Question

• Prepare all required adjusting entries (omit explanations) for the end of the accounting period, post all adjusting entries to the general ledger and create an Adjusted Trial Balance for the six months ending June 30, 2016.
• Prepare all required closing entries (omit explanations) for the end of the accounting period, post all closing entries to the general ledger and prepare a Post-Closing Trial Balance as of June 30, 2016.
• Calculate the following ratios: Current Ratio, Quick Ratio, Profit Margin, and Return on Assets.

Transactions:

1/1       The owner of the business contributed $10,000 cash and a truck worth $16,000 to the business in exchange for 26,000 shares of $1par common stock. This is the first ever transaction for the business. Use perpetual inventory.

1/31     Borrowed $50,000 on a note payable from the bank.

1/31     Paid January rent, $500

2/01     Purchased equipment for $10,000 cash.

2/15     Purchased 100 bags of lawn fertilizer for $2.00 per bag on account (this lawn fertilizer will be sold to customers to apply themselves)

2/01     Paid February rent, $500

3/01     Prepaid, March – December rent at $500 per month

3/01     Purchased 100 bags of weed preventive fertilizer for $8 per bag on account (this fertilizer will be sold to customers to apply themselves)

3/01     Paid amount owed on lawn fertilizer from 2/15 transaction8 25

3/15     Sold 20 bags of weed preventive fertilizer for $15 per bag (cash)

3/15     Received $500 cash from customers for spring lawn services performed

3/15     Performed spring lawn service to customers on account $750

4/01     Collected $500 from customers on account from 3/15 transaction

4/14     Collected $250 from customers on account from 3/15 transaction

4/15     Sold 25 bags of weed preventive fertilizer for $15 per bag (cash)

4/15     Sold 15 bags of lawn fertilizer for $6 per bag (cash)

4/15     Paid for advertising campaign, $5,000 cash

5/01     Received payment for summer services in advance from 20 customers

            5 months (May – September) at $1000 each for a total of $100,000

5/31     Received payment for May’s lawn services provided from 5 customers, $5,500

5/31     Performed May lawn service for 5 customers on account to be received by 6/15, $5,500

5/31     Paid fuel expense of $1,000 for May

6/05     Paid wages to employees for May, $8000

6/15     Received payment from May’s credit customers, $5,500

6/15     Sold 20 bags of lawn fertilizer for $6 per bag (cash)

6/30     Received payment for June’s lawn service from 4 customers, $4,400

6/30     Performed June lawn service for 5 customers on account to be received by 7/15, $5,500

6/30     Purchased supplies on account, $1,000

6/30     Paid semi-annual payment on note from bank, $4,000 principal plus $2,000 interest expense for a total payment of $6,000

6/30     Paid fuel expense of $1,000 for May

Information for adjusting entries: (06/30/2016)

1. Depreciation on the truck for the period, (St-Line method, 4 years’ useful life, no salvage value)
2. Depreciation on the equipment for the period, (St-Line method, 3 years’ useful life, $1000 salvage value)
3. Adjust for unearned revenue now earned from customers who prepaid on 5/01.
4. Adjust for prepaid rent expired.
5. Accrue wages for employees who worked in June, but will be paid on July 5^th, $7,500

Answer 1

Date	Particulars		Dr Amt	Cr Amt
1/1	Cash		10000
	Truck		16000
		Equity Shares of $1 each		26000
1/31	Bank		50000
		Bank Note Payable		50000
31/1	Rent		500
		Bank		500
2/01	Equipment		10000
		Cash		10000
2/15	Lawan Fertilizer		200
		Lawan Fertilizer Supplier		200
2/01	Rent		500
		Bank		500
3/01	Prepaid Rent		4500
		Bank		4500
3/01	Weed preventive Fertilizer		800
		Bank		800
3/01	Lawan Fertilizer Supplier		200
		Bank		200
3/15	Cash		300
		Sale of Weed Preventive Fertilizer		300
3/15	Cost of Weed preventive Fertilizer Sold		160
		Weed preventive Fertilizer		160
3/15	Cash		500
		Lawn Servises		500
3/15	Customer / Debtor		750
		Lawn Servises		750
4/01	Bank		500
		Customer / Debtor		500
4/14	Bank		250
		Customer / Debtor		250
4/15	Cash		375
		Sale of Weed Preventive Fertilizer		375
4/15	Cost of Weed preventive Fertilizer Sold		200
		Weed preventive Fertilizer		200
4/15	Cash		90
		Sale of Lawn Fertilizer		90
4/15	Cost of Lawn Fertilizer Sold		30
		Lawn Fertilizer		30
4/15	Cash		5000
		Bank		5000
4/15	Adervertising Campain		5000
		Cash		5000
5/01	Bank		100000
		Advance for Summer Services		100000
5/31	Bank		5500
		Lawn Servises		5500
5/31	Customer / Debtor		5500
		Lawn Servises		5500
5/31	Fuel Expense		1000
		Bank		1000
6/05	Wages		8000
		Bank		8000
6/15	Bank		5500
		Customer / Debtor		5500
6/15	Cash		120
		Lawn Servises		120
6/30	Bank		4400
		Lawn Servises		4400
6/30	Customer / Debtor		5500
		Lawn Servises		5500
6/30	Supplies		1000
		Supplier / Creditor		1000
6/30	Bank Note Payable		4000
	Interest on Bank Note		2000
		Bank		6000
6/30	Fuel Expense		1000
		Bank		1000
6/30	Depreciation on Truck		2000
		Truck		2000
6/30	Depreciation on Equipment		1500
		Equipment		1500
6/30	Advance for Summer Services		40000
		Summer Servises		40000
6/30	Rent		2000
		Prepaid Rent		2000
6/30	Wages		7500
		Outstanding Wages		7500
			302375	302375
Trial Balance
Sr. No.	Particulars		Dr Amt	Cr Amt
1	Equity Share			26000
2	Truck		14000
3	Equipent		8500
4	Depreciation on Truck		2000
5	Depreciation on Equipment		1500
6	Rent		3000
7	Prepaid Rent		2500
8	Wages		15500
9	Outstanding Wages			7500
10	Advance for Summer Services			60000
11	Cash		1385
12	Bank		138650
13	Bank Note Payable			46000
14	Summer Services			40000
15	Fuel Expense		2000
16	Interest on Bank Note		2000
17	Supplies		1000
18	Supplier / Creditor			1000
19	Lawn Servises			22270
20	Sale of Weed Preventive Fertilizer			675
24	Sale of Lawn Fertilizer			90
21	Lawan Fertilizer Supplier			200
22	Lawan Fertilizer		170
23	Weed preventive Fertilizer		440
25	Advertising Campain		5000
26	Supplier / Creditor for Supplies			1000
27	Customer / Debtor		5500
28	Depreciation on Equipment		1500
			204645	204735
Current Assets Ratio = Current Assets / Current Liabilites
	=	2.39
Current Assests
	Prepaid Rent		2500
	Cash		1385
	Bank		138650
	Lawan Fertilizer		170
	Weed preventive Fertilizer		440
	Customer / Debtor		5500
		Total	148645
Current Liabilites
	Advance for Summer Services			60000
	Supplier / Creditor			1000
	Lawan Fertilizer Supplier			200
	Supplier / Creditor for Supplies			1000
		Total		62200
Quicks Ratio = Quick Assets / Current Liabilites
	=	2.26
Quick Assests
	Cash		1385
	Bank		138650
	Lawan Fertilizer		170
	Weed preventive Fertilizer		440
		Total	140645

More details can not be added due to word limit