Question

Transaction Analysis and Financial Statements

Transaction Analysis and Financial Statements Just Rolling Along Inc. was organized on May 1 by two college students who recognized an opportunity to make money while spending their days at a beach along Lake Michigan. The two entrepreneurs plan to rent bicydles and in-line skates to weekend visitors to the lakefront. The following transactions occurred during the first month of operations: May 1: Received contribution of $9,500 from each of the two principal owners of the new business in exchange for shares of stock Purchased ten bicydes for $275 each on an open account. The company has 30 days to pay for the bicycles. May 1: Registered as a vendor with the city and paid the $20 monthly fee. May 5: Purchased 15 pairs of in-line skates at $140 per pair, 15 helmets at $35 each, and 15 sets of protective gear May 9: (knee and elbow pads and wrist guards) at $30 per set for cash. Purchased $105 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. May 10: Paid $125 bill from local radio station for advertising for the last two weeks of May May 15: Customers rented in-line skates and bicycles for cash of $2,140. May 17: May 24: Billed the local park district $1,400 for in-line skating lessons provided to neighborhood children. The park district is to pay one-half of the bill within five working days and the rest within 30 days. Received 50% of the amount billed to the park district. May 29: May 30: Customers rented in-line skates and bicycles for cash of $2,750. Paid wages of $150 to a friend who helped over the weekend. May 30: May 31: Paid the balance due on the bicycles Required:

Answer 1

In the books of Just Rolling Along Inc. :

Date	Account Titles	Debit	Credit
		$	$
May 1	Cash	19,000
	Common Stock		19,000
May 1	Equipment	2,750
	Accounts Payable		2,750
May 5	Registration Fee	20
	Cash		20
May 9	Equipment	3,075
	Cash		3,075
May 10	Miscellaneous Supplies	105
	Accounts Payable		105
May 15	Advertising Expense	125
	Cash		125
May 17	Cash	2,140
	Rental Fees Revenue		2,140
May 24	Accounts Receivable	1,400
	Lessons Revenue		1,400
May 29	Cash	700
	Accounts Receivable		700
May 30	Cash	2,750
	Rental Fees Revenue		2,750
May 30	Salaries and Wages Expense	150
	Cash		150
May 31	Accounts Payable	2,750
	Cash		2,750

1.a.

Just Rolling Along Inc. Income Statement For the month of May
Revenues
Rental Fees	$4,890
Lessons	1,400
Total Revenues		$ 6,290
Expenses
Registration Fees	20
Advertising	125
Salaries and Wages	150
Total Expenses		295
Net Income		$ 5,995

b.

Just Rolling Along Inc. Balance Sheet May 31
Assets
Current Assets
Cash	$ 18,470
Accounts Receivable	700
Supplies	105
Total Current Assets		$ 19,275
Property Plant and Equipment
Equuipment		5,825
Total Assets		$ 25,100
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable		105
Stockholders' Equity
Common Stock	19,,000
Retained Earnings	5,995
		24,995
Total Liabilities and Stockholders' Equity		$ 25,100