Use this information to answer the following questions:

The account titles to be responded to are provided in no particular order. Assume that all accounts have normal balances according to whether the account is increased by a debit or increased by a credit.

Required:

In column A$,$ indicate whether a debit will:

$1.$ Increase the account balance, or

$2.$ Decrease the account balance.

In column B$,$ classify each account according to the following scheme. For contra accounts, indicate the classification of the account to which it relates.

$1.$ A current asset in the balance sheet.

$2.$ A noncurrent asset in the balance sheet.

$3.$ A current liability in the balance sheet.

$4.$ A long$-$term liability in the balance sheet.

$5.$ A permanent equity account in the balance sheet.

$6.$ A revenue account in the income statement.

$7.$ An expense account shown in the income statement.

$8.$ Account does not appear in either the balance sheet or the income statement.

Account Title Effect of a Debit Classification

Advertising Expense Decrease Expense

Buildings and Equipment Increase Noncurrent asset

$1-$year Notes Payable Decrease Long$-$term liability

Cost of Goods Sold Decrease Expense

Accounts Receivable Increase Current asset

Inventory Increase Current asset

Deferred Revenue Decrease Current liability

Bonds Payable Decrease Long$-$term liability

Retained Earnings Decrease Permanent equity account

Interest Revenue Increase Revenue

Supplied Expense Decrease Expense

Prepaid Rent Increase Current asset

Common Stock Decrease Permanent equity account

 

Below are the transactions for Cleaning Racer, Inc. for April, the first month of operations.

April $1$ Borrow$$50,000$ from the bank by signing a note.

April $2$ Issue common stock in exchange for cash of $$20,000.$

April $7$ Purchase equipment for $$40,000$ cash.

April $10$ Purchase cleaning supplies of $$4,000$ on account.

April $12$ Provide services of $$5,000$ for cash.

April $16$ Pay employees $$1,200$ for work performed.

April $19$ Pay for advertising in a local newspaper, costing $$500.$

April $23$ Provide services of $$7,000$ on account.

April $29$ Pay employees $$1,500$ for work performed.

April $30$ A utility bill of $$1,200$ for the current month is paid.

April $30$ Pay dividends of $$700$ to stockholders.

Required:

$1.$ Record each transaction.

$2.$ Post each transaction to the appropriate T$-$accounts.

$3.$ Calculate the balance of each account.

$4.$ Prepare a trial balance for June.

Racer uses the following accounts: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Notes Payable, Common Stock, Dividends, Service Revenue, Salaries Expense, Advertising Expense, and Utilities Expense.

Requirement $1($Journal$)$

April $1$ Notes Payable $$50,000$

April $2$ Common Stock $$20,000$

April $7$ Equipment $$40,000$

April $10$ Supplies $$4,000$

April $12$ Cash $$5,000$

April $16$ Salaries Expense $$1,200$

April $19$ Advertising Expense $$500$

April $23$ Accounts Receivable $$7,000$

April $29$ Salaries Expense $$1,500$

April $30$ Utilities Expense $$1,200$

April $30$ Dividends $$700$

Requirements $2$ and $3($T accts and balances$)$

Cash Accounts Receivable Supplies

Equipment Accounts Payable Notes Payable

Common Stock Dividends Service Revenue

Salaries Expense Advertising Expense Utility Expense

 Requirement $4$

Cleaning Racer Inc.

Trial Balance

June $30$

Account Title Debit Credit

Cash

Accounts Receivable

Supplies

Equipment

Accounts Payable

Notes Payable

Common Stock

Dividends

Service Revenue

Salaries Expense

Advertising Expense

Utilities Expense