(Answered): During its first month of operation, the Bethany's Bicycle Corporation, which specializes in bicycle repairs, com…

pleted the following transactions.
March Transactions
Date Transaction DescriptionDuring its first month of operation, the Bethany’s Bicycle Corporation, which specializes in bicycle repairs, com
March 1 Began business by making a deposit in a company bank account of $20,000, in exchange for 2,000 shares of $10 par value common stock.
March 1 Paid the premium on a 1-year insurance policy, $2,400.
March 1 Paid the current month’s store rent expense, $1,900.
March 3 Purchased repair equipment from Andrew Company, $5,800. Paid $1,000 down and the balance was placed on account. Payments will be $400.00 per month for 12 months. The first payment is due 4/1. Note: Use Accounts Payable for the Balance Due.
March 8 Purchased repair supplies from Jackson Company on credit, $650.
March 10 Paid telephone bill for March, $340.
March 11 Cash bicycle repair revenue for the first third of March, $1,650.
March 18 Made payment to Jackson Company, $400.
March 20 Cash bicycle repair revenue for the second third of March, $2,450.
March 31 Cash bicycle repair revenue for the last third of March, $1,250.
March 31 Paid the current month’s electice bill, $250.
March 31 Declared and paid cash dividend of $1,000.

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Use the following account descriptions for journal entries.
Chart of Accounts
Account Type Account Number Account Title Normal Balance
Assets
111 Cash Debit
117 Prepaid Insurance Debit
119 Repair Supplies Debit
144 Repair Equipment Debit
145 Accum Dep -Repair Equipment Credit
Liabilities
212 Accounts Payable Credit
213 Income Tax Payable Credit
Stockholders Equity
311 Common Stock Credit
312 Retained Earnings Credit
313 Dividends Debit
Revenue
411 Bicycle Repair Revenue Credit
Expenses
511 Store Rent Expense Debit
512 Telephone Expense Debit
513 Insurance Expense Debit
514 Repair Supplies Expense Debit
515 Dep Expense – Repair Equipment Debit
516 Income Tax Expense Debit
517 Electric Expense Debit

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REQUIREMENT #3: Prepare a trial balance for March in the space below.
Bethany’s Bicycle Corporation
Trial Balance
March 31
Account Account Balance
Number Title Debit Credit

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Requirement #4: Prepare adjusting entries using the following information in the General Journal below. Show your calculations!
a) One month’s insurance has expired.
b) The remaining inventory of repair supplies is $200.
c) The estimated depreciation on repair equipment is $120.
d) The estimated income taxes are $65.
Requirement #5: Post the adjusting entries on March 31 below to the General Ledger T-accounts and compute adjusted balances. Just add to the balances that are already listed.
General Journal
Date Account Number from Chart of Accounts tab Account Title from Chart of Accounts tab Debit Credit

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Expert Answer

Journal entries in books of accounts of Bethany Bicycle Corporation are as follows :

Date Particulars Debit ( In $ ) Credit ( In $ )

March 1 Cash 20,000 To Common Stock [ 2,000 * 10 ] 20,000

March 1 Prepaid Insurance 2,400 To Cash 2,400

March 1 Store rent expense 1,900 To Cash 1,900

March 3 Repair Equipment 5,800 To Cash 1,000 To Accounts payable [ 400 * 12 ] 4,800

March 8 Repair Supplies 650 To Accounts Payable 650

March 10 Telephone Expenses 340 To Cash 340

March 11 Cash 1,650 To Bicycle repair revenue 1,650

March 18 Accounts payable 400 To Cash 400

March 20 Cash 2,450 To Bicycle repair revenue 2,450

March 31 Cash 1,250 To Bicycle repair revenue 1,250

March 31 Electric expense 250 To Cash 250

March 31 Retained Earnings 1,000 To Dividends 1,000

March 31 Dividends 1,000 To Cash 1,000

Bethany Bicycle Corporation

Trial Balance before adjusting entries

As on 31 March

Particulars Debit ( In $ ) Credit ( In $ )

Cash 18,060

Common Stock 20,000

Prepaid Insurance 2,400

Store rent expense 1,900

Repair Equipment 5,800

Accounts Payable 5,050

Repair Supplies 650

Telephone expenses 340

Bicycle repair revenue 5,350

Electric expense 250

Retained earnings 1,000

Total 30,400 30,400

Adjusting journal entries in books of accounts of Bethany Bicycle Corporation are as follows :

Particulars Debit ( In $ ) Credit ( In $ )

(a) Insurance expense 200 To Prepaid Insurance 200 [ [ 2,400 / 12 ] * 1 ]

(b) Repair Supplies expense 450 To Repair Supplies 450 [ 650 – 200 ]

(c) Depreciation expense ( Repair Equipment ) 120 To Accumulated Depreciation ( Repair Equipment ) 120

(d) Income tax expense 65 To Income tax payable 65

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