Baker’s Bikes earns revenue through a.) service of bicycles b.) selling new bicycles.

Assignment: Create journal entries, and trial balances, close the accounts, and prepare four financial statements.

• The accounting period is from January 1, 2021, until December 31, 2021

• Baker’s bikes record cost-of-goods sold under the FIFO method.

• Assets unless otherwise indicated should be amortized under straight-line amortization.

• All the types of bikes can be recorded as bikes.

• Unless specified on account all transactions are in cash.

• To settle accounts payable use the amount payable in cash

One Year of Financial Transactions

Action Plan

a.) Create a journal entries for all the above transactions.

b.) Prepare a general ledger and trial balance for all above transactions

c.) Prepare financial statements for all the above transactions.

d.) Calculate the following ratios

a. Current Ratio

b. Profit Margin

c. Return on Equity

 
 
 
 

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Date 1/12 1/14 1/17 1/18 2/1 2/5 2/6 2/10 2/1 2/14 3/1 3/1 3/2 3/4 3/5 3/10 3/10 Activity Tim Baker deposits $10,000 of his own capital to start the business. Tim Baker purchases branding and advertising materials for $500 Baker purchases a stand and tools with a useful life of 20 years for $1,000 Baker purchases office equipment including a laptop for $1000 cash. 2/1 Tim hires Sachin Patel, to run the sales floor and fix bikes. Sachin will work 30 hours per week and receive $1000 a month in salary. Tim buyers ten bicycles on account from Scott for $500 each on account terms 2/10 n 30. Tim sells two bicycles to a couple for $1000 each for cash. Tim performs 3 tune ups for $50 each. Tim performs three tune ups for $50 each. Sachin sells 3 bikes at $1100 each. Notes Tim buys merchandise inventory from Giant Bikes of 5 bikes on account shipping terms destination for $500 each, credit terms 2/12 n 20. Thomas buys 2 bikes for $1150 each. Advertising Expenses Equipment Tim sells 2 bikes for $1100 each. Tim collects performs services on account for Jacob for $75 Tim Baker buys three bicycles merchandise on account $1,500 term 2/10 n 30. Tim sells 3 bikes for $1200 each. 3/1 Tim buys a one year business insurance policy for $100 per month. * Date 1/12 1/14 1/17 1/18 2/1 2/5 2/6 2/10 2/1 2/14 3/1 3/1 3/2 3/4 3/5 3/10 3/10 Activity Tim Baker deposits $10,000 of his own capital to start the business. Tim Baker purchases branding and advertising materials for $500 Baker purchases a stand and tools with a useful life of 20 years for $1,000 Baker purchases office equipment including a laptop for $1000 cash. 2/1 Tim hires Sachin Patel, to run the sales floor and fix bikes. Sachin will work 30 hours per week and receive $1000 a month in salary. Tim buyers ten bicycles on account from Scott for $500 each on account terms 2/10 n 30. Tim sells two bicycles to a couple for $1000 each for cash. Tim performs 3 tune ups for $50 each. Tim performs three tune ups for $50 each. Sachin sells 3 bikes at $1100 each. Notes Tim buys merchandise inventory from Giant Bikes of 5 bikes on account shipping terms destination for $500 each, credit terms 2/12 n 20. Thomas buys 2 bikes for $1150 each. Advertising Expenses Equipment Tim sells 2 bikes for $1100 each. Tim collects performs services on account for Jacob for $75 Tim Baker buys three bicycles merchandise on account $1,500 term 2/10 n 30. Tim sells 3 bikes for $1200 each. 3/1 Tim buys a one year business insurance policy for $100 per month. *

Answer rating: 100% (QA)

1 Journal Entries January 1 2021 Bakers Bikes opens for business with the following cash transaction Cash 100000 Equipment 60000 Land 30000 January 2 2021 Bakers Bikes purchases inventory on account f... View the full answer