Identifying common accounts and normal account balances [10-15 min]
Party Time Amusements Company owns movie theaters. Party Time engaged in the following business transactions in 2012:
Aug1 | Daniel Smith invested $400,000 personal cash in the business by depositing that amount in a bank account titled Party Time Amusements. The business issued common stock to Smith. |
2 | Paid $350,000 cash to purchase a theater building. |
5 | Borrowed $200,000 from the bank. Smith signed a note payable to the bank in the name of Party Time. |
10 | Purchased theater supplies on account, $1,300. |
15 | Paid $1,000 on account. |
15 | Paid property tax expense on theater building, $1,200. |
16 | Paid employees’ salaries $2,700, and rent on equipment $1,700. Make a single compound entry. |
28 | Paid cash dividends of $8,000. |
31 | Received $25,000 cash from service revenue and deposited that amount in the bank. |
Requirements
1. Create the list of accounts that Party Time Amusements will use to record these transactions.
2. Identify the account type and normal balance of each account identified in Requirement 1.
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