Sweetwater Temporary Clerical Help Service opened for business in June 2011. From the opening until the end of the year, Sweetwater engaged in the activities described below. So that a realistic trial balance can be prepared, the events described below are aggregations of many individual events.
a. Sold 10,000 shares of common stock for $4.50 per share
b. Purchased office equipment from Furniture Max Inc. for $18,710 cash
c. Received $112,880 from clients for services provided
d. Paid wages of $87,300
e. Borrowed $20,000 from the Bank of America on a three-year note payable
f. Paid office rent of $10,200
g. Purchased office supplies on credit for $2,120 from Office Supply Inc.
h. Paid $1,200 toward the payable established in transaction g
i. Paid utility charges incurred during the year of $3,250
Required:
1. Analyze the events for their effect on the accounting equation.
2. Prepare journal entries. (Note: Ignore the date because these events are aggregations of individual events.)
3. Post the journal entries to ledger accounts.
4. Prepare a trial balance at December 31, 2011.