Problem 3 Third Eye Transaction Analysis and Trial Balance

Nick Danger opened a forensic accounting practice, (Nick Danger, Third Eye, Inc.), on June 1. The following accounts will be needed to record the businesss transactions for June: Cash; Accounts Receivable; Office Supplies; Forensic Accounting Library; Office Furniture and Fixtures; Accounts Payable; Notes Payable; Common Stock; Dividends; Service Revenue; Rent Expense; Salaries Expense; Advertising Expense; Utilities Expense; and Interest Expense. The following transactions occurred in June:

1. Danger opened a business checking account at a local bank, investing $22,000 in his practice in exchange for common stock.

2. Purchased office furniture and fixtures for $9,800, paid $4,800 cash, and gave a note payable for the balance.

3. Purchased books and software for a forensic accounting library on account, $6,700.

4. Purchased office supplies for cash, $390.

5. Paid rent for June, $850.

6. Returned $300 of books with defective bindings. The return reduced the amount owed to the supplier.

7. Billed clients for professional services rendered, $18,600.

8. Paid $1,700 on account for the library items purchased on June 3.

9. Collected $17,250 on account from clients billed on June 7.

10. Paid June salaries, $4,900.

11. Received an invoice for June advertising, to be paid in July, $400.

12. The business paid stockholders a cash dividend of $800.

13. Paid utilities for June, $210.

14. Paid interest for June on an outstanding note payable, $160.

Required:

Prepare journal entries and record the above transactions in T-accounts, and key entries with the numbers of the transactions.

Prepare a trial balance from the general ledger as of June 30.