Running coaches and friends Dash, Sprint, and Bolt just bought a coaching company and gym, called Run Forever, from their friend, Speed. They’ve been the owners for the last quarter, but have no idea how to keep track of their business transactions and activities. They’d like to buy a new treadmill for their gym, but don’t know if they have the cash to do it. They did jot down all the money they spent and all the money they received for the last quarter: Paid Speed $200,000 to purchase the business Each owner put $10,000 into the company bank account as Contributed Capital on April 1, 2021 Paid rent for April, May, June, on the first of each month; and prepaid for July on June 30, 2021, at $3,000 per month Collected $17,000 in cash for coaching services from clients who pay at the end of each session Charged $11,000 on client credit cards for coaching services from clients who pay at the end of each session; still awaiting payout from credit card companies Collected $5000 from credit card companies for coaching services that were previously paid by clients on credit card at the end of each session Collected $6,000 in cash from clients who signed up for a pack of 10 coaching sessions. Of these clients, half of the sessions remain to be used, even though the clients have already paid Run Forever the cash Purchased a new spin bike for the gym for $1000 on May 1, 2021. The bike has a useful life of 3 years Used supplies throughout the quarter (paper towels, sanitizer, disposal masks). Did not keep track of the supplies used, but you went and checked their inventory and calculated that about $1,800 of supplies is still left Did not pay or record salaries for themselves, totaling $60,000 for the quarter Paid salaries for two coaches on June 30, 2021, totaling $10,000 Insurance on the gym was prepaid by the previous owner for the entire 12 months starting January 1, 2021. Three months passed this quarter under the new owners. Paid off a balance of $7,000 that had been owed on previously purchased weights and benches with a local supplier, leaving the company with no outstanding debt. They also gave us financial statements created by the previous owner for the quarter ended March 31, 2021, just before they bought the company on April 1, 2021. Record the list of transactions as journal entries and prepare a new set of financial statements for the current period that include the additional entries from the client. Complete the following tasks in Excel: Prepare journal entries to record the effect of the transactions and activities listed in the email. Indicate whether each entry is a regular journal entry or an adjusting journal entry. If it is an adjusting journal entry, what makes it so? Revise the financial statements after the journal entries are posted. Be sure that all financial information is consistent across all statements.

Running coaches and friends Dash, Sprint, and Bolt just bought a coaching company and gym, called Run Forever, from their friend, Speed. They’ve been the owners for the last quarter, but have no idea how to keep track of their business transactions and activities. They’d like to buy a new treadmill for their gym, but don’t know if they have the cash to do it. They did jot down all the money they spent and all the money they received for the last quarter: Paid Speed $200,000 to purchase the business Each owner put $10,000 into the company bank account as Contributed Capital on April 1, 2021 Paid rent for April, May, June, on the first of each month; and prepaid for July on June 30, 2021, at $3,000 per month Collected $17,000 in cash for coaching services from clients who pay at the end of each session Charged $11,000 on client credit cards for coaching services from clients who pay at the end of each session; still awaiting payout from credit card companies Collected $5000 from credit card companies for coaching services that were previously paid by clients on credit card at the end of each session Collected $6,000 in cash from clients who signed up for a pack of 10 coaching sessions. Of these clients, half of the sessions remain to be used, even though the clients have already paid Run Forever the cash Purchased a new spin bike for the gym for $1000 on May 1, 2021. The bike has a useful life of 3 years Used supplies throughout the quarter (paper towels, sanitizer, disposal masks). Did not keep track of the supplies used, but you went and checked their inventory and calculated that about $1,800 of supplies is still left Did not pay or record salaries for themselves, totaling $60,000 for the quarter Paid salaries for two coaches on June 30, 2021, totaling $10,000 Insurance on the gym was prepaid by the previous owner for the entire 12 months starting January 1, 2021. Three months passed this quarter under the new owners. Paid off a balance of $7,000 that had been owed on previously purchased weights and benches with a local supplier, leaving the company with no outstanding debt. They also gave us financial statements created by the previous owner for the quarter ended March 31, 2021, just before they bought the company on April 1, 2021. Record the list of transactions as journal entries and prepare a new set of financial statements for the current period that include the additional entries from the client. Complete the following tasks in Excel: Prepare journal entries to record the effect of the transactions and activities listed in the email. Indicate whether each entry is a regular journal entry or an adjusting journal entry. If it is an adjusting journal entry, what makes it so? Revise the financial statements after the journal entries are posted. Be sure that all financial information is consistent across all statements.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Paid Speed $200,000 to purchase the business
Each owner put $10,000 into the company bank account as Contributed Capital on April 1, 2021
Paid rent for April, May, June, on the first of each month; and prepaid for July on June 30, 2021, at $3,000 per month
Collected $17,000 in cash for coaching services from clients who pay at the end of each session
Charged $11,000 on client credit cards for coaching services from clients who pay at the end of each session; still awaiting payout from credit card companies
Collected $5000 from credit card companies for coaching services that were previously paid by clients on credit card at the end of each session
Collected $6,000 in cash from clients who signed up for a pack of 10 coaching sessions. Of these clients, half of the sessions remain to be used, even though the clients have already paid Run Forever the cash
Purchased a new spin bike for the gym for $1000 on May 1, 2021. The bike has a useful life of 3 years
Used supplies throughout the quarter (paper towels, sanitizer, disposal masks). Did not keep track of the supplies used, but you went and checked their inventory and calculated that about $1,800 of supplies is still left
Did not pay or record salaries for themselves, totaling $60,000 for the quarter
Paid salaries for two coaches on June 30, 2021, totaling $10,000
Insurance on the gym was prepaid by the previous owner for the entire 12 months starting January 1, 2021. Three months passed this quarter under the new owners.
Paid off a balance of $7,000 that had been owed on previously purchased weights and benches with a local supplier, leaving the company with no outstanding debt.

They also gave us financial statements created by the previous owner for the quarter ended March 31, 2021, just before they bought the company on April 1, 2021.

Record the list of transactions as journal entries and prepare a new set of financial statements for the current period that include the additional entries from the client. Complete the following tasks in Excel:

Prepare journal entries to record the effect of the transactions and activities listed in the email. Indicate whether each entry is a regular journal entry or an adjusting journal entry. If it is an adjusting journal entry, what makes it so?
Revise the financial statements after the journal entries are posted. Be sure that all financial information is consistent across all statements.

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