Sweet Dreams Chocolatiers Ltd. began operations on January 1, 2011. During its first year, the following transactions occurred:
1. Issued common shares for $200,000 cash.
2. Purchased $475,000 of inventory on account.
3. Sold inventory on account for $640,000. The original cost of the inventory that was sold was $380,000.
4. Collected $580,000 from customers on account.
5. Paid $430,000 to suppliers for the inventory previously purchased on account.
6. Bought a delivery vehicle for $36,000 cash.
7. Paid $26,000 for rent, including $2,000 related to the next year.
8. Incurred $20,000 of other expenses, of which $18,000 was paid.
9. Recorded $2,000 of depreciation on the vehicle.
10. Declared and paid dividends of $6,000.
Required:
a. Prepare journal entries to record each of the above transactions.
b. Create T accounts and post the journal entries to the T accounts.
c. Prepare a December 31, 2011, trial balance.