Question

You recently accepted the position of Controller of a newly incorporated company, Lynbrook IT, Inc. Lynbrook provides IT (information technology) services to small and medium size companies. The owner, Sam Thompson, gave you the following list of transactions that were made during the first month of operations.

1. On March 1, Thompson invested $30,000 cash and $150,000 of equipment in Lynbrook in exchange for common stock.

2. On March 2, Lynbrook paid $6,000 cash for furniture for the shop.

3. On March 3, Lynbrook paid $2,000 cash to rent space in an office building for March.

4. On March 4, it purchased $12,000 of equipment on credit for the business (using 5-year note payable).

5 On March 5, Lynbrook opened for business. Cash received from IT services in the first week and a half of business (ended March 15) was $8,250.

6. On March 15, it provided $1,000 of IT services on account.

7. On March 24, it received a $1,000 check for services previously rendered on account.

8. On March 26, it paid $4,250 to an assistant for hours worked during March.

9. On March 30, cash received from services provided during the second half of March was $9,300.

10. On March 31, it paid a $400 installment toward principal on the note payable entered into on March 4.

11. On March 31, it paid $500 for utilities used during the month of March.

12. On March 31, it paid $1,500 cash in dividends to Thompson.

Required 1. Prepare general journal entries in good form for the above transactions.

2. Post the journal entries from (1) to the ledger accounts. (using T accounts)

3. Prepare a trial balance as of March 31, 2020.

4. Prepare a single-step income statement for the month of March.

5. Prepare a statement of retained earnings for the month of March.

6. Prepare a balance sheet as of March 31, 2020

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Part 1 Part 2 Date Account Debit Credit Cash Debit Credit Mar 1 Mar 1 Mar 1 Cash Equipment Common Stock $ 30,000 $ 150,000 Mar 1 Mar 5 Mar 24 Mar 30 $ 30,000 Mar 2 $ 8,250 Mar 3 $ 1,000 Mar 26 $ 9,300 Mar 31 $ $ $ $ 6,000 2,000 4,250 2,400 $ 180,000 $ 6,000 Mar 2 Mar 2 Furniture Cash $ 6,000 Endng Balance $ 33,900 $ 2,000 Accounts Receivable Mar 3 Mar 3 Rent Expense Cash $ 2,000 Debit Credit Mar 15 $ 1,000 Mar 24 $ 1,000 $ 12,000 Mar 4 Mar 4 Equipment Note Payable $ 12,000 Endng Balance $ - $ 8,250 Equipment Mar 5 Mar 5 Cash Service Revenue $ 8,250 Credit Debit Mar 1 Mar 4 Endng Balance Mar 15 $ 1,000 Accounts Receivable Service Revenue $ 150,000 $ 12,000 $ 162,000 Mar 15 $ 1,000 $ 1,000 Furniture Mar 24 Mar 24 Cash Accounts Receivable $ 1,000 Debit Credit Mar 2 $ 6,000 $ 4,250 Mar 26 Mar 26 Salaries Expense Cash $ 4,250 Endng Balance $ 6,000 $ 9,300 Note Payable Mar 30 Mar 30 Cash Service Revenue $ 9,300 Debit Credit Mar 31 $ 400 Mar 4 $ 12,000 $ 400 Mar 31 Mar 31 Note Payable Cash $ 400 Endng Balance $ 11,600 $ 500 Dividend Mar 31 Mar 31 Utilities Expense Cash $ 500 Debit Credit Mar 31 $ 1,500 $ 1,500 Mar 31 Mar 31 Dividend Cash $ 1,500 Endng Balance $ 1,500 Common Stock Debit Credit Mar 1 $ 180,000 Endng Balance $ 180,000

Part 3 Rent Expense Account Debit Credit Debit Credit Mar 3 $ 2,000 $ $ $ 33,900 162,000 6,000 Endng Balance $ 2,000 $ 11,600 $ 180,000 Salaries Expense Cash Equipment Furniture Note Payable Common Stock Dividend Service Revenue Rent Expense Salaries Expense Utilities Expense Debit Credit $ 1,500 Mar 26 $ 4,250 $ 18,550 Endng Balance $ 4,250 $ $ $ 2,000 4,250 500 Utilities Expense Debit Credit Total $ 210,150 $ 210,150 Mar 31 $ 500 Part 4 Endng Balance $ 500 $ 18,550 Debit Service Revenue Credit Mar 5 Mar 15 Mar 30 Endng Balance $ $ $ $ 8,250 1,000 9,300 18,550 Revenue: Service Revenue Expense: Rent Expense Salaries Expense Utilities Expense Total Expense Net Income $ $ $ 2,000 4,250 500 $ $ (6,750) 11,800 Part 5 Beginning Retained Earning Add: Net Income Less: Dividend Ending Retained Earning $ $ $ 11,800 (1,500) 10,300 Part 6 Assets: Cash Equipment Furniture Total Assets Liabilities and Equity: Note Payable Common Stock Retained Earning Total Liabilities and Equity $ 33,900 $ 162,000 $ 6,000 $ 201,900 $ 11,600 $ 180,000 $ 10,300 $ 201,900