Question

Problem 3-2 Transaction Analysis and Financial Statements Just Rolling Along Inc. was organized on May 1, 2007, by wo college students who recog nized an opportunity to make money while spending their days at a beach along Lake Michi- gan. The two entrepreneurs plan to rent bicycles and in-line skates to weekend visitors to the lakefront. The following uransactions occurred during the first month of operations: May 1: Received contribution of $9,000 from each of the two principal owners of the May 1: Purchased 10 bicycles for $300 each on an open account. The company has 30 May 9: Purchased 20 pairs of in-line skates at $125 per pair, 20 helmes at $50 each, and May 10: Purchased $100 in miscellaneous supplies on account. The company has 30 days new business in exchange for shares of stock. days to pay for the bicycles. 20 sets of protective gear (knee and elbow pads and wrist guards) at $45 per set May 5: Registered as a vendor with the city and paid the $15 monthly fee. for cash to pay for the supplies. May 17: Customers rented in-line skates and bicycles for cash of $1,800. May 24: Billed the local park district $1,200 for in-line skating lessons provided to neigh- borhood kids. The park district is to pay one half of the bill within five working days and the rest within 30 days May 29: Received 50% of the amount billed to the park district. May 30: Customers rented in-line skates and bicycles for cash of S3,000. May 30: Paid wages of $160 to a friend who helped out over the weekend. May 31: Paid the balance due on the bicycles.

Answer 1

Following will be the accounting equation :-

Transaction		Assets						=	Liabilities +	owners	equity
Transaction	date	Cash	accounts receivable	bicycle	helmet	inline skets	protective gear	supplies	accounts payable	capital stock	retained earnings
1.	May 1.	18000								18000
2 .	May 1.			3000					3000
Balance		18000		3000					3000	18000
3.	May 5	(15)									(15)
Balance		17985		3000					3000	18000	(15)
4 .	May 9 .	(4400) [2500+1000+900]			1000	2500	900
Balance		13585		3000	1000	2500	900		3000	18000	(15)
5 .	May 10 .							100	100
Balance		13585		3000	1000	2500	900	100	3100	18000	(15)
6 .	May 15 .	(125)									(125)
Balance		13460		3000	1000	2500	900	100	3100	18000	(140)
7 .	May 17 .	1800									1800
Balance		15260		3000	1000	2500	900	100	3100	18000	1660
8 .	May 24		1200								1200
Balance		15260	1200	3000	1000	2500	900	100	3100	18000	2860
9 .	May 29.	600	(600)
Balance		15860	600	3000	1000	2500	900	100	3100	18000	2860
10.	May 30 .	3000									3000
Balance		18860	600	3000	1000	2500	900	100	3100	18000	5860
11.	May 30 .	(160)									(160)
Balance		18700	600	3000	1000	2500	900	100	3100	18000	5700
12 .	May 31 .	(3000)							(3000)
Balance		$15700	$600	$3000	$1000	$2500	$900	$100	$100	$18000	$5700
Total assets								$23800	total liabilities & owners equity		$23800