(1)	Receive 60,000 in exchange for common stock.
(2)	Borrow 12,000 from bank.
(3)	Purchase 2,400 of supplies inventory on credit.
(4)	Receive 18,000 cash from customers for services provided.
(5)	Pay 2,400 cash to supplier in transaction 3.
(6)	Receive order for future services with 4,200 advance payment.
(7)	Pay 6,000 cash dividend to shareholders.
(8)	Pay employees 7,200 cash for compensation earned.
(9)	Pay 600 cash for interest on loan in transaction 2.

a. Prepare journal entries for each of the transaction (1) through (9).

(1)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(2)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(3)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(4)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(5)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(6)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(7)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(8)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(9)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer

b. Set up T-accounts for each of the accounts used in part a. and post the journal entries to the appropriate line in the correct T-accounts. (The T-accounts will not have opening balances.) After all transactions are recorded, compute the balance for each account in the appropriate column.

Cash (A)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Common Stock (SE)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Inventory (A)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Retained Earnings (SE)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Accounts Payable (L)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Revenue (R)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Unearned Revenue (L)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Wages Expense (E)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Notes Payable (L)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Interest Expense (E)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Feedback

In journal entries, debits increase assets and expenses and decrease liabilities, equity and revenues. Credits increase liabilities, equity and revenues and decrease assets and expenses. For each entry, the debits must equal the credits.