Joan Hartman owned and managed a company in the retail sporting goods business. The following trial balance existed on February 1, 2000, the beginning of the fiscal year: Hartman Sporting goods Trail Balance February 1, 2001 Cash $5600 Accounts Receivable $30,000 Merchandise Inventory $100,000 Prepaid Rent $6,000 Store Equipment $14,400 Accounts Payable $40,000 Note Payable $20,000 Accrued Interest Payable $750 OwnerÃ¢â‚¬â„¢s Equity $95,250 $156,000 $156,000 Summarize transactions for February were as follows: 1. Sales for cash were $50,200 2. Sales on accounts were $40,000 3. Cost of goods sold was $50,000 4. Collections on account were $34,000 5. Acquisitions of inventory on account was $60,000 6. Payments to creditors was $38,000 7. Advertising in newspapers, paid in cash was $4,000 8. Wages paid in cash was $11,000 9. Miscellaneous expenses paid in cash was $ 10,000 10. Wages earned by the employees, but unpaid was $2,000 11. Adjustment for prepaid rent. Rent was paid quarterly in advance, $9,000 per quarter. Payments were due January 1, April1, July1 and October 1. 12. The store equipment originally cost $16,800 on February 1,2001. It is being depreciated on a straight-line basis over 7 years with zero terminal salvage value. 13. The note payable is based on a one-year loan of $20,000. The note is dated November 1,2001. Principle plus 15% interest is payable at maturity. 14. Adjustments for the accrued taxes. The applicable income tax rate is 30%. Required 1. Enter the February 1, balances in the general ledger 2. Prepare journal entries 3. Post the financial effects of each transaction to the ledger 4. Prepare the trial balance 5. Prepare a multi-step income statement for the month of February 6. Prepare a classified Balance Sheet.
Click here for the SOLUTION