Book: Using Financial Accounting Information III. Problem 3-2 Transaction Analysis and Financial Statements, p. 134

Transaction Analysis and Financial Statements Just Rolling Along Inc. was organized on May 1 by two college students who recognized as opportunity to make money while spending their days at a beach along Lake Michigan. The two entrepreneurs plan to rent bicycles and in line skates to weekend visitors to the lakefront. The following transactions occurred during the first month of operations: Received contribution of $9,000 from each of the two principal owners of the new business in exchange for shares of stock. Purchased ten bicycles lor $300 each on an open account. The company has30days to pay for the bicycles. Registered as a vendor with the city and paid the $15 monthly fee. Purchased 20 pairs of in line skates at $125 per pair, 20 helmets at $50 each, and 20 sets of protective gear (knee and elbow pads and wrist guards) at $45 per set for cash Purchased $100 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. Paid $125 bill from local radio station for advertising for the last two weeks of Mrs. Customers rented in-line skates and bicycles for cash of $1,800. Billed the local park district $1,200 for in-line skating lessons provided to neighborhood children. The park district is to pay one-half of the bill within five working days and the rest within 30 days. Received 50% of the amount billed to the park district. Customer rented in line skates and bicycles for cash of $3,000. Paid wages of $160 to a friend who helped over the weekend Paid the balance due on the bicycles. Required Prepare a table to summarize the preceding transactions as they affect the accounting equation. Use the format in Exhibit 3-1 Identify each transaction with the date. Prepare an income statement for the month of May Prepare a classified balance sheet at May 31. Why do you think the two college students decided to incorporate their business rather operate it as a partnership? Transaction Analysis and Financial Statements Just Rolling Along Inc. was organized on May 1 by two college students who recognized as opportunity to make money while spending their days at a beach along Lake Michigan. The two entrepreneurs plan to rent bicycles and in line skates to weekend visitors to the lakefront. The following transactions occurred during the first month of operations: Received contribution of $9,000 from each of the two principal owners of the new business in exchange for shares of stock. Purchased ten bicycles lor $300 each on an open account. The company has30days to pay for the bicycles. Registered as a vendor with the city and paid the $15 monthly fee. Purchased 20 pairs of in line skates at $125 per pair, 20 helmets at $50 each, and 20 sets of protective gear (knee and elbow pads and wrist guards) at $45 per set for cash Purchased $100 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. Paid $125 bill from local radio station for advertising for the last two weeks of Mrs. Customers rented in-line skates and bicycles for cash of $1,800. Billed the local park district $1,200 for in-line skating lessons provided to neighborhood children. The park district is to pay one-half of the bill within five working days and the rest within 30 days. Received 50% of the amount billed to the park district. Customer rented in line skates and bicycles for cash of $3,000. Paid wages of $160 to a friend who helped over the weekend Paid the balance due on the bicycles. Required Prepare a table to summarize the preceding transactions as they affect the accounting equation. Use the format in Exhibit 3-1 Identify each transaction with the date. Prepare an income statement for the month of May Prepare a classified balance sheet at May 31. Why do you think the two college students decided to incorporate their business rather operate it as a partnership