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PRINCIPLES OF ACCOUNTING PROBLEMS

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

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 $2,500 per month.

3. Signed a 2­year rental agreement on a warehouse; paid $24,000 cash in advance for the first year.

4. Purchased furniture and equipment costing $33,000. A cash payment of $12,000 was made immediately; the remainder will be paid in 6 months.

5. Paid $1,600 cash for a one­year insurance policy on the furniture and equipment.

Transactions during the remainder of the month:

6. Purchased basic office supplies for $600 cash.

7. Purchased more office supplies for $1,600 on account.

8. Total revenues earned were $21,000-$8,000 cash and $13,000 on account.

9. Paid $400 to suppliers for accounts payable due.

10. Received $2,800 from customers in payment of accounts receivable.

11. Received utility bills in the amount of $400, to be paid next month.

12. Paid the monthly salaries of the two employees, totaling $5,000.

Required -

1. Prepare journal entries to record each of the events listed. 

2. Post the journal entries to T­accounts.

3. Prepare a trial balance as of May 31, 2017.

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