Grete Rodewald formed a dog grooming and training business called Grete Kanines on September 1, 2021. After consulting with a friend who had taken introductory accounting, Grete created a chart of accounts for the business as follows: No. 101 Cash; No. 112 Accounts Receivable; No. 130 Prepaid Insurance; No. 151 Equipment; No. 201 Accounts Payable; No. 209 Unearned Revenue; No. 301 G. Rodewald, Capital; No. 306 G. Rodewald, Drawings; No. 400 Service Revenue; No. 610 Advertising Expense; No. 726 Rent Expense; and No. 737 Utilities Expense. During September, the following events and transactions occurred:

Sept. 1 Grete transferred $9,630 from her personal bank account to a bank account under the company name Grete Kanines.

2 Signed a one-year rental agreement for $690 per month. Paid the first month’s rent.

2 Paid $750 for a one-year insurance policy effective September 1, 2021.

5 Purchased $2,640 of equipment on credit.

7 Paid $420 for advertising in several community newsletters in September.

13 Collected $500 cash for providing dog grooming services.

21 Attended a dog show and provided $800 of dog grooming services for one of the major

kennel owners. The kennel owner will pay the amount owing within two weeks.

24 Collected $540 from the kennel owner for the services provided on September 21. The

kennel owner promised to pay the rest on October 2.

28 Paid $210 for utilities for the month of September.

29 Paid $1,470 of the amount owed from the September 5 equipment purchase.

30 Received $860 cash for dog training lessons that will start on October 10.

30 Collected $1,045 cash for providing dog grooming services.

30 Paid the owner, Grete Rodewald, $1,490 for her personal use.

Instructions

a. Journalize the transactions.

b. Post the journal entries to the ledger accounts. (Use the ledger format provided in Illustration 2.20.)

c. Prepare a trial balance as at September 30, 2021.

Taking it further

Grete thinks she needs only one account for investments, drawings, revenues, and expenses because these are all owner’s equity accounts. Explain to her why she needs separate accounts.