Reference no: EM132764750

Question - On August 1, 2020, Mark Diamond began a tour company in the Northwest Territories called Millennium Arctic Tours. The following occurred during the first month of operations:

Aug. 1 Purchased office furniture on account; $4,600.

Aug. 1 Mark Diamond invested $6,200 cash into his new business.

Aug. 2 Collected $2,700 in advance for a three-week guided caribou watching tour beginning later in August.

Aug. 3 Paid $4,800 for six months' rent for office space effective August 1.

Aug. 4 Received $2,200 for a three-day northern lights viewing tour just completed.

Aug. 7 Paid $1,100 for hotel expenses regarding the August 4 tour.

Aug. 15 Mark withdrew cash of $500 for personal use.

Aug. 22 Met with a Japanese tour guide to discuss a $110,000 tour contract.

Aug. 31 Paid wages of $1,220.

Assume Mark Diamond uses the straight-line method to depreciate the assets.

Required -

1. Prepare General Journal entries to record the August transactions.

2. Using the following information, prepare the adjusting entries on August 31. The office furniture has an estimated life of three years and a $208 residual value. Use the straight-line method to depreciate the furniture.

i. Two-thirds of the August 2 advance has been earned.

ii. One month of the Prepaid Rent has been used.

iii. The August telephone bill was not received as of August 31 but amounted to $240.

3. Post the entries to the accounts; calculate the ending balance in each account.

4. Prepare n adjusted trial balance.

5-a. Prepare income statement for month ended August 31, 2020.

5-b. Prepare statement of changes in equity for month ended August 31, 2020.

5-c. Prepare balance sheet for month ended August 31, 2020. (Be sure to list the assets and liabilities in order of their liquidity.)