Answer:
Andy's Autobody Shop
1. Journal Entries:
Debit Cash Account $123,800
Credit Long-term Note Payable $123,800
To record the receipt of bank loan.
Debit Accounts Receivable $2,300
Credit Service Revenue $2,300
To record repair services completed.
Debit Rent Expense $740
Credit Cash Account $740
To record rent expense for the month.
Debit Cash Account $360
Credit Accounts Receivable $360
To record cash received from a customer.
Debit Advertising Expense $350
Credit Advertising Payable $350
To record advertising expense for the month.
2. Income Statement:
Service Revenue $2,300
Expenses:
Rent $740
Advertising 350 1,090
Net Income 1,210
3. Statement of Retained Earnings:
Net Income $1,210
Retained Earnings, 33,900
Dividends 0
Retained Earnings, $35,110
4. Classified Balance Sheet:
Assets:
Cash $133,220
Accounts Receivable 3,240
Total current assets $136,460
Equipment, 44,900
Total assets $181,360
Accounts Payable, $2,100
Advertising Payable 350
Total current liabilities $2,450
Long-term Note 123,800
Total Liabilities $126,250
Common Stock, 20,000
Retained Earnings, 35,110
Total Liabilities + Equity $181,360
Explanation:
a) Data:
Andy's Autobody Shop
Trial balance, September 1:
Accounts Debit Credit
Cash, $9,800
Accounts Receivable, $1,300
Equipment, $44,900
Accounts Payable, $2,100
Common Stock, $20,000
Retained Earnings, $33,900
Total $56,000 $56,000
b) Cash Account
Description Debit Credit
Balance $9,800
Long-term Note 123,800
Rent $740
Accounts Receivable 360
Balance 133,220
c) Accounts Receivable
Description Debit Credit
Balance $1,300
Service Revenue 2,300
Cash $360
Balance 3,240
