2-115
2-116
2-118
197.
Baker Incorporated specializes in training and veterinary services to for household pets,
such as dogs, birds, lizards, fish, and of course, cats. After the first 11 months of
operations in 2018, Baker has the following account balances.
Account Title
Debits
Credits
Cash
$13,300
Supplies
2,600
Prepaid rent
4,800
Equipment
82,100
Buildings
200,000
Accounts payable
$9,500
Deferred revenue
3,400
Common stock
145,000
Retained earnings
50,200
Dividends
9,000
Service revenue
250,000
Salaries expense
100,000
Advertising expense
15,600
Utilities expense
30,700
Totals
458,100
$458,100
The following transactions occur during December 2018:
December 1-31
Throughout the month, Baker provides services to customers for
cash, $25,400. (Hint: Record the entire month’s services in a single
entry.)
December 4
Purchase pet supplies on account, $2,700.
December 8
Pay for fliers to be distributed to local residences to advertise the
company’s services, $3,100.
December 9
Pay for supplies purchased on December 4.
December 12
Issue additional shares of common stock for cash, $6,000.
December 16
Pay cash on accounts payable, $6,600.
December 19
Purchase equipment with cash, $7,800.
December 22
Pay utilities for December, $4,400.
December 24
Receive cash from customers for services to be provided next
January, $2,500.
December 27
One of Baker’s trainers takes a part-time job at the zoo and earns a
salary of $1,300. The zoo and Baker are separate companies.
December 30
Pay employees’ salaries for the current month, $10,000.
December 31
Pay dividends to stockholders, $3,000.
Required:
1. Record each transaction.
2. Post each transaction to the appropriate T-accounts.
3. Calculate the balance of each account at December 31. (Hint: Be sure to include the
balance at the beginning of December in each T-account.)
4. Prepare a trial balance as of December 31.
December 1-31
Service Revenue
(Provide services for cash)
December 4
Accounts Payable
(Purchase supplies on account)
2-120
2-121
2-122
2-124
198.
Below are the account balances of Heron Company at the end of November.
Accounts
Balances
Cash
$12,000
Accounts Receivable
?
Rent Expense
1,000
Supplies
5,000
Equipment, net
19,000
Accounts Payable
7,000
Service Revenue
40,000
Utilities Payable
1,000
Deferred Revenue
6,000
Common Stock
19,000
Utilities Expense
2,000
Retained Earnings
15,000
Salaries Payable
2,000
Salaries Expense
9,000
Insurance Expense
6,000
Advertising Expense
1,000
Supplies Expense
10,000
Dividends
3,000
Prepaid Insurance
4,000
Legal Fees Expense
6,000
Required:
Prepare a trial balance by placing amounts in the appropriate debit or credit column and
determining the balance of the Accounts Receivable account.
Accounts
Cash
199.
Describe the difference between external events and internal events and give two
examples of each.
200.
Describe the six steps in the measurement process of external transactions.
201.
Explain what it means that external transactions have a dual effect.