Prepare a trial balance dated May 31, current year. Assume accounts with zero balances are not included in the trial balance.

3-10

Janet Enterprises incorporated on

May 3, current year. The company engaged in the following transactions during its first month of operations.

May   3 Issued capital stock in exchange for $950,000 cash.

May   4 Paid May office rent expense of $1,800.

May   5 Purchased office supplies for $600 cash. The supplies will last for several months.

May 15 Purchased office equipment for $12,400 on account. The entire amount is due June 15.

May 18 Purchased a company car for $45,000. Paid $15,000 cash and issued a note payable for the remaining amount owed.

May 20 Billed clients $120,000 on account.

May 26 Declared an $8,000 dividend. The entire amount will be distributed to shareholders on June 26.

May 29 Paid May utilities of $500.

May 30 Received $90,000 from clients billed on May 20

.May 31 Recorded and paid salary expense of $32,000.

A partial list of the account titles used by the company includes the following.

Cash                                 Dividends Payable

Accounts Receivable        Dividends

Office Supplies                  Capital Stock

Office Equipment              Client Revenue

Vehicles                            Office Rent Expense

Notes Payable                 Salary Expense

Accounts Payable          Utilities Expense

1. Prepare journal entries, including explanations, for these transactions.
2. Post each entry to the appropriate ledger accounts

(use the T account format illustrated in Exhibit 3–8).

1. Prepare a trial balance dated May 31, current year. Assume accounts with zero balances are not included in the trial balance.

3-1

Glenn Grimes is the founder and president of Heartland Construction, a real estate development venture. The business transactions during February while the company was being organized are listed as follows.

Feb. 1 Grimes and several others invested $600,000 cash in the business in exchange for 30,000 shares of capital stock.

Feb. 10 The company purchased office facilities for $360,000, of which $120,000 was appli-cable to the land and $240,000 to the building. A cash payment of $72,000 was made and a note payable was issued for the balance of the purchase price.

Feb. 16 Computer equipment was purchased from PCWorld for $14,400 cash.

Feb. 18 Office furnishings were purchased from Hi-Way Furnishings at a cost of $10,800. A $1,200 cash payment was made at the time of purchase, and an agreement was made to pay the remaining balance in two equal installments due March 1 and April 1. Hi-Way Furnishings did not require that Heartland sign a promissory note.

Feb. 22 Office supplies were purchased from Office World for $360 cash.

Feb. 23 Heartland discovered that it paid too much for a computer printer purchased on February 16. The unit should have cost only $359, but Heartland was charged $395. PCWorld promised to refund the difference within seven days.

Feb. 27 Mailed Hi-Way Furnishings the first installment due on the account payable for office furnishings purchased on February 18.

Feb. 28 Received $36 from PCWorld in full settlement of the account receivable created on February 23.

Instructions

1. Prepare journal entries to record these transactions. Select the appropriate account titles from the following chart of accounts.

Cash                                           Land

Accounts Receivable              Office Building

Office Supplies                        Notes Payable

Office Furnishings                  Accounts Payable

Computer Systems                 Capital Stock

1. Indicate the effects of each transaction on the company’s assets, liabilities, and owners’ equity for the month of February. Organize your analysis in tabular form as shown for the February1 transaction.