LO7 PROBLEM 3.6A Short Comprehensive Problem L09 Donegan's Lawn Care Service began operations in July 2011. The company uses the following general ledger accounts: Cash Capital Stock Accounts Receivable Retained Earnings Office Supplies Mowing Revenue Mowing Equipment Salaries Expense Accounts Payable Fuel Expense Notes Payable The company engaged in the following transactions during its first month of operations: July 18 Issued 500 shares of capital stock to Patrick Donegan for $1,500. July 22 Purchased office supplies on account for $100. July 23 Purchased mowing equipment for $2,000, paying $400 cash and issuing a 60-day note payable for the remaining balance. July 24 Paid $25 cash for gasoline. All of this fuel will be used in July. July 25 Billed Lost Creek Cemetery $150 for mowing services. The entire amount is due July 30. July 26 Billed Golf View Condominiums $200 for mowing services. The entire amount is due August 1. July 30 Collected $150 from Lost Creek Cemetery for mowing services provided on July 25. July 31 Paid $80 salary to employee Teddy Grimm for work performed in July. a. Record each of the above transactions in general journal form. Include a brief explanation of the transaction as part of each journal entry. b. Post each entry to the appropriate ledger accounts (use the T account format illustrated in Exhibit 3-8 on page 108). c. Prepare a trial balance dated July 31, 2011. d. Explain why the Retained Earnings account has a zero balance in the trial balance. PROBLEM 3.5B The Accounting Cycle: Journalizing, Posting. and Preparing a Trial Balance DE Cravati, DMD.. opened a dental clinic on August 1. 2011. The business transactions for August are shown below: Aug, 1 Dr. Cravati invested $280,000 cash in the business in exchange for 1,000 shares of capital stock. Aug. 4 Land and a building were purchased for $400,000. Of this amount. $60,000 applied to the land and S340,000 to the building. A cash payment of $80,000 was made at the time of the purchase, and a note payable was issued for the remaining balance. Aug. 9 Medical instruments were purchased for $75,000 cash. Aug. 16 Office fixtures and equipment were purchased for $25,000. Dr. Cravati paid $10,000 at the time of purchase and agreed to pay the entire remaining balance in 15 days. Aug. 21 Office supplies expected to last several months were purchased for $4,200 cash. Aug, 24 Dr. Cravati billed patients $13,000 for services rendered. Of this amount, $1.000 was received in cash, and $12,000 was billed on account (due in 30 days). Aug. 27 A $450 invoice was received for several newspaper advertisements placed in August The entire amount is due on September 8 Aug. 28 Received a $500 payment on the $12.000 account receivable recorded August 24. Aug. 31 Paid employees $2.200 for salaries earned in August A partial list of account titles used by Dr. Cravati includes: Cash Office Fixtures and Equipment Accounts Receivable Land Office Supplies Building Notes Payable Service Revenue Accounts Payable Advertising Expense Capital Stock Salary Expense Medical Instruments Chapter 3 The Accounting Cycle: Capturing Economic Events Instructions a. Analyze the effects that each of these transactions will have on the following six components of the company's financial statements for the month of August. Organize your answer in tabu- lar form, using the column headings shown below. Use I for increase. D for decrease, and NE for no effect. The August 1 transaction is provided for you: Transaction Aug. 1 Income Statement Revenue - Expenses - Net Income NE NE NE Balance Sheet Assets - Liabilities + Owners' Equity I NE 1 b. Prepare journal entries (including explanations) for cach transaction. c. Post each transaction to the appropriate ledger accounts (use the T account format as illus- trated in Exhibit 3-8 on page 108). d. Prepare a trial balance dated August 31, 2011 c. Using figures from the trial balance prepared in part de compute total assets, total liabilities, and owners' equity. Did August appear to be a profitable month? LO7 PROBLEM 3.6A Short Comprehensive Problem L09 Donegan's Lawn Care Service began operations in July 2011. The company uses the following general ledger accounts: Cash Capital Stock Accounts Receivable Retained Earnings Office Supplies Mowing Revenue Mowing Equipment Salaries Expense Accounts Payable Fuel Expense Notes Payable The company engaged in the following transactions during its first month of operations: July 18 Issued 500 shares of capital stock to Patrick Donegan for $1,500. July 22 Purchased office supplies on account for $100. July 23 Purchased mowing equipment for $2,000, paying $400 cash and issuing a 60-day note payable for the remaining balance. July 24 Paid $25 cash for gasoline. All of this fuel will be used in July. July 25 Billed Lost Creek Cemetery $150 for mowing services. The entire amount is due July 30. July 26 Billed Golf View Condominiums $200 for mowing services. The entire amount is due August 1. July 30 Collected $150 from Lost Creek Cemetery for mowing services provided on July 25. July 31 Paid $80 salary to employee Teddy Grimm for work performed in July. a. Record each of the above transactions in general journal form. Include a brief explanation of the transaction as part of each journal entry. b. Post each entry to the appropriate ledger accounts (use the T account format illustrated in Exhibit 3-8 on page 108). c. Prepare a trial balance dated July 31, 2011. d. Explain why the Retained Earnings account has a zero balance in the trial balance. PROBLEM 3.5B The Accounting Cycle: Journalizing, Posting. and Preparing a Trial Balance DE Cravati, DMD.. opened a dental clinic on August 1. 2011. The business transactions for August are shown below: Aug, 1 Dr. Cravati invested $280,000 cash in the business in exchange for 1,000 shares of capital stock. Aug. 4 Land and a building were purchased for $400,000. Of this amount. $60,000 applied to the land and S340,000 to the building. A cash payment of $80,000 was made at the time of the purchase, and a note payable was issued for the remaining balance. Aug. 9 Medical instruments were purchased for $75,000 cash. Aug. 16 Office fixtures and equipment were purchased for $25,000. Dr. Cravati paid $10,000 at the time of purchase and agreed to pay the entire remaining balance in 15 days. Aug. 21 Office supplies expected to last several months were purchased for $4,200 cash. Aug, 24 Dr. Cravati billed patients $13,000 for services rendered. Of this amount, $1.000 was received in cash, and $12,000 was billed on account (due in 30 days). Aug. 27 A $450 invoice was received for several newspaper advertisements placed in August The entire amount is due on September 8 Aug. 28 Received a $500 payment on the $12.000 account receivable recorded August 24. Aug. 31 Paid employees $2.200 for salaries earned in August A partial list of account titles used by Dr. Cravati includes: Cash Office Fixtures and Equipment Accounts Receivable Land Office Supplies Building Notes Payable Service Revenue Accounts Payable Advertising Expense Capital Stock Salary Expense Medical Instruments Chapter 3 The Accounting Cycle: Capturing Economic Events Instructions a. Analyze the effects that each of these transactions will have on the following six components of the company's financial statements for the month of August. Organize your answer in tabu- lar form, using the column headings shown below. Use I for increase. D for decrease, and NE for no effect. The August 1 transaction is provided for you: Transaction Aug. 1 Income Statement Revenue - Expenses - Net Income NE NE NE Balance Sheet Assets - Liabilities + Owners' Equity I NE 1 b. Prepare journal entries (including explanations) for cach transaction. c. Post each transaction to the appropriate ledger accounts (use the T account format as illus- trated in Exhibit 3-8 on page 108). d. Prepare a trial balance dated August 31, 2011 c. Using figures from the trial balance prepared in part de compute total assets, total liabilities, and owners' equity. Did August appear to be a profitable month