Transaction Analysis and Financial Statements

Transaction Analysis and Financial Statements Just Rolling Along Inc. was organized on May 1 by two college students who recognized an 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: May 1: Received contribution of $9,000 from each of the two principal owners of the new business in exchange for shares of stock. May 1: Purchased ten bicycles for $280 each on an open account. The company has 30 days to pay for the bicycles. May 5: Registered as a vendor with the city and paid the $30 monthly fee. May 9: Purchased 30 pairs of in-line skates at $115 per pair, 30 helmets at $35 each, and 30 sets of protective gear (knee and elbow pads and wrist guards) at $30 per set for cash. May 10: Purchased $105 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. May 15: Paid $135 bill from local radio station for advertising for the last two weeks of May. May 17: Customers rented in-line skates and bicycles for cash of $2,070. May 24: Billed the local park district $1,400 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. May 29: Received 50% of the amount billed to the park district. May 30: Customers rented in-line skates and bicycles for cash of $2,800. May 30: Paid wages of $170 to a friend who helped over the weekend. May 31: Paid the balance due on the bicycles. Required: 1. Complete the table below to summarize the preceding transactions as they affect the accounting equation. Enter transactions in the same order as presented above. If an account is unaffected by a transaction, enter "0". Use the minus sign to indicate decreases. JUST ROLLING ALONG INC. TRANSACTIONS FOR THE MONTH OF MAY Assets = Liabilities + Stockholders' Equity Date Cash Accounts Receivable Equipment Supplies Accounts Payable Capital Stock Retained Earnings Prepare an income statement for the month of May. Just Rolling Along Inc. Income Statement For the Month of May Revenues: Rental fees $ Lessons Total Revenues $ Expenses: Registration fee $ Advertising Salaries and wages expense Total Expenses Net income $ 3. Prepare a classified balance sheet at May 31. Just Rolling Along Inc. Balance Sheet May 31 Assets Current assets: Cash $ Accounts receivable Supplies Total current assets $ Property, plant, and equipment: Equipment Total assets $ Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ Capital stock $ Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $