Chapter 2 Processing Accounting information P2-13B. Transaction Analysis and Trial Balance Ashley Somers owns San Diego Art Company, a firm L04, 5, 6 providing designs for advertisers, market analysts, and others. On July 1, the business's general ledger showed the following normal account balances: Retained earnings . Total assets..$24,300 Total Liabilities and Stockholders' Equity. The following transactions occurred during the month of July: July 1 Paid July rent, $670. $24,300 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, $19,550 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 9 10 11 12 13 Received invoice for supplies used in July, to be paid in August, $2,260 14 Paid a delivery service for delivery of graphics to commercial firms, $400. Paid July salaries, $4,600. Received invoice for July advertising expense, to be paid in August, $800. Paid utilities for July, $350. The business paid a $2,000 cash dividend. 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 I 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. Prepare a trial balance as of July 31. b. P2-12B. Transaction Analysis and the Effect of Errors on the Trial Balance The following T-accounts contain numbered entries for the May transactions of Valerie Rankine who opened a consulting ser- vices business on May 1: Cash Common Stock (1) 20,000 4,800 (2) 20,000 (1) 3,700 810 (4) 1,950 (6) 600 (8) Accounts Receivable Dividends (5) 6,400 3,700 (9) Office Supplies 600 Professional Fees Earned (3) 2,800 6,400 (5) Office Equipment Rent Expense 4,800 810 Accounts Payable Utilities Expense 1,950 2,800 (3) 270 270(7 Required a. Give a description of each of the nine numbered transactions entered in the above accounts. Ex- ample: (1) Valerie Rankine invested $20,000 of her personal funds in the business in exchange for common stock. The following trial balance, prepared for Rankine's firm as of May 31, contains several errors. Itemize the errors and indicate the correct totals for the trial balance. b