Reference no: EM132493832

The Tennis Shop, owned by Alex Mikhale, sells tennis equipment. The shop has as August 31st fiscal year end and uses a perpetual inventory system. On August 1st, 2019, the company had the following balances in its general ledger:

Cash 17,840                                                      A.Mikhael, Capital 54,650

Accounts Receivable 2,975                                 A.Mikhael, Drawings 41,000

Inventory 112,700                                             Sales 762,300

Supplies 2,660                                                 Sales Ret/Allow 11,420

Prepaid Insurance 4,140                                    Sales Discounts 3,805

Equipment 53,800                                               Cost of Goods Sold 517,680

Accumulated Amortization Salaries Expense 92,900     - Equiment 13,450

Accounts Payable 18,625                                    Rent Expense 17,050

Unearned Revenue 4,820                                     Advertising Expense 9,625

Notes Payable 36,000                                           Interest Expense 2,250

During August, the last month of the fiscal year, the company had the following transactions:

Aug. 1 Paid $1,550 for August's rent

2 Paid $4,500 owing on account

4 Sold merchandise costing $8,500 for $12,250 cash

5 Purchased merchandise on account from Orange Line Co., FOB shipping point, for $24,500

5 The correct company paid freight charges of $500 from Aug 5th transaction

8 Purchased supplies on account for $345

9 Refunded a customer $425 cash for returned merchandise. The merchandise had cost $290 and was returned to inventory.

10 Sold merchandise on account to Spider Company for $16,750, terms 2/10, n/30, FOB shipping point. The merchandise had a cost of $11,340

11 Paid Orange Line Co. For half of the merchandise purchased on August 5th

12 Spider Company returned $750 of the merchandise it pruchased. The merchandise had a cost of $510 and was returned to inventory.

15 Paid salaries, $4,200

17 A. Mikhael took out $3,800 cash for personal use

19 Spider Company paid the amount owing

21 Purchased $9,900 of merchandise from Rainbow Option Co. On account, terms 2/10, n/30, FOB destination

23 Returned $800 of the merchandise to Rainbow Option Co

24 Received $525 cash in advance from customers for merchandise to be delivered in September

26 Purchased merchandise for $4,500 cash

29 Paid $1,200 for advertising

30 Paid Rainbow Option Co, the amount owing

31 Collected $775 from past accounts receivable

Instructions:

Question a) Prepare an Income Statement, Statement of Owner's Equity, and Classified Balance Sheet (Note: account balances in the T-accounts will change after step (e))

Question b) Record and post closing entries

Question c) Prepare a post-closing trial balance on August 31st