[The following information applies to the questions displayed below.]

Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $10. At the start of January 2015, VGCs income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash	$	1,810,000
Accounts Receivable		224,000
Supplies		23,400
Equipment		916,000
Land		1,950,000
Building		446,000
Accounts Payable		120,000
Unearned Revenue		91,000
Notes Payable (due 2018)		159,000
Common Stock		2,600,000
Retained Earnings		2,399,400

In addition to the above accounts, VGCs chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense.

rev: 09_10_2015_QC_CS-23922

Required:

1.	Analyze the effect of the January transactions (shown below) on the accounting equation, and indicate the account, amount, and direction of the effect (+ for increase and for decrease) of each transaction. (Enter any decreases to account balances with a minus sign.)

a.	Received $68,500 cash from customers for subscriptions that had already been earned in 2014.
b.	Received $205,000 cash from Electronic Arts, Inc. for service revenue earned in January.
c.	Purchased 10 new computer servers for $30,800; paid $19,900 cash and signed a three-year note for the remainder owed.
d.	Paid $17,100 for an Internet advertisement run on Yahoo! in January.
e.	Sold 19,400 monthly subscriptions at $10 each for services provided during January. Half was collected in cash and half was sold on account.
f.	Received an electric and gas utility bill for $6,180 for January utility services. The bill will be paid in February.
g.	Paid $360,000 in wages to employees for work done in January.
h.	Purchased $3,350 of supplies on account.
i.	Paid $3,350 cash to the supplier in (h).

	Assets		=	Liabilities		+	Stockholders Equity
a.
b.
c.
d.
e.
f.
g.
h.
i.

2.

Prepare journal entries for the January transactions listed in part 1, using the letter of each transaction as a reference. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) 1.) Record the receipt of $68,500 cash from customers for subscriptions that had already been earned in 2014. 2.) Record the receipt of $205,000 cash from Electronic Arts, Inc. for service earned in the month of January. 3.) Record the purchase of 10 new computer servers for $30,800; paid $19,900 as cash and signed a three year note for the remainder owed. 4.) Record the payment of $17,100 for an Internet advertisement run on Yahoo! in January. 5.) Record the sale of 19,400 monthly subscriptions at $10 each for services provided during January. Half was collected in cash and half was sold on account. 6.) Record the receipt of an electric and gas utility bill for $6,180 for January utility services. The bill will be paid in February. 7.) Record the payment of $360,000 in wages to employees for work done in January. 8.) Record the purchase $3,350 of supplies on account. 9.) Record the payment of $3,350 cash to the supplier in (h).

3.

Create T-accounts, enter the beginning balances shown above, post the journal entries to the T-accounts, and show the unadjusted ending balances in the T-accounts.

Cash					Accounts Receivable
Beg. Bal					Beg. Bal
					End. Bal
End. Bal
Supplies					Equipment
Beg. Bal					Beg. Bal
End. Bal					End. Bal
Land					Building
Beg. Bal					Beg. Bal
End. Bal					End. Bal
Accounts Payable					Unearned Revenue
Beg. Bal					Beg. Bal
End. Bal					End. Bal
Notes Payable (long-term)					Common Stock
Beg. Bal					Beg. Bal
End. Bal					End. Bal
Retained Earnings					Service Revenue
Beg. Bal					Beg. Bal
End. Bal					End. Bal
Salaries and Wages Expense					Advertising Expense
Beg. Bal					Beg. Bal
End. Bal					End. Bal
Utilities Expense
Beg. Bal
End. Bal