Question: On July 31, 2017, the general ledger of Hills Legal Services Inc. showed the following balances: Cash $4,000, Accounts Receivable $1,500, Supplies $500, Equipment $5,000, Accounts Payable $4,100, Common Stock $3,500, and Retained Earnings $3,400. During August, the following transactions occurred. Aug.
3 Collected $1,200 of accounts receivable due from customers.
5 Received $1,300 cash for issuing common stock to new investors. 6 Paid $2,700 cash on accounts payable.
7 Performed legal services of $6,500, of which $3,000 was collected in cash and the remainder was due on account.
12 Purchased additional equipment for $1,200, paying $400 in cash and the balance on account.
14 Paid salaries $3,500, rent $900, and advertising expenses $275 for the month of August.
18 Collected the balance for the services performed on August 7.
20 Paid cash dividend of $500 to stockholders.
24 Billed a client $1,000 for legal services performed.
26 Received $2,000 from Laurentian Bank; the money was borrowed on a bank note payable that is due in 6 months.
27 Agreed to perform legal services for a client in September for $4,500. The client will pay the amount owing after the services have been performed.
28 Received the utility bill for the month of August in the amount of $275; it is not due until September 15.
31 Paid income tax for the month $500.
Instructions: (a) Using T-accounts, enter the beginning balances in the general ledger as of April 30, 2017.
(b) Journalize the May transactions.
(c) Post the May journal entries to the general ledger.
(d) Prepare a trial balance on May 31, 2017.