Question

Alpine Stables Inc. was established on April 1, 2020. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new assistant controller. The following transactions for April 2020 are provided for your review: a. Received contributions from five investors of $60,000 in cash ($12,000 each), a barn valued at $100,000, and land valued at $90,000. Each investor received 3,000 shares. b. Built a small barn for $62,000. The company paid half the amount in cash on April 1, 2020, and signed a three-year note payable for the balance. c. Provided animal care services to customers, all on credit, for $35,260. d. Rented stables to customers who cared for their own animals, and received cash payment of $13,200. e Received from a customer $2,400 to board her horse in April, May, and June (record as deferred revenue). f. Purchased hay and feed supplies on account for $3,180 to be used in the summer. & Paid $1,240 in cash for water utilities expense incurred in the month. h. Paid $2,700 on accounts payable for previous purchases. i. Received $10,000 from customers on accounts receivable. j. Paid $6,000 in wages to employees who worked during the month. k. Purchased a one-year insurance policy for $3,600 at the end of the month. 1. Received an electric utility bill for $1,800 for usage in April; the bill will be paid in May. m. Paid $500 cash dividend to each of the investors at the end of the month. Page 169 Required: 1. Set up appropriate T-accounts. All accounts begin with zero balances. 2. Record in the T-accounts the effects of each transaction for Alpine Stables in April, referencing each transaction in the accounts with the transaction letter. Show the ending balances in the T-accounts.

Answer 1

Note - As per the policy we are allowed to process only 4 question from the multiple questions asked.

1. T- Accounts -

Owners Capital $ 250,000 b a g h Cash a $ 60,000 $31,000 d $ 13,200 $ 1,240 e $ 2,400 $ 2,700 i $ 10,000$ 6,000 $ 3,600 $ $ 500 End Bal$ 40,560 End Bal j k $ 250,000 m Notes Payable $ 31,000 b $ 85,600 $ 45,040 Land End Bal $ 31,000 a $ 90,000 Animal Care Service Revenue $ 35,260 с End Bal$ 90,000 End Bal $ 35,260 a Barn $ 100,000 $ 62,000 b Supplies $ 3,180 f End Bal $ 162,000 End Bal $ 3,180 Deferred Revenue $ 2,400 e Accounts Payable $ 2,700$ 3,180 h f f End Bal $ 2,400 End Bal $ 480 Water Utilities Expense $ 1,240 Accounts Receivable $ 35,260 $ 10,000 C i End Bal$ 1,240 End Bal$ 25,260 Wages Expense $ 6,000 j Electric Utilties Expense $ 1,800 1 End Bal$ 6,000 End Bal$ 1,800 Prepaid Insurance $ 3,600 k Electric Utilties Payable $ 1,800 1 End Bal$ 3,600 End Bal $ 1,800 Dividends 500 m $ Rent Revene $ 13,200 d End Bal $ 500 End Bal $ 13,200

2. Statement of Earnings -

Alpine Stables Inc. Statement of Earnings For the month April Animal Care Service Revenue $ 35,260 Rent Revene $ 13,200 Total Revenue $ 48,460 Expenses: Water Utilities Expense $ 1,240 Electric Utilties Expense $ 1,800 Wages Expense $ 6,000$ 9,040 Net Earnings $ 39,420

3. Financial Postion -

Alpine Stables Inc. Financial Postion April Assets: Cash $ 40,560 Supplies $ 3,180 Prepaid Insurance $ 3,600 Accounts Receivable $ 25,260 Land $ 90,000 Barn $ 162,000 Total Assets $324,600 Liabilities: Accounts Payable Deferred Revenue Electric Utilties Payable Notes Payable Total Liabilities $ 480 $ 2,400 $ 1,800 $ 31,000 $ 35,680 Equity: Owners Capital Add: Net Earnings Less: Dividends $ 250,000 $ 39,420 $ (500) $288,920 Total Liabilities and Equity $324,600

4. Analysis -

Being 1st month Company has earned good profit $39,420. Company's net profit margin is 81% which is very good. Company has debt ratio of 10% which shows company is started majority from the owner's Capital. In future there will not be any dues to the outsiders like in the form of interest.

Overall company has done good performance in the 1st month.