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Bob's Chocolate Chips and More, a bakery specializing in gourmet pizza and chocolate chip cookies, started business October 1, 2017 The following transactions occurred during the month of October a. Common stock of $90,000 was sold at par to start the business b. Equipment consisting of mixers and ovens was acquired October 1 for $30,000 cash. The equipment is expected to last five years, after which it is expected to be sold for $5,000. Management uses the straight-line method to calculate depreciation expense c Ingredients costing $15,000 were purchased on account during the month and all but $5,000 was paid for by the end of the month. d. Rent is $500 a month. October e. A payment of $800 for utilities was made during the month. f Sixty percent of thei t, and December's rent was paid October 5 ts purchased in part c were prepared and sold for $35,000 on account: $26,000 was collected on accounts receivable during the month. g. Wages of $5,200 were paid during the month. Moreover, wages for the last three days of the month amounted to $400 and will be paid during the first week of November h. Borrowed $12,000 from the bank for additional working capital requirements, and $3.000 was repaid by month-end. Interest on the unpaid loan balance amounted to $450 at the end of October and was paid on November 5 Required: Prepare the required journal entries and adjusting entries as well as an October income statement and a balance sheet as of October 31, 2017 for Bob's Chocolate Chips and More. (Hint: You may want to consider using T-accounts to classify and accumulate the preceding transactions before preparing the statements) Complete this question by entering your answers in the tabs below Requ s. (If no entry is required for a transaction/event, select "No journal entry in the first account field. Round your final answers to the nearest whole dolliar.) K Prev 3 of 5 Next>

Answer 1

1)

		Debit	Credit
a	Cash	$ 90,000.00
	Common Stock		$ 90,000.00
b	Equipment	$ 30,000.00
	Cash		$ 30,000.00
c	Purchase	$ 15,000.00
	Cash		$    5,000.00
	Accounts Payable		$ 10,000.00
d	Prepaid Rent	$    1,500.00
	Cash		$    1,500.00
e	Utilties expense	$        800.00
	Cash		$        800.00
f	Cash	$ 26,000.00
	Accounts Receivable	$    9,000.00
	Sales		$ 35,000.00
g	Wages	$    5,200.00
	Cash		$    5,200.00
h	Cash	$ 12,000.00
	Bank loan		$ 12,000.00
h	Bank Loan	$    3,000.00
	Cash		$    3,000.00
Adjusting entries
	Depreciation	$    5,000.00
	Accumulated Depreciation		$    5,000.00
	Rent	$        500.00
	Prepaid Rent		$        500.00
	wages	$        400.00
	outstanding wages		$        400.00
	Interest	$        450.00
	Outstanding Interest		$        450.00

2)

Income Statement
Bobs Chocolate chips and more
For the year ended October 31,2017
Sales	$ 35,000.00
Purchase	$ 15,000.00
Closing Stock	$    6,000.00
Gross Profit	$ 26,000.00
Rent Expense	$        500.00
Utilities Expense	$        800.00
Depreciation	$    5,000.00
Wages	$    5,600.00
Interest	$        450.00
Total Expense	$ 12,350.00
Net Profit	$ 13,650.00

Balance Sheet
Bobs Chocolate chips and more
Non Current assets
Equipment	$ 30,000.00
Less : Accumulated Depreciation	$ (5,000.00)
Total Non Current Assets		$    25,000.00
Current Assets
Cash	$ 82,500.00
Accounts Receivable	$    9,000.00
Closing Stock	$    6,000.00
Prepaid rent	$    1,000.00	$    98,500.00
Total Current Assets
		$ 123,500.00
Total Assets
Non Current Liabilities		$      9,000.00
Bank Loan
Current Liabilites
Accounts Payable	$ 10,000.00
Wages Payable	$        400.00
Interest Payable	$        450.00	$    10,850.00
Total Current Liabilites
		$    90,000.00
Common Stock		$    13,650.00
Retained earnings
Total Liabilites and Shareholders equity		$ 123,500.00