Question

The following accounting events apply to Mary’s Designs for Year 1:

Asset Source Transactions

1. Began operations by acquiring $21,000 of cash from the issue of common stock.
2. Performed services and collected cash of $900.
3. Collected $4,900 of cash in advance for services to be provided over the next 12 months.
4. Provided $12,100 of services on account.
5. Purchased supplies of $490 on account.

Asset Exchange Transactions

6. Purchased $4,900 of land for cash.
7. Collected $7,900 of cash from accounts receivable.
8. Purchased $540 of supplies with cash.
9. Paid $3,200 for one year’s rent in advance.

Asset Use Transactions

10. Paid $2,500 cash for salaries of employees.
11. Paid a cash dividend of $2,200 to the stockholders.
12. Paid off $490 of the accounts payable with cash.

Claims Exchange Transactions

13. Placed an advertisement in the local newspaper for $180 on account.
14. Incurred utility expense of $75 on account.

Adjusting Entries

15. Recognized $3,675 of revenue for performing services. The collection of cash for these services occurred in a prior transaction. (See Event 3.)
16. Recorded $1,280 of accrued salary expense at the end of Year 1.
17. Recorded supplies expense. Had $85 of supplies on hand at the end of the accounting period.
18. Recognized three months of expense for prepaid rent that had been used up during the accounting period.

Required
a. Record each of the preceding events in T-accounts.

Cash

Accounts Receivable

Supplies

Prepaid Rent

Land

Accounts Payable

Unearned Revenue

Salaries Payable

Common Stock

Dividends

Service Revenue

Rent Expense

Salary Expense

Supplies Expense

Utilities Expense

Advertising Expense

Answer 1

Credit Date Date Credit Date Credit Marys Designs T Accounts Date Debit Date Cash 1 $ 21,000 6 $ 900 8 3 $ 4,900 7 $ 7,900 Debit Date Credit Accounts Receivable $ 12,100 7 $ 7,900 Debit Date Supplies $ 490 17 $ 540 Debit Date Prepaid Rent $ 3,200 18 4 $ 945 9 $ 800 5 8 9 $ 4,900 $ 540 $ 3,200 $ 2,500 $ 2,200 $ 490 12 Bal. Bal. Bal. Bal. $ 20,870 Land $ 4,900 $ 85 Unearned Revenue $ 3,675 3 $ 4,200 Accounts Payable $ 490 5 13 14 $ 2,400 Salaries Payable 16 6 12 15 $ 4,900 $ 1,280 $ $ $ 490 180 75 Bal. $ 255 $ 1,225 Bal. $ 1,280 $ 4,900 Common Stock 1 Bal. Dividends $ 2,200 $ 21,000 11 $ 21,000 Bal. Bal. Service revenue 2 4 15 $ 2,200 Rent expense $ 800 18 $ 900 $ 12,100 $ 3,675 10 16 Salary expense $ 2,500 $ 1,280 $ 16,675 Bal. Bal. al. Supplies expense $ 945 $ 800 Utilities expense $ 75 $ 3,780 Advertising expense $ 180 17 14 13 Bal. $ 945 Bal. $ 75 Bal. $ 180

Adjusted TB Debit Credit 20,870 4,200 85 2,400 4,900 Marys Designs Account Names Cash Accounts Receivable Supplies Prepaid Rent Land Accounts Payable Unearned Revenue Salaries Payable Common Stock Dividends Service Revenue Rent expense Salaries expense Supplies expense Utilities expense Advertising expense Totals 255 1,225 1,280 21,000 2,200 16,675 800 3,780 945 75 180 40,435 40,435