Question

The following amounts summarize the financial position of Little Yellow Dog Inc. on May 31, 2020: Cash + Accounts Balance 3840 1920 Assets = Liabilities + Computers + Supplies + Land = Accounts + Note 600 15600 10320 0 + + Salaries + Interest + 0 0 Shareholders' Equity Common + Retained 5520 6120 During June 2020, the business completed these transactions: June 1: Received cash of $9000 and issued common shares. June 1: Bought two computers for a total of $9600 by paying $2100 down and signing a note payable for the rest. Interest of 10% to be paid with the note payable on June 1, 2021. The computers are expected to last 3 years. June 5: Performed services for a client and received cash of $2400. June 9: Paid $3000 on accounts payable. June 13: Purchased supplies on account, $7800. June 20: Collected cash from a customer on account, $720. June 23: Consulted on the design of a business report, and billed the client for services rendered, $3600. June 25: Declared and paid a cash dividend of $1320. June 30: Recorded the following business expenses for the month: paid office rent, $1200; paid advertising, $480. June 30: Accrued $2640 in employee salaries. Employees are paid on the first day of each month. June 30: A count revealed that $120 worth of supplies are still on hand. Other Information: 1) In the past, Little Yellow Dog Inc. has used the following accounts on their income statement: Revenue, Depreciation Expense, Supplies Expense, Interest Expense, Rent Expense, Salaries Expense, Advertising Expense, and Supplies Expense. They use the Dividends account to record dividends. Not all accounts have been used each period. Required: 1) Create all necessary journal entries for the month of June 2020. Place your answer under "Requirement 1* in the Answer" tab. Note that the dates have been pre-populated. Ensure your journal entries match the appropriate date. Explanations are not required. 2) Analyze the effects of the above transactions on the accounting equation. Place your answer under "Requirement 2 in the "Answer" tab. 3) Prepare the Income Statement for the month ended June 30, 2020. List expenses in decreasing order by amount. Place your answer under "Requirement 3* in the Answer" tab. 4) Prepare the Statement of Retained Earnings for the month ended June 30, 2020. Place your answer under "Requirement 4* in the "Answer * tab." 5) Prepare the Balance Sheet at June 30, 2020. Place your answer under "Requirement 5' in the "Answer" tab.

Answer 1

Please go through the following attachments for solution.

For journal entries of question 1, refer journal document.

For Accounting equation question 2, refer effect on equation document.

For the questions 3,4 and 5, refer statement of accounts documents.

1) Journal Entries Debit Date Account title Jun-01 Cash Common stock Credit 9000 9000 9600 Jun-01 Computers Cash Note Payable 2100 7500 2400 Jun-05 Cash Revenue 1 2400 3000 Jun-09 Accounts Payable Cash 3000 7800 Jun-13 Supplies Accounts Payable 7800 720 Jun-20 Cash Accounts Receivable 3600 Jun-23 Accounts Receivable Revenue 3600 1320 Jun-25 Dividends Cash 1320 Jun-30 Rent Expense Advertising Expense Cash 1200 480 1680 2640 Jun-30 Salaries Expense Salaries Payable 2640 Jun-30 Supplies Expense 8280 Supplies 8280 600+7800-120 =8280.(Opening+Purchases-Ending=Consumption) Jun-30 Depreciation Expense 266.67 Computers 266.67 9600/3*1/12=266.67.(Depreciation for one month is to be calculated.) Jun-30 Interest Expense 62.5 Interest Payable 62.5 Interest for one month is to be calculated=7500*10%*1/12

Liabilities + Salaries Supplies + Land = Accounts + Note + Interest 7500 2) Effect on Accounting Equation Assets Date Cash + Accounts + Computers + Jun-01 9000 Jun-01 -2100 9600 Jun-05 2400 Jun-09 -3000 Jun-13 Jun-20 Jun-23 3600 Jun-25 -1320 Jun-30 -1200 -3000 7800 7800 720 -720 Shareholders Equity + Common + Retained 9000 Common stock Computers 2400 Revenue Accounts Payable Supplies Accounts Receivable 3600 Revenue - 1320 Dividends -1200 Rent Expense -480 Advertising Expense -2640 Salaries Expense -8280 Supplies Expense -266.67 Depreciation Expense -62.5 Interest Expense -480 2640 -8280 Jun-30 Jun-30 Jun-30 Jun-30 -266.67 62.5

Amount 6000 Income Statement Particulars Revenue Less: Expenses Supplies Expense 8280 Salaries Expense 2640 Rent Expense 1200 Advertising Expense 480 Depreciation Expense 266.67 Interest Expense 62.5 Total Net Loss 12929.17 -6929.17 Statement of Retained Earnings Particulars Amount Beginning Balance 6120 Add: Current Month Income -6929.17 Less: Dividend Paid 1320 Ending Retained Earnings -2129.17 Balance sheet Particulars Amount Assets Cash 7860 For this ending balances, please refer working note. Accounts Receivable 4800 Computers (Net) 9333.33 Supplies 120 Land 15600 Total Assets 37713.33 Liabilities Accounts Payable 15120 Notes Payable 7500 Salaries Payable 2640 Interest Payable 62.5 25322.5 Shareholders equity Common stock 14520 5520+9000 Retained Earnings -2129.17|12390.83 Total of liabilities and equity 37713.33

Working Notes Assets Accounts + Computers + Supplies + Land = Accounts + Note 1920 600 15600 10320 Liabilities + Salaries + Interest 0 9600 7500 -3000 7800 7800 Date Cash + Opening 3840 Jun-01 9000 Jun-01 -2100 Jun-05 2400 Jun-09 -3000 Jun-13 Jun-20 720 Jun-23 Jun-25 -1320 Jun-30 -1200 -480 Jun-30 Jun-30 Jun-30 Jun-30 Ending 7860 -720 3600 Shareholders Equity + Common + Retained 5520 6120 Common stock 9000 Computers Revenue 2400 Accounts Payable Supplies Accounts Receivable Revenue 3600 Dividends -1320 Rent Expense -1200 Advertising Expense -480 Salaries Expense -2640 Supplies Expense -8280 Depreciation Expense -266.67 Interest Expense -62.5 13200 -809.17 2640 -8280 -266.67 62.5 62.5 4800 9333.33 120 15600 15120 7500 2640