Comprehensive Problem Mulberry Services sells electronic data processing services to firms too small to own their own

Question:

Comprehensive Problem Mulberry Services sells electronic data processing services to firms too small to own their own computing equipment. Mulberry had the following accounts and account balances as of January 1, 2018;

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During 2018, the following transactions occurred (the events described below are aggregations of many individual events):

a. During 2018 , Mulberry sold $\$ 690,000$ of computing services, all on credit.

b. Mulberry collected $\$ 570,000$ from the credit sales in transaction $a$ and an additional $\$ 129,000$ from the accounts receivable outstanding at the beginning of the year.

c. Mulberry paid the interest payable of $\$ 8,000$.

d. Wages of $\$ 379,000$ were paid in cash.

e. Repairs and maintenance of $\$ 9,000$ were incurred and paid.

f. The prepaid rent at the beginning of the year was used in 2018. In addition, $\$ 28,000$ of computer rental costs were incurred and paid. There is no prepaid rent or rent payable at year-end.
g. Mulberry purchased computer paper for $\$ 13,000$ cash in late December. None of the paper was used by year-end.
h. Advertising expense of $\$ 26,000$ was incurred and paid.
i. Income tax of $\$ 10,300$ was incurred and paid in 2018 .
j. Interest of $\$ 5,000$ was paid on the long-term loan.
\section*{Required:}
1. Establish $\mathrm{T}$-accounts for the accounts listed above and enter the beginning balances. Use a chart of accounts to order the T-accounts.
2. Analyze each transaction. Journalize as appropriate. (Note: Ignore the date because these events are aggregations of individual events.)
3. Post your journal entries to the T-accounts. Add additional T-accounts when needed.
4. Use the ending balances in the T-accounts to prepare a trial balance.