Mulberry Services sells electronic data processing services to firms too small to own their own computing equipment. Mulberry had the following accounts and account balances as of January 1: Accounts Payable $14,000 Accounts Receivable 130,000 Cash 6,000 Common Stock 114,000 Interest Payable 8,000 Notes Payable (Long-term) 80,000 Prepaid Rent (Short-term) 96,000 Retained Earnings, January 1 16,000

During the year, the following transactions occurred (the events described below are aggregations of many individual events):

a. During the year, Mulberry sold $690,000 of computing services, all on credit.

b. Mulberry collected $570,000 from the credit sales in Transaction a and an additional $129,000 from the accounts receivable outstanding at the beginning of the year.

c. Mulberry paid the interest payable of $8,000.

d. Wages of $379,000 were paid in cash.

e. Repairs and maintenance of $9,000 were incurred and paid.

f. The prepaid rent at the beginning of the year was used during the year. In addition, $28,000 of computer rental costs were incurred and paid. There is no prepaid rent or rent payable at year-end.

g. Mulberry purchased computer paper for $13,000 cash in late December. None of the paper was used by year-end.

h. Advertising expense of $26,000 was incurred and paid.

i. Income tax of $10,300 was incurred and paid during the year.

j. Interest of $5,000 was paid on the long-term loan. Required:

1. Establish a ledger for the accounts listed above and enter the beginning balances.

2. Analyze each transaction. Journalize as appropriate.

3. Post your journal entries to T-accounts. Add additional T-accounts when needed.

4. Use the ending balances in the T-accounts to prepare a trial balance.

GENERAL JOURNAL:

	DATE	ACCOUNT	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
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