1.Preparing Adjusting Entries Financial Statements and Closing EntriesSeaside Surf Shop began operations on July 1 2014 with an initial investment of $50 000. During the initial 3 months of operations the following cash transactions were recorded in the firm’s checking account.Cash receiptsCash paymentsInitial investment by owner…….$ 50 000Rent …………………….$ 24 000Collected from customers …….81 000Fixtures and equipment ………25 000Borrowed from bank 7/1/2014 ….10 000Merchandise inventory ……….62 000Total cash receipts………….$141 000Salaries ………………….6 000Other expenses…………….13 000Total cash payments…………$130 000Additional information1. Most sales were for cash however the store accepted a limited amount of credit sales; at September 30 2014 customers owed the store $9 000.2. Rent was paid on July 1 for six months.3. Salaries of $3 000 per month are paid on the 1st of each month for salaries earned in the month prior.4. Inventories are purchased for cash; at September 30 2014 inventory worth $21 000 was available.5. Fixtures and equipment were expected to last ?ve years with zero salvage value.6. The bank charges 12% annual interest (1% per month) on its bank loan.RequiredUsing the financial statement effects template and journal entry form set up T-accounts and post adjusting entries to them at September 30 2014.
