Question

Blossom is a licensed CPA. During the first month of operations of her business, Blossom Company, the following events and transactions occurred. 

May 1 Stockholders invested $21,100 cash in exchange for common stock 

2 Hired a secretary-receptionist at a salary of $3,000 per month. 

3 Purchased $1,900 of supplies on account from Vincent Supply Company. 

7 Paid office rent of $740 cash for the month. 

11 Completed a tax assignment and billed client $2,800 for services performed. 

12 Received $3,500 advance on a management consulting engagement 

17 Received cash of $1,000 for services performed for Orville Co. 

31 Paid secretary-receptionist $3,000 salary for the month. 

31 Paid 40% of balance due Vincent Supply Company 

Julia uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 311 Common Stock, No.400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense. 

(a) Journalize the transactions.

Answer 1

Date	Account and explanation	Debit	Credit
May 1	Cash To common stock ( stock holders invested)	$21100	$21100
May 2	No entry
May 3	Supplies To Accounts payable (Purchased on account)	$1900	$1900
May, 7	Rent expense To Cash (rent paid on cash)	$740	$740
May 11	Accounts receivable To service revenue (service revenue is not yet received)	$2800	$2800
May12	Cash To Unearned revenue (Received an advance)	$3500	$3500
May 17	cash To Service revenue (Cash received from service)	$1000	$1000
May 31	Salary and wages expense To Cash (Salary paid)	$3000	$3000
May 31	Account payable To Cash (paid 40%of balance due)	$760	$760

Explanation

May 1

Investment is made by cash for the return of common stock, we debit cash account when cash increases and credit the common stock as equity increases

May 2

No entry is to be made because there is no payment is made. Payment is made at the end of month

May 3

Supplies purchased on account. supplies account is asset account it is debited when asset increases.account payable is liability, when account payable increases so it is credited here.

May 7

Rent paid in cash. Rent is an expense account it is debited when it increases, and cash is an asset account it is credited when it decreases.

May 11

Service is made and payment is not yet received so Account Receivable is debited as asset increased service revenue is credited as it is an income account when income increases it is credited

May 12

Cash is debited as cash is asset account. Asset is increased, unearned revenue is credited as it is liability account.

May 17

Asset increased so cash is debited.income increased so service revenue credited

May 31

Salary is an expense account when expense increases it is debited and cash an asset paid so it is reduced and credited

May 31

Cash is credited as asset decrease, account payable is liability when liability decreases it is debited