(Transaction Analysis—Service Company)
Brown is a licensed CPA. During the first month
of operations of her business (a sole proprietorship), the following events and transactions occurred.
Invested $73,600 cash and equipment valued at $32,200 in the business.
Hired a secretary-receptionist at a salary of $667 per week, payable monthly.
Purchased supplies on account $1,610. (Debit an asset account.)
Paid office rent of $1,380 for the month.
Completed a tax assignment and billed client $2,530 for services rendered. (Use Service Revenue
Received $7,360 advance on a management consulting engagement.
Received cash of $5,290 for services completed for Calunga Co.
Paid insurance expense $253.
Paid secretary-receptionist $2,668 for the month.
A count of supplies indicated that $276 of supplies had been used.
Purchased a new computer for $14,030 with personal funds. (The computer will be used exclusively
for business purposes.)
Journalize the transactions in the general journal. (Omit explanations.)
(Corrected Trial Balance)
The trial balance of Cervantes Corporation, below, does not balance.
PRIL 30, 2007
Supplies on Hand
Furniture and Equipment
An examination of the ledger shows these errors.
Cash received from a customer on account was recorded (both debit and credit) as $2,760 instead
The purchase on account of a computer costing $6,400 was recorded as a debit to Office Expense
and a credit to Accounts Payable.
Services were performed on account for a client, $4,500, for which Accounts Receivable was deb-
ited $4,500 and Service Revenue was credited $450.
A payment of $190 for telephone charges was entered as a debit to Office Expenses and a debit to Cash.
The Service Revenue account was totaled at $10,400 instead of $10,560.
From this information prepare a corrected trial balance.
The ledger of Chan Rental Agency on March 31 of the current year includes
the following selected accounts before adjusting entries have been prepared.
Unearned Rent Revenue