Question

April

Date

1 Acquired $55000 to establish the company, $33,000 from an initial investment through the issue of common stock to themselves and $22,000 from a bank loan by signing a note. The entire note is due in five years and has a 7 per cent annual interest rate. Interest is payable in cash on March 31 of each year.

1 Paid $42000 (represents 3 months) in advance rent for a one-year lease on kitchen space.

1 Paid $35000 to purchase a refrigerator. The refrigerator is expected to have a useful life of five years and a salvage value of $5000 at the end of 5 years.

6 Purchased supplies for $500 for cash.

9 Received $700cash as an advance payment from a client to be served in May.

10 Recorded sales to customers. Cash receipts were $700, and invoices for sales on account were $1500.

15 Paid $1460 cash for employees semi-monthly salaries.

16 Collected $400 from accounts receivable.

23 Received monthly utility bills amounting to $340. The bills are to be paid in May.

25 Paid advertising expense for advertisements run during April, $260.

30 Recorded services to customers. Cash receipts were $1300 and invoices for services on account were $1800.

30 Paid $1460 cash for employees salaries.

Additional information provided by the Supreme Caterers for the end of April

1 Counted the supplies inventory on hand, $55.

Required:

1 Open general ledger accounts, using the T-accounts provided, and post the general journal entries to the ledger.

2 Record and post the appropriate adjusting entries.

3 Prepare a statement of retained earnings.

Answer 1