Question

NEED-TO-KNOW COMPREHENSIVE (This problem extends the Comprehensive Need-To-Know of Chapter 1.) After several months of planning, Jasmine Worthy started a haircutting business called Expressions. The following events occurred during its first month. a. On August 1, Worthy invested $3,000 cash and $15,000 of equipment in Expressions in exchange for common stock. b. On August 2, Expressions paid $600 cash for furniture for the shop. c. On August 3, Expressions paid $500 cash to rent space in a strip mall for August. d. On August 4, it purchased $1,200 of equipment on credit for the shop (using a long- term note payable) e. On August 5, Expressions opened for business. Cash received from haircutting services in the first week and a half of business (ended August 15) was $825. f. On August 15, it provided $100 of haircutting services on account g. On August 17, it received a $100 check for services previously rendered on account. h. On August 17, it paid $125 to an assistant for hours worked during the grand opening 1. Cash received from services provided during the second half of August was $930. 1. On August 31, it paid a $400 installment toward principal on the note payable entered into on August 4. k. On August 31, it paid $900 cash in dividends to Worthy (sole shareholder). Required 1. Open the following ledger accounts in balance column format (account numbers are in parentheses): Cash (101); Accounts Receivable (102); Furniture (161): Store Equipment (165). Note Payable (240). Common Stock (307): Dividends (319) Haircutting Services Revenue (403); Wages Expense (623); and Rent Expense (640). Prepare general journal entries for the transactions. 2. Post the journal entries from (1) to the ledger accounts. 3. Prepare a trial balance as of August 31. 4. Prepare an income statement for August. 5. Prepare a statement of retained earnings for August 2 6. Prepare a balance sheet as of August 31. 7. Determine the debt ratio as of August 31.

Answer 1

Date	General Journal		Debit	Credit
Aug-01	Cash	101	3,000.00
	Store Equipment	165	15,000.00
	Common Stock	307		18,000.00
Aug-02	Furniture	161	600.00
	Cash	101		600.00
Aug-03	Rent Expense	640	500.00
	Cash	101		500.00
Aug-04	Store Equipment	165	1,200.00
	Note Payable	240		1,200.00
Aug-05	Cash	101	825.00
	Hair Cutting Service Revenue	403		825.00
Aug-15	Accounts Receivable	102	100.00
	Hair Cutting Service Revenue	403		100.00
Aug-17	Cash	101	100.00
	Accounts Receivable	102		100.00
Aug-17	wages Expense	623	125.00
	Cash	101		125.00
	Cash	101	930.00
	Hair Cutting Service Revenue	403		930.00
Aug-31	Notes Payable	240	400.00
	Cash	101		400.00
Aug-31	Dividends	319	900.00
	Cash	101		900.00