Lars Linken opened Lars Cleaners on March 1, 2019. During March, the following transactions were completed. Mar.

Question:

Lars Linken opened Lars Cleaners on March 1, 2019. During March, the following transactions were completed.

Mar. 1 Issued 10,000 shares of common stock for $15,000 cash.

1 Borrowed $6,000 cash by signing a 6-month, 6%, $6,000 note payable. Interest will be paid the first day of each subsequent month.

1 Purchased used truck for $8,000 cash.

2 Paid $1,500 cash to cover rent from March 1 through May 31.

3 Paid $2,400 cash on a 6-month insurance policy effective March 1.

6 Purchased cleaning supplies for $2,000 on account.

14 Billed customers $3,700 for cleaning services performed.

18 Paid $500 on amount owed on cleaning supplies.

20 Paid $1,750 cash for employee salaries.

21 Collected $1,600 cash from customers billed on March 14.

28 Billed customers $4,200 for cleaning services performed.

31 Paid $350 for gas and oil used in truck during month (use Maintenance and Repairs Expense).

31 Declared and paid a $900 cash dividend.

The chart of accounts for Lars Cleaners contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Prepaid Rent, Equipment, Accumulated Depreciation-Equipment, Accounts Payable, Salaries and Wages Payable, Notes Payable, Interest Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Rent Expense, and Interest Expense.

Instructions

(a) Journalize the March transactions.

(b) Post to the ledger accounts. (Use T-accounts.)

(c) Prepare a trial balance at March 31.

(d) Journalize the following adjustments.

1. Services performed but unbilled and uncollected at March 31 were $200.

2. Depreciation on equipment for the month was $250.

3. One-sixth of the insurance expired.

4. An inventory count shows $280 of cleaning supplies on hand at March 31.

5. Accrued but unpaid employee salaries were $1,080.

6. One month of the prepaid rent has expired.

7. One month of interest expense related to the note payable has accrued and will be paid April 1.

(e) Post adjusting entries to the T-accounts.

(f) Prepare an adjusted trial balance.

(g) Prepare the income statement and a retained earnings statement for March and a classified balance sheet at March 31.

(h) Journalize and post closing entries and complete the closing process.

(i) Prepare a post-closing trial balance at March 31.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Financial Accounting

ISBN: 978-1119305736

10th edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel

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