LO 4 E2-36B. (Learning Objective 4: Analyze the impact of business transactions

Question

LO 4 E2-36B. (Learning Objective 4: Analyze the impact of business transactions on accounts) Set up the following T-accounts: Cash, Accounts Receivable, Office Supplies, Office Furniture, Accounts Payable, Common Stock, Dividends, Service Revenue, Salary Expense, and Rent Expense. Record the following transactions directly in the T-accounts without using a journal. Use the letters to identify the transactions. a. Eric Newton opened a law firm by investing $23,000 cash and office furniture with a fair value of $9,400. Organized as a professional corporation, the business issued common stock to Newton. b. Paid monthly rent of $1,000. c. Purchased office supplies on account, $700 d. Paid employee salaries of $2,500 e. Paid $150 of the accounts payable created in transaction c f. Performed legal service on account, $10,900 g. Declared and paid dividends of $2,000.

Explanation / Answer

Cash Accounts Receivable Office Supplies a.    23,000.00    1,000.00 b. f.    10,900.00 c.       700.00    2,500.00 d.       150.00 e.    2,000.00 g. End. Bal.    17,350.00 End. Bal.    10,900.00 End. Bal.       700.00 Office Furniture Accounts Payable Common Stock a.      9,400.00 e.          150.00          700.00 c.    32,400.00 a. End. Bal.      9,400.00 End. Bal.          550.00 End. Bal.    32,400.00 Dividends Service Revenue Salary Expense g.      2,000.00    10,900.00 f. d.    2,500.00 End. Bal.      2,000.00 End. Bal.    10,900.00 End. Bal.    2,500.00 Rent Expense b.      1,000.00 End. Bal.      1,000.00

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