Question

oblem IV: Gleason Sports Inc., which specializes in sports management, was incorporated on January 1, 20X1. The following transactions occurred during its first month of operations: Jan 1 Stockholders contributed a total of $50,000 cash in exchange for common stock. Jan 1 - Paid for six months' rent in advance totaling S4,200 ($700 per month). (hint: place the full $4,200 amount in a prepaid account) Jan 1 Purchased office equipment costing $10,000 by paying $2,000 cash and financing the remaini $8,000 with a one-year, 12%, loan from the bank. Jan 3- Purchased supplies on account costing $800. Jan 10- Received $4,000 cash for services performed. Jan 12 - Performed services worth $1,200 on account. Jan 15 - Received $500 cash in advance for services to be provided in February (next month). Jan 25- Paid $400 for advertising which ran earlier this month in the local newspaper Jan 27 - Paid for the supplies previously purchased on Jan 3 Jan 30 - Paid $2,000 for employee salaries. Jan 31 - Received a utility bill from Duke Energy for $300. These utilities costs were incurred in January. The bill will be paid in February. Jan 31 - Paid cash dividends of $200 to shareholders. Required: Using the transaction worksheet on the next page, do each of the following: Record each of the above transactions. Use plus and negative signs to indicate whether the account balance is increasing or decreasing. All accounts needed are given on the worksheet. If the retained earnings account is affected, use the far-right column to indicate the specific reason retained earnings is going up or down (ex. Service Revenue) . After recording each of the transactions, compute ending account balances. . Verify the ending account balances balance the accounting equation .

Answer 1