Problem 3-2A  Transaction Analysis and Financial Statements

Beachway Enterprises was organized on June 1 by two college students who recognized an opportunity to make money while spending their days at a beach in Florida. The two entrepre- neurs plan to rent beach umbrellas. The following transactions occurred during the first month of operations:

June 1:         Received contributions of $2,000 from each of the two principal owners of the new business in exchange for shares of stock.

June 1:         Purchased 25 beach umbrellas for $250 each on account. The company has 30 days to pay for the beach umbrellas.

June 5:         Registered as a vendor with the city and paid the $35 monthly fee.

June 10:       Purchased $50 in miscellaneous supplies on an open account. The company has 30 days to pay for the supplies.

June 15:       Paid $70 bill from a local radio station for advertising for the last two weeks of June. June 17:       Customers rented beach umbrellas for cash of $1,000.

June 24:       Billed a local hotel $2,000 for beach umbrellas provided for use during a convention being held at the hotel. The hotel is to pay one-half of the bill in five days and the rest within 30 days.

June 29:       Received 50% of the amount billed to the hotel.

June 30:       Customers rented beach umbrellas for cash of $1,500.

June 30:       Paid wages of $90 to a friend who helped over the weekend. June 30:  Paid the balance due on the beach umbrellas.

Required

1.        Prepare a table to summarize the preceding transactions as they affect the accounting equa- tion. Use the format in Exhibit 3-1. Identify each transaction with a date.

2.        Prepare an income statement for the month of June.

3.        Prepare a classified balance sheet at June 30.

 

 

LO1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LO3