1. Prepare general journal entries for the following transactions of Valdez Services.
a. The company paid $2,000 cash for payment on a 6-month-old account payable for office supplies.
b. The company paid $1,200 cash for the just completed two-week salary of the receptionist.
c. The company paid $39,000 cash for equipment purchased.
d. The company paid $800 cash for this month’s utilities.
e. The company paid $4,500 cash in dividends to the owner (sole shareholder).
2. Transactions a, c, and e did not record an expense. Match each transaction (a, c, and e) with one of the following reasons for not recording an expense.
_____ This transaction is a distribution of cash to the owner. Even though equity decreased, that decrease did not occur in the process of providing goods or services to customers.
_____ This transaction decreased cash in settlement of a previously existing liability (equity did not change). Supplies expense is recorded when assets are used, not necessarily when cash is paid.
_____ This transaction involves the purchase of an asset. The form of the company’s assets changed, but total assets did not (and neither did equity).