Question

Chapter 3 The Accounting Cyde: Capturing Economic Events 103-7. 103-3. 103-9 PROBLEM 3.6A Short Comprehensive Donegan's Lawn Care Service began operations in July, current year. The company uses the fol lowing general ledger accounts. Cash Capital Stock Accounts Receivable Retained Earnings Office Supplies Mowing Revenue Mowing Equipment Salaries Expense Accounts Payable Fuel Expense Notes Payable The company engaged in the following transactions during its first month of operations July 18 Issued 500 shares of capital stock to Patrick Donegan for $1.500. July 22 Purchased office supplies on account for $100. July 23 Purchased mowing equipment for $2.000, paying $400 cash and issuing a 60-day note payable for the remaining balance. July 24 Paid S25 cash for gasoline. All of this fuel will be used in July July 25 Billed Lost Creek Cemetery $150 for mowing services. The entire amount is due July July 26 Billed Golf View Condominiums $200 for mowing services. The entire amount is die August July 30 Collected $150 from Last Creek Cemetery for mowing services provided on July 15 July 31 Paid S80 salary to employee Teddy Grimm for work performed in July a. Recand each of these transactions in general journal form. Include a brief explanation of the transaction as part of each journal entry. h. Post cach entry to the appropriate ledger accounts (use the T account format illustrated in Exhibit 3-8). c. Prepare a trial balance dated July 31. current year. d. Explain why the Retained Earnings account has a zero balance in the trial balance Sanlucas, Inc. provides home inspection services to its clients. The following is the company trial balance dated June 1. current year. 103- 603-5 PROBLEM 27A SANLUCAS, INC. TRIAL BALANCE JUNE 1. CURRENT YEAD

Answer 1

	Journal Entries
DATE	EXPLANATION	DEBIT	CREDIT
18-Jul	cash	1500
	common stock		1500
22-Jul	office supplies	100
	accounts payable		100
23-Jul	equipment	2000
	cash		400
	notes payable		1600
24-Jul	gasoline expenses	25
	cash		25
25-Jul	accounts receivables	150
	service revenue		150
26-Jul	accounts receivables	200
	service revenue		200
30-Jul	cash	150
	accounts receivables		150
30-Jul	salary expenses	80
	salary payable		80
	T-Account
	cash
common stock	1500	equipment	400
accounts receivables	150	gasoline expenses	25
		balance	1225
total	1650	total	1650
	common stock
balance	1500	cash	1500
	supplies
accounts payable	100	balance	100
	accounts payable
balance	100	office supplies	100
	notes payable
balance	1600	equipment	1600
	gasoline expenses
cash	25	balance	25
	accounts receivables
service revenue	150	cash	150
service revenue	200	balance	200
	service revenue
balance	350	accounts receivables	150
		accounts receivables	200
	salary expense
salary payable	80	balance	80
	salary payable
balance	80	salary expenses	80
	Equipment
cash	400	balance	2000
notes payable	1600
Trial Balance
Explanation	Debit	Credit
equipment	2000
cash	1225
common stock		1500
supplies	100
accounts payable		100
notes payable		1600
gasoline expenses	25
accounts receivables	200
service revenue		350
salary expense	80
salary payable		80
total	3630	3630
4-	Balance of retained earning account is zero because this business is a new business.