Laura Morrow operates Wildhorse Riding Academy, Inc. The academys primary sources of revenue are riding fees and lesson fees, which are provided on a cash basis. Laura also boards horses for owners, who are billed monthly for boarding fees. In a few cases, boarders pay in advance of expected use. For its revenue transactions, the academy maintains these accounts: Cash, Accounts Receivable, Unearned Service Revenue, and Service Revenue. The academy owns 10 horses, a stable, a riding corral, riding equipment, and office equipment. These assets are accounted for in the following accounts: Horses, Buildings, and Equipment. The academy employs stable helpers and an office employee, who receive weekly salaries. At the end of each month, the mail usually brings bills for advertising, utilities, and veterinary service. Other expenses include feed for the horses and insurance. For its expenses, the academy maintains the following accounts: Supplies, Prepaid Insurance, Accounts Payable, Salaries and Wages Expense, Advertising Expense, Utilities Expense, Maintenance and Repairs Expense, Supplies Expense, and Insurance Expense. Lauras sole source of personal income is dividends from the academy. Thus, the corporation declares and pays periodic dividends. To account for stockholders equity in the business and dividends, two accounts are maintained: Common Stock and Dividends. During the first month of operations, an inexperienced bookkeeper was employed. Laura asks you to review the following eight entries of the 50 entries made during the month. In each case, the explanation for the entry is correct. | May 1 | | Cash | | 17,700 | | | | | | | Unearned Service Revenue | | | | 17,700 | | | | | (Issued common stock in exchange for $17,700 cash) | | | | | | | 5 | | Cash | | 300 | | | | | | | Service Revenue | | | | 300 | | | | | (Received $300 cash for lesson fees) | | | | | | | 7 | | Cash | | 590 | | | | | | | Service Revenue | | | | 590 | | | | | (Received $590 for boarding of horses beginning June 1) | | | | | | | 9 | | Supplies Expense | | 1,770 | | | | | | | Cash | | | | 1,770 | | | | | (Purchased estimated 5 months supply of feed and hay for $1,770 on account) | | | | | | | 14 | | Equipment | | 90 | | | | | | | Cash | | | | 900 | | | | | (Purchased desk and other office equipment for $900 cash) | | | | | | | 15 | | Salaries and Wages Expense | | 470 | | | | | | | Cash | | | | 470 | | | | | (Issued check to Laura Morrow for personal use) | | | | | | | 20 | | Cash | | 173 | | | | | | | Service Revenue | | | | 182 | | | | | (Received $182 cash for riding fees) | | | | | | | 31 | | Maintenance and Repairs Expense | | 90 | | | | | | | Accounts Receivable | | | | 90 | | | | | (Received bill of $90 from carpenter for repair services performed) | | | | | | Answer the following. | | | |
