Reference no: EM132641440
Question - Spicewood Stables, Inc., was established in Dripping Springs, Texas, on April 1. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new assistant controller. The following transactions for April are provided for your review.
1. Received contributions from investors and issued $350,000 of common stock on April 1.
2. Acquired a barn for $228,000. On April 2, the company paid half the amount in cash and signed a three-year note payable for the balance.
3. Provided $17,800 in animal care services for customers on April 3, all on credit.
4. Rented stables to customers who cared for their own animals; received cash of $12,000 on April 4 for rent earned this month.
5. On April 5, received $2,700 cash from a customer to board her horse in May, June, and July (record as Deferred Revenue).
6. Purchased and received hay and feed supplies on account on April 6 for $5,100.
7. Paid $1,860 on accounts payable on April 7 for previous purchases.
8. Received $1,860 from customers on April 8 on accounts receivable.
9. On April 9, prepaid a two-year insurance policy for $4,200 for coverage starting in May.
10. On April 28, paid $1,350 in cash for water and utilities used this month.
11. Paid $16,000 in wages on April 29 for work done this month.
12. Received an electric utility bill on April 30 for $2,220 for usage in April; the bill will be paid next month.
Required -
1. Prepare the journal entry for each of the above transactions.
2. Post the transaction activity from requirement 1 to the T-Accounts below. All accounts begin with zero balances because this is the first month of operations.
3. Prepare an unadjusted trial balance as of April 30.
4-a. Refer to the revenues and expenses shown on the unadjusted trial balance. Based on this information, calculate preliminary net income and net profit margin.
4-b. Determine whether the net profit margin is better or worse than the 30.0 percent earned by a close competitor.