On May 5, 2013, Gina Enna beortiz started a carpet cleaning business called Ennabeortiz Family Carpet Cleaning. She completed the following transactions during the month:
- Gina invested $16,500 cash and a small truck with a value of $8,000 to start her business.
- Prepaid $3,500 cash for 12 months’ rent on a small office.
- Purchased office supplies for cash, $575.
- Purchased equipment on account, $4,000.
- Received cash for services performed, $3,350.
- Performed services on credit, $2,350.
- Purchased truck supplies on account, $125.
- Received $15,350 cash in advance of providing cleaning services to a customer.
- Paid $2,500 cash for the premium on a 6-month insurance policy.
- Paid salary of employee, $1,550.
- Purchased $2,500 of additional equipment by paying $400 cash and signing a long-term note payable for $2,100.
- Paid for repairs to truck, $225.
- Received $1,350 for the services performed in transaction f.
- Paid utilities, $315.
- Completed cleaning services and immediately collected $10,500.
- Paid creditor $675 on the purchase in transaction d.
- Provided $2,000 of cleaning services from transaction h.
- Gina withdrew cash for personal use, $2,775.
- Paid $5,000 cash for advertisements on the local television station during May.
Required:
1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).
2. Open a set of T accounts with the following titles: Cash (101), Accounts Receivable (106); Office Supplies (124); Truck Supplies(128); Equipment (131); Prepaid Rent (140); Prepaid Insurance (150); Truck (163); Accounts Payable (201); Notes Payable (202); Unearned Cleaning Revenue (203); Gina Ennabeortiz, Capital (301); Gina Ennabeortiz, Drawing (302); Cleaning Revenue (403); Salaries Expense (620); Truck Expense (630); Utilities Expense (640) and Advertising Expense (650). Post journal entries from Part 1 to the T accounts and calculate the account balance for each account.
3. Prepare a trial balance as of the end of this month’s operations.
4. Using the trial balance created above, prepare an income statement, statement of owner’s equity and a balance sheet for the month ended May 31st.
