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

(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
assignment, record the adjustments in the Worksheet, calculate the adjusted trial
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.
Explanations are optional. Start with Page 3 of the General Journal for the adjusting
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
Advertising Expense
Insurance Expense
Depreciation Expense
Interest Expense