On December 1, Tim Walker began an auto repair shop, Walkers Quality Automotive. The following transactions occurred

Question:

On December 1, Tim Walker began an auto repair shop, Walker’s Quality Automotive. The following transactions occurred during December:

Dec. 1 Walker contributed $ 48,000 cash to the business in exchange for shares of common stock.

1 Purchased $ 10,000 of equipment paying cash.

1 Paid $ 1,600 for a 4-month insurance policy starting on December 1.

9 Paid $ 20,000 cash to purchase land to be used in operations.

10 Purchased office supplies on account, $ 2,400.

19 Borrowed $ 15,000 from the bank for business use. Walker signed a note payable to the bank in the name of the corporation.

22 Paid $ 1,300 for advertising expenses.

26 Paid $ 600 on account.

28 The business received a bill for utilities to be paid in January, $ 240.

31 Revenues earned during the month included $ 16,500 cash and $ 2,800 on account.

31 Paid employees’ salaries $ 3,500 and building rent $ 1,000. Record as a compound entry.

31 The business received $ 1,140 for auto screening services to be performed next month.

31 Cash dividends of $ 5,000 were paid to stockholders.

The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Equipment; Accumulated Depreciation—Equipment; Land; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Common Stock; Retained Earnings; Dividends; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense—Equipment.

Adjustment data:

a. Office Supplies used during the month, $ 800.

b. Depreciation for the month, $ 200.

c. One month insurance has expired.

d. Accrued Interest Expense, $ 80.

Requirements

1. Prepare the journal entries and post to the T-accounts.

2. Prepare an unadjusted trial balance.

3. Prepare the adjusting entries and post to the T-accounts.

4. Prepare an adjusted trial balance.

5. Complete the worksheet for the month ended December 31, 2014. (Optional)

6. Prepare the income statement, the statement of retained earnings, and the unclassified balance sheet in account form.

7. Prepare the closing entries and post to the T-accounts.

8. Prepare a post-closing trial balance.

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...