Ashley Conners owns La Jolla Art Company, a firm providing designs for advertisers, market analysts, and others. On July 1, the business's general ledger showed the following normal account balances:

The following transactions occurred during the month of July:

1 Paid July rent, \(\$ 670\).

2 Collected \(\$ 8,100\) on account from customers.

3 Paid \(\$ 3,500\) installment due on the \(\$ 7,000\) noninterest-bearing note payable to a relative.

4 Billed customers for design services rendered on account, \(\$ 21,000\).

5 Rendered design services and collected from cash customers, \(\$ 1,400\).

6 Paid \(\$ 1,900\) to creditors on account.

7 Collected \(\$ 16,500\) on account from customers.

8 Paid a delivery service for delivery of graphics to commercial firms, \(\$ 400\).

9 Paid July salaries, \(\$ 4,600\).

10 Received invoice for July advertising expense, to be paid in August, \(\$ 620\).

11 Paid utilities for July, \(\$ 350\).

12 The business paid a \(\$ 2,000\) cash dividend.

13 Received invoice for supplies used in July, to be paid in August, \(\$ 1,575\).

14 Purchased a computer for \(\$ 4,300\) cash to be used in the business starting next month.

Required

a. Set up accounts for the general ledger accounts with July 1 balances and enter the beginning balances. Also provide the following accounts: Equipment; Dividends; Service Fees Earned; Rent Expense; Salaries Expense; Delivery Expense; Advertising Expense; Utilities Expense; and Supplies Expense. Prepare journal entries and record the listed transactions in the appropriate T-accounts.

b. Prepare a trial balance as of July 31 .

Transcribed Image Text:

Cash..... Accounts receivable. $14,500 Accounts payable. 9,800 Notes payable... Common stock. $ 2,100 7,000 11,200 Retained earnings 4,000 Total assets $24,300 Total Liabilities and Stockholders' Equity... $24,300