Melvin Patel bid for and won a concession to rent bicycles in the local park during the summer. During the month of June, Patel completed the following transactions for his bicycle rental business:
June 2 Began business by placing $7,200 in a business checking account in the name of the company.
3 Purchased supplies on account for $150
4 Purchased 10 bicycles for $2,500, paying $1,200 down and agreeing to pay the rest in 30 days.
June 5 Paid $2,900 in cash for a small shed to store the bicycles and so use for other operations.
8 Paid $400 in cash for shipping and installation costs (considered an addition to the cost of the shed) to place the shed at the park entrance.
9 Hired a part-time assistant-to help out on weekends at $7 per hour.
10 Paid a maintenance person $75 to clean the grounds.
13 Received $970 in cash for rentals.
17 Paid $150 for the supplies purchased on June 3.
18 Paid a $55 repair bill on bicycles.
23 Billed a company $110 for bicycle rentals for an employee outing.
25 Paid the $100 fee for June to the Park District for the right to operate the bicycle concession.
27 Received $960 in cash for rentals.
29 Paid the assistant $240.
30 Made a cash withdrawal of $500.
1. Prepare entries to record these transactions in journal form.
2. Set up the following T accounts and post all the journal entries: Cash; Accounts Receivable; Supplies; Shed; Bicycles; Accounts Payable; M. Patel, Capital; M. Patel, Withdrawals; Rental Revenue; Wages Expense; Maintenance Expense; Repair Expense; and Concession Fee Expense.
3. Prepare a trial balance for Patel Rentals as of June 30, 2011.
4. Compare and contrast how the issues of recognition, valuation, and classification are settled in the transactions of June 3 and 10.