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3. Goodwin Bikes 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 above.
- 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:
i. At the end of April, $19,200 supplies remained on hand.
ii. Rent paid in Transaction b is for a lease that began on April 1.
iii. At the end of April, one-third of the advertising campaign in Transaction f was completed.
iv. The truck is expected to be used for five years (60 months).
v. 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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