Problem 2-3A (Part Level Submission) Maquoketa Services was formed on May 1, 201

Question

Problem 2-3A (Part Level Submission)

Maquoketa Services was formed on May 1, 2017. The following transactions took place during the first month.

Received utility bills in the amount of $380, to be paid next month.

Paid the monthly salaries of the two employees, totaling $6,100.

Prepare a trial balance as of May 31, 2017.

Transactions on May 1: 1. Jay BradFord invested $40,000 cash in the company, as its sole owner. 2. Hired two employees to work in the warehouse. They will each be paid a salary of $3,050 per month. 3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year. 4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months. 5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment. Transactions during the remainder of the month: 6. Purchased basic office supplies for $420 cash. 7. Purchased more office supplies for $1,500 on account. 8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account. 9. Paid $400 to suppliers for accounts payable due. 10. Received $3,000 from customers in payment of accounts receivable. 11.

Received utility bills in the amount of $380, to be paid next month.

12.

Paid the monthly salaries of the two employees, totaling $6,100.

Prepare a trial balance as of May 31, 2017.

Explanation / Answer

Solution:

Journal Entries - Maquoketa Services Event Particulars Debit Credit 1 Cash Dr $40,000.00            To Bradford's Capital $40,000.00 (To record cash invested in business) 2 No Entry 3 Prepaid rent Dr $24,000.00            To Cash $24,000.00 (To record advance rent payment) 4 Furniture and Equipment Dr $30,000.00            To Cash $10,000.00            To Accounts payable $20,000.00 (To record purchase of furniture and equipment) 5 Prepaid insurance Dr $1,800.00            To Cash $1,800.00 (To record payment of insurance premium) 6 Office supplies Dr $420.00            To Cash $420.00 (To record purchase of office supplies) 7 Office supplies Dr $1,500.00            To Accounts payable $1,500.00 (To record purchase of office supplies) 8 Cash Dr $8,000.00 Accounts receivables Dr $12,000.00            To Service Revenue $20,000.00 (To record service revenue) 9 Accounts Payable Dr $400.00            To Cash $400.00 (To record payment to supplier) 10 Cash Dr $3,000.00            To Accounts Receivables $3,000.00 (To record collection from customer) 11 Utilities expense Dr $380.00            To Accounts payable $380.00 (To record utility bills due for payment) 12 Salaries Expense Dr $6,100.00            To Cash $6,100.00 (To record payment of salary expense)

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