Question

Pyrenees Consulting, Inc. was organized in 2019 to provide consulting services to small businesses. The following are balance sheet values as of November 30, 2019: Cash $ 14,200 Accounts receivable Supplies 2,600 2,100 8,000 5,000 Equipment Patent Accounts payable $ 4,800 Unearned Service Revenue 1,100 Notes payable -0- Common Stock 1,000 Additional Paid in Capital 14,000 Retained earnings 11,000 Total $31,900 $31,900 Consider the following transactions that occurred during December 2019: 1. Sold 1,000 shares of $1 par value stock for $15 per share to investors. 2. Paid $600 for office rent for the month. 3. Purchased $500 of supplies on account. 4. Paid $150 to advertise in the Daily Courier. 5. Received $1,400 cash for consulting services performed. 6. Paid $200 cash dividend. 7. Performed $4,200 of consulting services on account. 8. Paid $2,500 for employee salaries. 9. Paid for the supplies purchased on account in transaction (3).

Answer 1

Credit Pyrenees Consulting Inc. Journal entries Transaction General Journal Cash Common Stock Additional paid in capital Debit $ 15,000 Calculation =1000*15 =1000*1 $ $ 1,000 14,000 2 $ 600 Rent expense Cash $ 600 3 $ 500 Supplies Accounts Payable $ 500 $ 150 Advertising expense Cash $ 150 $ 1,400 Cash Service Revenue $ 1,400 $ 200 Dividends Cash $ 200 7 $ 4,200 Accounts Receivable Service Revenue $ 4,200 $ 2,500 Salaries expense Cash $ 2,500 $ 500 Accounts Payable Cash $ 500 10 $ 1,200 Cash Accounts Receivable $ 1,200 11 $ 5,000 Cash Notes Payable $ 5,000 12 $ 2,000 Equipment Cash Accounts Payable $ $ 200 1,800 $ 180 Utilities expense Cash $ 180

Credit Date Date Credit Date Credit Pyrenees Consulting Inc. T Accounts Date Debit Date Cash Op bal $14,200 2 $ 15,000 4 5 $ 1,400 10 $ 1,200 11 $ 5,000 Op bal 7 Debit Date Credit Accounts Receivable $ 2,600 $ 4,200 10 $ 1,200 Debit Date Supplies $ 2,100 $ 500 Debit Date Equipment $ 8,000 $ 2,000 Op bal 3 Op bal 12 $ 600 $ 150 $ 200 $ 2,500 $ 500 $ 200 $ 180 13 Bal. Bal. Bal. Bal. $ 32,470 Patent $ 5,000 $ 5,600 Accounts Payable $ 500 Op bal 3 $ 2,600 Unearned Service Revenue Op bal $ 1,100 $ 10,000 Notes Payable Op bal 11 Op bal 9 $ 4,800 $ 500 $ 1,800 $ . $ 5,000 Bal. $ 1,100 $ 5,000 $ 5,000 Common Stock Op bal Bal. $ 6,600 Additional paid in capital Op bal $14,000 1 $ 14,000 Bal. Retained Earnings Op bal Bal. Dividends 200 $ 11,000 6 $ $1,000 $ 1,000 $ 2,000 $ 28,000 $ 11,000 Bal. Bal. Service Revenue 5 7 Bal. Salaries expense $ 2,500 Bal. Rent expense 600 $ 200 Advertising expense $ 150 2 $ 4 $ 1,400 $ 4,200 $ 5,600 Bal. $ 2,500 $ 600 Bal. $ 150 al. Utilities expense $ 180 13 Bal. $ 180

Pyrenees Consulting Inc. Account Names Cash Accounts Receivable Supplies Equipment Patent Accounts Payable Unearned Service Revenue Notes Payable Common Stock Additional paid in capital Retained Earnings Dividends Service Revenue Salaries expense Rent expense Advertising expense Utilities expense Totals Closing TB Debit Credit 32,470 5,600 2,600 10,000 5,000 6,600 1,100 5,000 2,000 28,000 11,000 200 5,600 2,500 600 150 180 59,300 59,300

5,600 Pyrenees Consulting Inc. Income Statement For the month ended Dec 31 Revenues Service Revenue Expenses Salaries expense Rent expense Advertising expense Utilities expense Total Expenses Net Income 2,500 600 150 180 3,430 2,170 Statement of Retained Earnings For the month ended Dec 31 Beginning balance, Dec 1 Net Income Less Dividends Ending Balance, Dec 31 11,000 2,170 (200) 12,970

Pyrenees Consulting Inc. Balance Sheet As of Dec 31 Assets Current Assets Cash Accounts Receivable Supplies Total Current Assets Liabilities & Stockholders Equity Liabilities 32,470 Accounts Payable 5,600 Unearned Service Revenue 2,600 Notes Payable 40,670 Total Liabilities 6,600 1,100 5,000 12,700 Property, Plant & Equipment Equipment 10,000 Stockholders Equity Common Stock Additional paid in capital Retained Earnings Total Stockholders Equity 2,000 28,000 12,970 42,970 Intangible Assets Patent 5,000 Total Assets 55,670 Total Liabilities & Stockholders Equity 55,670