Question

The following information applies to the questions displayed below.) Below are the transactions for Ute Sewing Shop for March, the first month of operations. March 1 Issue common stock in exchange for cash of $1,100. March 3 Purchase sewing equipment by signing a note with the local bank, $800. March 5 Pay rent of $410 for March. March 7 Martha, a customer, places an order for alterations to several dresses. Ute estimates that the alterations will cost Martha $610. Martha is not required to pay for the alterations until the work is complete. March 12 Purchase sewing supplies for $111 on account. This material will be used to provide services to customers. March 15 Ute delivers altered dresses to Martha and receives $610. March 19 Ute agrees to alter 10 business suits for Bob, who has lost a significant amount of weight recently. Ute receives $510 from Bob and promises the suits to be completed by March 25. March 25 Ute delivers 10 altered business suits to Bob. March 30 Pay utilities of $76 for the current period. March 31 Pay dividends of $55 to stockholders. 4. Prepare a trial balance as of March 31. Credit UTE SEWING SHOP Trial Balance March 31 Accounts Debit Cash Supplies Equipment Accounts Payable Deferred Revenue Notes Payable Common Stock Dividends Service Revenue Rent Expense Utilities Expense Totals $ 0 $

Answer 1

Solution:

Trial Balance as of March 31.

UTE SEWING SHOP
Trial Balance
March 31
Accounts	Debit	Credit
Cash	$                 1,679	$                      -
Supplies	$                     111	$                      -
Equipment	$                     800	$                      -
Accounts Payable	$                        -	$                   111
Deferred Revenue	$                        -	$                      -
Notes Payable	$                        -	$                   800
Common Stock	$                        -	$               1,100
Dividends	$                       55	$                      -
Service Revenue	$                        -	$               1,120
Rent Expense	$                     410	$                      -
Utilities Expense	$                       76	$                      -
Total	$                 3,131	$               3,131

Working:

UTE SEWING SHOP
Trial Balance
31-Mar
Accounts	Debit	Credit
Cash	1100-410+610+510-76-55	0
Supplies	111	0
Equipment	800	0
Accounts Payable	0	111
Deferred Revenue	0	510-510
Notes Payable	0	800
Common Stock	0	1100
Dividends	55	0
Service Revenue	0	610+510
Rent Expense	410	0
Utilities Expense	76	0
Total	3131	3131

Notes:

1) Deferred revenue earned on March 19th because of advance received before service provided and same service has been completed on March 25th and service revenue is recognized and deferred revenue is set off.