Question

Statements * AA Objective 2, 3, 4, 5, 6, 7 Sweetwater Temporary Clerical Help Service opened for business in June 2018, From the opening until the end oSAtater engaged in the activities described below, So that a realistic trial balance can be prepared, the nta described below are aggregations of many individual events. a. Issued 10,000 common shares for $4.50 per share b. Purchased office equipment from Furniture Max Inc. for $18,710 cash c. Received $112,880 from clients for services provided d. Paid wages of $87,300 e. Borrowed $20,000 from the Royal Bank on a three-year note payable f. Paid office rent of $10,200 g. Purchased office supplies on credit for $2,120 from Office Supply Ltd. h. Paid $1,200 toward the payable established in transaction g i. Paid utility charges incurred during the year of $3,250 Required: 1. Analyze the events for their effect on the basic accounting equation. 2. Prepare journal entries. (Note: Ignore the date because these events are aggregations of individual events.) 3. Post the journal entries to T-accounts. wer+ eck Figure: Ending Cash balance = $57,220 - Prepare a trial balance at December 31, 2018.

Answer 1

Identify effects on Accounting equation as follows:

Trn	Assets	=	Liabilities	+	Stockholders' Equity
a	Increase				Increase
b	Increase
	Decrease
c	Increase				Increase
d	Decrease				Decrease
e	Increase		Increase
f	Decrease				Decrease
g	Increase		Increase
h	Decrease		Decrease
i	Decrease				Decrease

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Prepare journal entries as follows:

Prepare journal entries as follows: Account Titles and Explanation Credit Trn. Debit Cash Common stock (10,000 × $4.50 per share) (To record issue of common stock in cash) $45,000 $45,000 Office Equipment $18,710 $18,710 Cash (To record the purchase of office equipment) Cash $112,880 Service revenue $112,880 (To record the service revenue) Wages expense S87,300 Cash S87,300 (To record wages payment) Cash Note payable (To record note payable) $20,000 $20,000

  

Office Rent expense $10,200 f $10,200 Cash Office supplies $2,120 Accounts payable $2,120 (To record purchase of office supplies on account) Accounts payable $1,200 Cash $1,200 (To record payment to accounts payable) Utility expense i $3,250 $3,250 Cash

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Prepare T-Accounts as follows:

Cash
a	$45,000	b	$18,710
c	$112,880	d	$87,300
e	$20,000	f	$10,200
		h	$1,200
		i	$3,250
End. Bal.	$57,220
Common stock
		a	$45,000
		End. Bal.	$45,000
Office Equipment
b	$18,710
End. Bal.	$18,710
Service revenue
		c	$112,880
		End. Bal.	$112,880
Note payable
		e	$20,000
		End. Bal.	$20,000
Office Rent Expense
f	$10,200
End. Bal.	$10,200
Office Supplies
g	$2,120
End. Bal.	$2,120
Accounts payable
h	$1,200	g	$2,120
		End. Bal.	$920
Utility Expense
i	$3,250
End. Bal.	$3,250
Wage Expense
d	$87,300
End. Bal.	$87,300

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Prepare Adjusted Trial balance as follows:

Adjusted Trail balance
	Debit	Credit
Cash	$57,220
Office supplies	$2,120
Office Equipment	$18,710
Office rent Expense	$10,200
Utility Expense	$3,250
Wage Expense	$87,300
Service revenue		$112,880
Account payable		$920
Note payable		$20,000
Common stock		$45,000
Total	$178,800	$178,800