Question

The following are the transactions relating to the formation of Gray Mowing Services Inc. and its first month of operations. a. The firm was organized and the initial stockholders invested cash of $840. b. The company borrowed $1,260 from a relative of one of the initial stockholders; a short-term note was signed. c. Two zero-turn lawn mowers costing $672 each and a professional trimmer costing $182 were purchased for cash. The original list price of each mower was $854, but a discount was received because the seller was having a sale. d. Gasoline, oil, and several packages of trash bags were purchased for cash of $126. e. Advertising flyers announcing the formation of the business and a newspaper ad were purchased. The cost of these items, $238, will be paid in 30 days. f. During the first two weeks of operations, 47 lawns were mowed. The total revenue for this work was $987; $651 was collected in cash, and the balance will be received within 30 days. g. Employees were paid $588 for their work during the first two weeks. h. Additional gasoline, oil, and trash bags costing $154 were purchased for cash. i. In the last two weeks of the first month, revenues totaled $1,288, of which $525 was collected. j. Employee wages for the last two weeks totaled $714; these will be paid during the first week of the next month. k. It was determined that at the end of the month the cost of the gasoline, oil, and trash bags still on hand was $42. 1. Customers paid a total of $210 due from mowing services provided during the first two weeks. The revenue for these services was recognized in transaction f. Required: Prepare the journal entries for above of the transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list

Answer 1

Transaction	Particulars	Debit	Credit
a	Cash	$840
	Common stock		$840
	(To record issue of common stock)
b	Cash	$1260
	Notes payable(ST)		$1260
	(To record amount borrowed from relative)
c	Equipment	$1526
	Cash		$1526
	(To record purchase of 2 lawn movers@672, proffessional trimmer @182)
d	supplies	$126
	Cash		$126
	(to record purchase of gasoline oil and trash bags)
e	advertising expense	$238
	Account payable		$238
	(to record advertising flyer for formation of business on account)
f	cash	$651
	Accounts receivable	$336
	Service revenue		$987
	(to record service revenue for first two weeks of operation)
g	wages expense	$588
	Cash		$588
	(to record salaries expense for first two weeks)
h	supplies	$154
	Cash		$154
	(to record purchase of gasoline oil and trash bags)
i	cash	$525
	Accounts receivable	$763
	Service revenue		$1288
	(to record service revenue for last two weeks of first month)
j	wages expense	$714
	Wages payable		$714
K	supplies expense ($126+$154)-$42	$238
	Supplies		$238
L	Cash	$210
	Accounts receivable		$210
	(to record payment received from customer)