Question

(A) On December 1, Bob waldo started an auto repair shop, Waldo’s Quality automotive. The following...

(A)

On December 1, Bob waldo started an auto repair shop, Waldo’s Quality automotive. The following transactions occurred during December:

12/01 Waldo contributed $70,000.00 cash to the business in exchange for common stock.

12/01 Paid 1,750.00 for a five -month insurance policy, starting December 1st.

12/01 Purchased $12,000.00 of equipment, paying cash

12/09 Paid $20,000.00 cash to purchase land

12/10 Purchased office supplies on account for $2,800.00

12/19 Borrowed $15,000.00 from the bank. Waldo signed a note payable. The note is due in 5 years.

12/22 Paid 1,300.00 for advertising expenses

12/26 Paid 900.00 on account

12/28 The business received a $280.00 bill for utilities. The bill is to be paid in January.

12/31 Revenues earned during the month included $16,000.00 in cash, and $3,600.00 on account.

12/31 The business received $1440.00 for auto screening services to be performed next month.

12/31 Paid cash dividends of $5,500.00 to stockholders.

12-31 Paid employees’ salaries $3,800.00, and Building rent #1,200.00, record as a compound entry.

Adjustment data:

  1. Office supplies used during the month, $1,800.00
  2. Depreciation for the month, $200.00
  3. One month of insurance has expired
  4. Accrued interest expense, $75.00

Use the information furnished above to:

Write journal entries (10 points)

Prepare an Income statement (5 points)

Prepare a statement of retained earnings (5 points)

Prepare the balance sheet (10 points)

Prepare closing entries (10 points)

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