Transaction Analysis, T Accounts, and Trial Balances
David Roberts began an upholstery cleaning business on August 1 and engaged in the following transactions during the month:
Aug.
1 Began business by depositing $30,000 in a bank account in the name of the company.
2 Ordered cleaning supplies, $6,000.
3 Purchased cleaning equipment for cash, $5,600.
4 Made two months' van lease payment in advance, $2,400.
7 Received the cleaning supplies ordered on August 2 and agreed to pay half the amount in 10 days and the rest in 30 days.
9 Paid for repairs on the van with cash, $2,160.
12 Received cash for cleaning upholstery, $1,920.
17 Paid half the amount owed on supplies received on August 7, $3,000.
21 Billed customers for cleaning upholstery, $2,680.
24 Paid cash for additional repairs on the van, $160.
27 Received $1,200 from the customers billed on August 21.
31 Made a cash withdrawal of $1,400.
Required:
1. Set up the following T accounts: Cash; Accounts Receivable; Cleaning Supplies; Prepaid Lease; Cleaning Equipment; Accounts Payable; D. Roberts, Capital; D. Roberts, Withdrawals; Cleaning Revenue; and Repair Expense.
2. Record transactions directly in the T accounts. Identify each entry by date.
3. Prepare a trial balance for Roberts Upholstery Cleaning as of August 31, 2014.
4. Concept- Compare and contrast how the issues of recognition, valuation, and classification are settled in the transactions of August 7 and 9.