Goodwin Bike’s began operations in April 2022 and had the following transactions. Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock. Paid $84,000 cash for 6 months’ rent. Purchased $300,000 of bicycle inventory on credit. Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000. Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000. Paid $90,000 cash for an advertising campaign in connection with Tour de France. The campaign will run over the next two of months. Paid $24,000 in cash for supplies to have on hand for bike repairs. Collected $60,000 from accounts receivable. Paid for bikes purchased on credit in Transaction c Paid cash dividends of $3,000. Received $6,000 cash from a customer as a deposit for a custom bicycle to be built. Required: Record each transaction a) through k) in the financial statements’ effects template – A. At the end of April, the following information is available: At the end of April, $19,200 supplies remained on hand. Rent paid in Transaction b is for a lease that began on April 1. At the end of April, one-third of the advertising campaign in Transaction f was completed. The truck is expected to be used for five years (60 months). The custom bicycle in Transaction k was built and delivered to the customer on April 30. Required: Record any accounting adjustments required for items i. through v., in the financial statement effects template – B.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Goodwin Bike’s began operations in April 2022 and had the following transactions.

 

  1. Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock.
  2. Paid $84,000 cash for 6 months’ rent.
  3. Purchased $300,000 of bicycle inventory on credit.
  4. Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000.
  5. Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000.
  6. Paid $90,000 cash for an advertising campaign in connection with Tour de France. The campaign will run over the next two of months.
  7. Paid $24,000 in cash for supplies to have on hand for bike repairs.
  8. Collected $60,000 from accounts receivable.
  9. Paid for bikes purchased on credit in Transaction c
  10. Paid cash dividends of $3,000.
  11. Received $6,000 cash from a customer as a deposit for a custom bicycle to be built.

 

Required:  Record each transaction a) through k) in the financial statements’ effects template – A.

 

At the end of April, the following information is available:

 

  1. At the end of April, $19,200 supplies remained on hand.
  2. Rent paid in Transaction b is for a lease that began on April 1.
  3. At the end of April, one-third of the advertising campaign in Transaction f was completed.
  4. The truck is expected to be used for five years (60 months).
  5. The custom bicycle in Transaction k was built and delivered to the customer on April 30.

 

Required:  Record any accounting adjustments required for items i. through v., in the financial statement effects template – B.   

 

 

 

 

Problem #3A

 

Balance Sheet

Income Statement

 

 

Transaction

Cash Asset

+

Noncash Assets

=

Liabil-

ities

+

Contrib. Capital

+

Earned

Capital

Rev-

enues

Expen-ses

=

Net

Income

a)

 

 

 

 

=

 

 

 

 

 

 

 

 

=

 

 

b)

 

 

 

=

 

 

 

 

 

 

 

=

 

 

c)

 

 

 

=

 

 

 

 

 

 

 

 

=

 

 

d)

 

 

 

 

=

 

 

 

 

 

 

 

 

 

 

=

 

 

e)

 

 

 

 

=

 

 

 

 

 

 

 

 

=

 

 

f)

 

 

 

=

 

 

 

 

 

 

 

=

 

 

g)

 

 

 

=

 

 

 

 

 

 

-

 

=

 

 

h)

 

 

 

=

 

 

 

 

 

 

-

 

=

 

 

i)

 

 

 

=

 

 

 

 

 

 

-

 

=

 

 

j)

 

 

 

=

 

 

 

 

 

 

-

 

=

 

 

k)

 

 

 

=

 

 

 

 

 

 

-

 

=

 

 

                                     

 

 

 

 

 

 

 

 

 

 

 

 

Problem 3B

 

Balance Sheet

Income Statement

 

 

Transaction

Cash Asset

+

Noncash Assets

=

Liabil-

ities

+

Contrib. Capital

+

Earned

Capital

Rev-

enues

Expen-ses

=

Net

Income

i

 

 

 

=

 

 

 

 

 

 

 

 

=

 

 

ii.

 

 

 

 

=

 

 

 

 

 

 

 

 

=

 

 

iii.

 

 

 

 

=

 

 

 

 

 

 

 

 

 

=

 

 

iv.

 

 

 

 

=

 

 

 

 

 

 

 

 

=

 

 

v.

 

 

 

=

 

 

 

 

 

 

 

 

=

 

 

                                     

 

 

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