Question

Spicewood Stables, Inc., was established in Dripping Springs, Texas, on April 1. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new assistant controller. The following transactions for April are provided for your review. a. Received contributions from investors and issued $290,000 of common stock on April 1. b. Acquired a barn for $182.000. On April 2, the company paid half the amount in cash and signed a three-year note payable for the balance, c. Provided $19.800 in animal care services for customers on April 3, all on credit. d. Rented stables to customers who cared for their own animals, received cash of $18.800 on April 4 for rent earned this month e. On April 5, received $2,600 cash from a customer to board her horse in May, June, and July (record as Deferred Revenue), Purchased and received hay and feed supplies on account on April 6 for $4,800. 9. Pald $3,540 on accounts payable on April 7 for previous purchases. h. Received $2,520 from customers on April 8 on accounts receivable. On April 9. prepaid a two-year Insurance policy for $4,000 for coverage starting in May. 1. On April 28. paid $1.250 in cash for water and utilities used this month k. Pald $15.400 in wages on April 29 for work done this month Received an electric utility bill on April 30 for $3,140 for usage in April the bill will be paid next month. cos Required: 1. Prepare the journal entry for each of the above transactions 2. Post the transaction activity from requirement to the T-Accounts below. All accounts begin with zero balances because this is the first month of operations 3. Prepare an unadjusted trial balance as of April 30. 4-a. Refer to the revenues and expenses shown on the unadjusted trial balance. Based on this information, calculate preliminary net income and net profit margin 4-b. Determine whether the net profit margin is better or worse than the 30.0 percent earned by a close competitor Complete this question by entering your answers in the tabs below. Rei Reg 2 Red Ree 4 Ro43 activity from requirements to the Accounts below. All account begin with zero balances because this is the first

Answer 1

Bimai Date: Pogo No a.) Cash 290ooo Common stock 290000 b) Building 382 000 Cash 191000 Noto payable 19/ooo C.) Accounts receivable 198co Sewice Revenue 19800 Cash 18800 pent Revenue 18800 Cash 2600 Deferred Revenue 2600 110 Supplies 4800 Accounts Payable 4500 Accounts Payable 3540 Cash 3540 ho) 2520 Auounts Receivable 2520 Prepaid Iromance Cash Goron Gero Utilities Expense 1250 Cash 1250

Bimal loatos Pago No ke Wajes Expense 15400 l. UUS - Utilities Expense 3140 3140 Utilities Payable Cash Common stock 290 000 1910vo 2900 / 8 800 3540 29000D 2600 Youo 2520 /250 Building 15400 1910vo 98730 19 loud Note Payable 382000 19lova Service Revenue 19800 (91000 19800 Accounts Receivable 19800 2520 Rent Revenue 48 800 (7280 Deferred Revenue 18800 2600 4 800 2600 Accounts Payable 14800 3540 4800 C OC Prepaid Insurance L'oro 1260 Utilities Expense yooo 1250 3140 4390

Bimal Date: Pago to Wazes Expense Utilities Payable 15400 3140 115400 3140 Un adjusted Trial Balence Debit Credit Cash 98730 382000 Building Account Receivable 17280 Supplies 4800 Prepaid Insurance Tovo Utilities Expense 4390 1 15400 wages Expense Common stock 29oooo Nate Payable 191ooo Service Revenue 19800 Rent Revenue 18800 2600 Deferred Revenue Accounts Payable 1260 Utilities payable 31 40 526 600 5 26600 Service Revenue from Reat Revenue 19800 18.800 38600 Utilities Expense 4390 (19790) wages Expense Net Income 48810