Question 10 Jennifer Morrow operates Pharoah Riding Academy, Inc. The academy's primary sources of revenue are riding fees and lesson fees, which are provided on a cash basis. Jennifer 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. Jennifer's 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 account are maintained: Common Stock and Dividends. During the first month of operations, an inexperienced bookkeeper was employed. Jennifer 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 5 Unearned Service Revenue (Issued common stock in exchange for $12,600 cash) Cash Service Revenue (Received $210 cash for lesson fees) 12,600 12,600 210 210 7 Cash Service Revenue 420 420 (Received $420 for boarding of horses beginning June 1) 9 Supplies Expense 1,260 Cash 1,260 (Purchased estimated 5 months' supply of feed and hay for $1,260 on account) 14 Equipment 70 0 Cash 700 (Purchased desk and other office equipment for $700 cash) 15 Salaries and Wages Expense Cash 340 340 (Issued check to Jennifer Morrow for personal use) 20 Cash Service Revenue (Received $129 cash for riding fees) 120 129