Question

On January 2, 200XX, Chris Blackwell opened a Hotel called Dolphins Cove. During the first month of operations, the business completed the following transactions. 20XX Jan. 2 Chris issued 25,000 shares of common stocks for cash $50,000. 2 Paid $2,400 in advance for rent. 3 Purchase equipment for $12,000 on account. 5 Paid $1,500 cash for advertising. 11 Received cash for fees earned, $9,750. 17 Purchased office supplies for cash, $1,400. 22 Billed customer for fees earned, $16,390. 27 Paid telephone bill, $900. 28 Received Utilities bill for $1,900, due in 30 days. 29 Paid salaries for month $14,000. 30 Paid half of the liability from January 3. 31 Paid $4,000 in cash dividends to stockholders INSTRUCTIONS: 1) Prepare Journal Entries 2) Post the transactions to the T-Accounts 3) Prepare a Trial Balance as of January 31, 20XX CHART OF ACCOUNTS: Cash, Account Receivable, Prepaid Rent, Office Supplies, Office Equipment, Account Payable, Common Stocks, Dividends, Service Revenue, Telephone Expense, Advertising Expense, Salaries Expense and Utilities Expense. NB. Working Papers are located on Blackboard

Answer 1

Requirement 1:

Date	Account title and Explanation	Debit	Credit
Jan.2	Cash	$50,000
	Common stock		$50,000
	[To record issuance of common stock for cash]
Jan.2	Prepaid rent	$2,400
	Cash		$2,400
	[To record cash paid in advance for rent]
Jan.3	Office Equipment	$12,000
	Accounts payable		$12,000
	[To record purchase of equipment on account]
Jan.5	Advertising expense	$1,500
	Cash		$1,500
	[To record payment of advertisements]
Jan.11	Cash	$9,750
	Service revenue		$9,750
	[To record cash received for services]
Jan.17	Office Supplies	$1,400
	Cash		$1,400
	[To record purchase of supplies]
Jan.22	Accounts receivable	$16,390
	Service revenue		$16,390
	[To record performed services on account]
Jan.27	Telephone expense	$900
	Cash		$900
	[To record payment of telephone expense]
Jan.28	Utilities expense	$1,900
	Accounts payable		$1,900
	[To record purchase of utilities on account]
Jan.29	Salaries expense	$14,000
	Cash		$14,000
	[To record payment of salaries expense]
Jan.30	Accounts payable [12,000 x 1/2]	$6,000
	Cash		$6,000
	[To record cash paid for accounts payable]
Jan.31	Cash dividends	$4,000
	Cash		$4,000
	[To record payment of cash dividends]

Requirement 2:

Cash					Dividends
Jan.2	$50,000	Jan.2	$2,400		Jan.31	$4,000
Jan.11	$9,750	Jan.5	$1,500
		Jan.17	$1,400		Bal.	$4,000
		Jan.27	$900
		Jan.29	$14,000		Service revenue
		Jan.30	$6,000				Jan.11	$9,750
		Jan.31	$4,000				Jan.22	$16,390
Bal.	$29,550						Bal.	$26,140
Accounts receivable					Telephone expense
Jan.22	$16,390				Jan.27	$900
Bal.	$16,390				Bal.	$900
Prepaid rent					Advertising expense
Jan.2	$2,400				Jan.5	$1,500
Bal.	$2,400				Bal.	$1,500
Office supplies					Salaries expense
Jan.17	$1,400				Jan.29	$14,000
Bal.	$1,400				Bal.	$14,000
Office equipment					Utilities expense
Jan.3	$12,000				Jan.28	$1,900
Bal.	$12,000				Bal.	$1,900
Accounts payable
Jan.30	$6,000	Jan.3	$12,000
		Jan.28	$1,900
		Bal.	$7,900
Common stocks
		Jan.2	$50,000
		Bal.	$50,000

Requirement 3:

Trial Balance
January 31, 20XX
Account title	Debit	Credit
Cash	$29,550
Accounts receivable	$16,390
Prepaid rent	$2,400
Office supplies	$1,400
Office equipment	$12,000
Accounts payable		$7,900
Common stocks		$50,000
Dividends	$4,000
Service revenue		$26,140
Telephone expense	$900
Advertising expense	$1,500
Salaries expense	$14,000
Utilities expense	$1,900
Total	$84,040	$84,040