Reference no: EM132642730

The trial balance of Kirk Used Auto Company, on March 31, 20X8, follows:

Account Title                          Debit                 Credit

Cash                                 $10,000

Accounts Receivable              20,000

Automobile Inventory           100,000

Accounts Payable                                       $3,000

Notes Payable                                             70,000

Kirk, owner's equity                                      57,000

Total                              $130,000               $130,000

This business is a sole proprietorship, thus the equity account used here is Kirk, Owner's Equity. In practice, it is often called Kirk, Capital.

Kirk rented operating space and equipment on a month-to month basis. During April, the business had the following summarized transactions:

a) Invested additional $20,000 cash in the business.

b) Collected $10,000 on accounts receivable.

c) Paid $2,000 on accounts payable.

d) Sold autos for $120,000 cash.

e) Cost of autos sold was $70,000

f) Replenished inventory for $60,000 cash

g) Paid rent expense in cash, $14,000

h) Paid utilities in cash, $1,000

i) Paid selling expense in cash, $30,000

j) Paid interest expense in cash, $1,000

Problem 1. Journalize transactions a to j above and post the entries to the ledger.

Problem 2. Open T-accounts for the accounts in the trial balance and the following to it: sales, cost of goods sold, rent expense, utilities expense, selling expense, and interest expense. Enter the March 31st balances in the appropriate accounts.

Problem 3. Prepare the trial balance as of April 30, 20X8.

Problem 4. Prepare income statement for April. Ignore income taxes.

Problem 5. Provide the closing entries.