Beachway Enterprises was organized on June 1 by two college students who recognized an…
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 entrepreneurs 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 equation. 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.