Question

Ms. Freida has started a new Landscaping business in the name of Freida’s Ferns on March 1^st, 2020. Following transactions have taken place during the first month of operation.

1. March 1^st – Started Freida’s Ferns by bringing in $ 15,000 in cash and $ 5,000 worth of equipment.
2. March 1^st – Took an office space on rent of $ 1,000 per month and paid 3 months rent in advance.
3. March 1st – Recruited 4 members to work on landscaping and incurred $ 1,000 towards recruitments expenses
4. March 1^st – Borrowed $ 8,000 from bank to invest in new equipment.
5. Mach 3^rd – Purchased a new lawn mower for $ 5,000 by paying $ 2,000 upfront and balance is agreed to be paid in 30days.
6. March 3^rd – Purchased fuel for mowers - $ 1,200.
7. March 5^th – Received an advance of $ 200 from Mr. Henry for land scaping work.
8. March 6^th – Purchased office supplies on account - $ 600.
9. March 8^th – Paid for advertising on a home décor magazine – $1,500.
10. March 13^th – Paid $ 500 for repairing the mowers.
11. March 15^th – Performed 200 hours of land mowing work for first 2 weeks including 5 hours on Mr. Henry’s. Charged a flat rate of $ 40 per hour of work. All charges collected on same day except for 50 hours of work on Mr. Roy’s lawn.
12. March 16^th – Paid a 1^st bi-weekly salary of $ 2,500.
13. March 19^th – Paid the balance for equipment purchased on March 3^rd.
14. March 20^th – Purchased fuel for mowers - $ 1,000.
15. March 21^st – Received a utilities bill for $ 1,100 and is not paid yet.
16. March 25^th – Purchased and paid for an insurance policy (effective from April 1^st) for 1 year -$ 2,400.
17. March 31^st - Performed 180 hours of land mowing work in last 2 weeks. Invoiced $ 40 per hour. All charges are collected except for 30 hours of work on Mr. Jenson’s lawn.
18. March 31^st – Paid the 2^nd bi-weekly salaries - $ 2,500.
19. March 31^st – Charge one month rent and adjust the advance paid for rent (means increase the expense and reduce the asset)
20. March 31^st – Paid $ 50 towards interest on loan.

Required

1. Prepare journal entries for the transactions given above                    [20 marks]
2. Prepare ‘T’ Accounts (all accounts – cashA/c - 2 marks rest 1each) [20 marks]
3. Prepare a Trial Balance as at the end of March 31^st                            [5 marks]

Prepare a Income Statement for the month of March and Balance Sheet as at the end of March 31^st. (Add net income to Owners’ Equity)                    

Answer 1