Question

21 Recording transactions LO3, 4, 5 Darby Consulting was established on 1 March, and during March, Darby entered into the following transactions: 1 Issued $10000 shares in exchange for cash 3 Purchased $300 of supplies on account. 7 Prepaid $1500 total for April, May and June rent. 8 Paid $175 towards the 3 March purchase of supplies. 11 Billed customers $5780 for services rendered. 12 Paid $700 for March advertising. 25 Received $4500 from customers billed on 11 March. 28 Paid $200 in dividends to shareholders. 29 Paid $1200 for March salaries. 29 Paid $760 for March water usage ent park the first dinary Required a Prepare jounal entries for each transaction (omitting explanations) Post the journal to the appropriate ledger (T-accounts). Prepare a trial balance at 31 March. Prepare an income statement and a statement of retained earnings for the month of March. Prepare a balance sheet at the end of March. es. b c d

Answer 1

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Assumptions:

1. No Supplies consumed in March as no data given.

2. No Rental for March, as no information given.

Part a:	Journal Entries
Date	Account	Debit	Credit
March 1	Cash	$10,000
	Common Stock		$10,000
Mar 3	Supplies	$300
	Accounts Payable		$300
Mar 7	Prepaid Rent	$1,500
	Cash		$1,500
Mar 8	Accounts Payable	$175
	Cash		$175
Mar 11	Accounts Receivable	$5,780
	Service Fee Income		$5,780
Mar 12	Advertising Expense	$700
	Cash		$700
Mar 25	Cash	$4,500
	Accounts Receivable		$4,500
Mar 28	Dividend	$200
	Cash		$200
Mar 29	Salaries Expense	$1,200
	Cash		$1,200
Mar 29	Water Expense	$760
	Cash		$760

Part b:	Ledger Posting
		Cash
		Debit		Credit
		Date	$	Date	$
		Mar 1	10000	Mar 7	1500
		Mar 25	4500	Mar 8	175
				Mar 12	700
				Mar 28	200
				Mar 29	1200
				Mar 29	760
		End Bal	9965
		Accounts Receivable
		Debit		Credit
		Date	$	Date	$
		Mar 11	5780	Mar 25	4500
		End Bal	1280
		Supplies
		Debit		Credit
		Date	$	Date	$
		Mar 3	300
		End Bal	300
		Prepaid Rent
		Debit		Credit
		Date	$	Date	$
		Mar 7	1500
		End Bal	1500
		Accounts Payable
		Debit		Credit
		Date	$	Date	$
		Mar 8	175	Mar 3	300
				End Bal	125
		Common Stock
		Debit		Credit
		Date	$	Date	$
				Mar 1	10000
				End Bal	10000
		Dividend
		Debit		Credit
		Date	$	Date	$
		Mar 28	200	Mar 31-Income Summary	200
		Service Fee Income
		Debit		Credit
		Date	$	Date	$
		Mar 31-Income Summary	5780	Mar 11	5780
		Advertising Expense
		Debit		Credit
		Date	$	Date	$
		Mar 12	700	Mar 31-Income Summary	700
		Water Expense
		Debit		Credit
		Date	$	Date	$
		Mar 29	760	Mar 31-Income Summary	760
		Salaries Expense
		Debit		Credit
		Date	$	Date	$
		Mar 29	1200	Mar 31-Income Summary	1200

Part c:	Trial Balance
Account	Debit	Credit
Cash	$9,965
Accounts Receivable	$1,280
Supplies	$300
Prepaid Rent	$1,500
Dividend	$200
Accounts Payable		$125
Common Stock		$10,000
Service Fee Income		$5,780
Advertising Expense	$700
Water Expense	$760
Salaries Expense	$1,200
Total	$15,905	$15,905
Part d:	Income Statement
	$	$
Service Fee Income		5780
Less: Expenses
Advertising Expense	700
Water Expense	760
Salaries Expense	1200	2660
Profit before tax		3120
Part d:	Statement of Retained Earning
Net Income		3120
Less: Dividend		200
Ending Retained Earning		2920
Part d:	Balance Sheet
	$	$
Assets:
Current Assets
Cash		9965
Accounts Receivable		1280
Supplies		300
Prepaid Rent		1500
Total Assets		13045
Liabilities:
Accounts Payable		125
Equity:
Common Stock	10000
Retained Earning	2920
Total Equity		12920
Total Liabilities and Equity		13045