Reference no: EM132493300

Point 1: Evan's Auto Parts (EAP) was established to distribute auto parts to retailers and auto shops. The company began business on November 1, 2017. The following transactions took place during the year ended December 31, 2018: Beginning Account Balances as of January 1, 2018 are as follows: Cash $65,000 Accounts Receivable $10,000 Inventory $7,000 Accounts Payable $10,500 Retained Earnings $71,500 (2) January 2 Evan hired two of his friends, Eric and Josh, to work for him and to help get started. He will pay his two employees $4,500 each on the first day of each quarter for the work performed in the prior quarter. The first payment will be made on April 1, 2018 for the work performed from January - March 2018. (3) January 31 Evan rented a building for $5,500 per month on a seven year rental contract. Rent is due on the 1st of every month beginning on February 1 (4) January 31 EAP obtained a $60,000 cash loan from Capital Bank. The note has a 6% annual interest rate and requires monthly interest only payments (0.5% per month) on the first day of every month beginning on March 1, 2018. The loan is due to be paid in full in two years.

Question 1. Prepare the journal entries for each transaction shown. For transactions such as depreciation, amortization of prepaid expenses, etc, they can be done once at the end of the year instead of monthly (it is up to your preference)