Question

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Cheyenne Architects incorporated as licensed architects on April 1, 2022. During the first month of the operation of the business, these events and transactions occurred: Apr. 1 Stockholders invested $20,700 cash in exchange for common stock of the corporation. 1 Hired a secretary-receptionist at a salary of $431 per week, payable monthly 2 Paid office rent for the month $1,035. 3 Purchased architectural supplies on account from Burmingham Company $1,495. 10 Completed blueprints on a carport and billed client $2,185 for services. 11 Received $805 cash advance from M. Jason to design a new home. 20 Received $3,220 cash for services completed and delivered to S. Melvin. 30 Paid secretary-receptionist for the month $1,724. 30 Paid $345 to Burmingham Company for accounts payable due.

Answer 1

Answer -

1. Answer -

Journal entries:

Date	Account Titles and Explanation	Debit	Credit
Apr. 01	Cash	$20700
	Common stock		$20700
Apr. 01	No entry	$0
	No entry		$0
Apr. 02	Rent expense	$1035
	Cash		$1035
Apr. 03	Supplies	$1495
	Accounts payable		$1495
Apr. 10	Accounts receivable	$2185
	Service revenue		$2185
Apr. 11	Cash	$805
	Unearned service revenue		$805
Apr. 20	Cash	$3220
	Service revenue		$3220
Apr. 30	Salaries and wages expense	$1724
	Cash		$1724
Apr. 30	Accounts payable	$345
	Cash		$345

Explanation:

As per accounting rules, increase in assets such as cash, accounts receivable, supplies are debited and decreases assets are credited. On the other hand increase in liabilities such as accounts payable, unearned service revenue and increase in owners’ equity such as common stock are credited and decreases liabilities and owners’ equity are debited. Similarly service revenue increases owners’ equity therefore, it’s credited and expenses such as salaries and wages, rent expense decreases liabilities balance therefore, it is debited.

Note: Hired a secretary-receptionist at salary of $431 per week, payable monthly. In this event, neither salary paid nor due on account. Journal made when secretary-receptionist start working.

2. Answer -

T-accounts:

Cash
Apr. 01	$20700	Apr. 02	$1035
Apr. 11	$805	Apr. 30	$1724
Apr. 20	$3220	Apr. 30	$345
Ending balance	$21621

Calculation:

Cash ending balance = [$20700 + $805 + $3220] - [$1035 + $1724 + $345] = $21621

Accounts Receivable
Apr. 10	$2185
Ending balance	$2185

Supplies
Apr. 03	$1495
Ending balance	$1495

Accounts Payable
Apr. 30	$345	Apr. 03	$1495
		Ending balance	$1150

Calculation:

Accounts payable ending balance = $1495 - $345 = $1150

Unearned Service Revenue
		Apr. 11	$805
		Ending balance	$805

Common stock
		Apr. 01	$20700
		Ending balance	$20700

Service Revenue
		Apr. 10	$2185
		Apr. 20	$3220
		Ending balance	$5405

Calculation:

Service revenue = $2185 + $3220 = $5405

Salaries and Wages Expense
Apr. 30	$1724
Ending balance	$1724

Rent Expense
Apr. 02	$1035
Ending balance	$1035

3. Answer -

Trial balance:

Cheyenne Architects Inc.
Trial Balance
April 30, 2022
	Debit	Credit
Cash	$21621
Accounts receivable	$2185
Supplies	$1495
Accounts payable		$1150
Unearned service revenue		$805
Common stock		$20700
Service revenue		$5405
Salaries and wages expense	$1724
Rent expense	$1035
Total	$28060	$28060

Note: Referred T-account’s ending balance for each accounts.