Question 5 Saira Morrow operates Dressage Riding Academy, Inc. The academy's primary sources of revenue are riding fees and lesson fees, which are provided on a cash basis. Saira 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 Saira'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 accounts are maintained: Common Stock and Dividends. During the first month of operations, an inexperienced bookkeeper was employed. Saira 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 12,600 Unearned Service Revenue 12,600 (Issued common stock in exchange for $12,600 cash) 5 Cash 210 Service Revenue 210 (Received $210 cash for lesson fees) 7 Cash 420 Service Revenue 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 Cash 700 (Purchased desk and other office equipment for $700 cash) Salaries and Wages Expense 15 340 Cash 340 (Issued check to Saira for personal use) 20 Cash 120 Service Revenue 129 (Received $129 cash for riding fees) Maintenance and Repairs Expense 31 65 Accounts Receivable 65 (Received bill of $65 from carpenter for repair services performed) Date Account Titles and Explanation Debit Credit Will the incorrect entries prevent the trial balance from balancing? Date May 1 May 7 May 9 May 14 May 15 May 20 May 31 What was the correct net income for May, assuming the bookkeeper originally reported net income of $3,780 after posting all 50 entries? Correct net income What was the correct cash balance at May 31, assuming the bookkeeper reported a balance of $10,480 after posting all 50 entries? Correct cash balance Click if you would like to Show Work for this question: Open Show Work