## (solution) Jim has asked you to prepare financial statements for his first

Jim has asked you to prepare financial statements for his first month of operation.  The following information relates to the month of May, 2014. (Round all calculations to the nearest whole dollar)

Ace Lawn Care Module 2 Mini Practice Problem

Jim has asked you to prepare financial statements for his first month of operation. The

following information relates to the month of May, 2014. (Round all calculations to the

nearest whole dollar)

1. On May 2, Jim signed a 1 year, 6% note for \$3,500 associated with the purchase of a

used truck for the business. The interest will be due with the principle of the note.

2. On May 2, Jim purchased a used truck for \$7,000 to use for the lawn care business.

He estimates a trade-in value of \$500 at the end of the estimated five-year life of the

truck.

3. On May 5, Jim purchased a lawn mower for \$300 and an aerator for \$500. He

estimates \$0 salvage value for both pieces of equipment and an estimated two-year

life for both.

4. On May 6, Jim writes a \$600 check for a six month insurance policy that expires

October 31, 2014. Instructions:

1. Using the chart of accounts provided, and the Excel template provided with this

balance and complete the worksheet.

2. Prepare the Income Statement, Statement of Owner?s Capital and Balance Sheet for

Ace Lawn Care for May, 2014

3. Prepare journal entries, in good form, to record the May adjusting entries.

entries.

4. Post the journal entries to general ledger accounts. There are already transactions in

the ledger for the month, you are adding to those transactions.

5. Prepare and post the closing entries for May, 2014. Start with Page 4 of the General

Journal for the closing entries

6. Prepare a post-closing trial balance as of May 31, 2014, for Ace Lawn Care. Classification

ASSETS LIABILITIES

OWNER?S

EQUITY

REVENUES

EXPENSES Ace Lawn Care

Chart of Accounts

Account Number Account Name

101

Cash

110

Accounts Receivable

120

Supplies

130

Prepaid Insurance

150

Equipment

155

Accumulated Depreciation ? Equipment

201

Accounts Payable

220

Notes Payable

225

Interest Payable

301

Owner?s Capital

305

310

401

620

630

640

650

660

670

680 Owner?s Drawings

Income Summary

Lawn Service Revenue

Supplies Expense

Fuel Expense

Repair and Maintenance Expense

Insurance Expense

Depreciation Expense

Interest Expense

Solution details:

STATUS

QUALITY

Approved

Sep 13, 2020

EXPERT

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