Answer:
1. Jay BradFord invested $40,000 cash in the company, as its sole owner.
Account Debit Credit
Cash $40,000
Capital $40,000
2. Hired two employees to work in the warehouse. They will each be paid a salary of $3,050 per month.
Account Debit Credit
Wage Expense $3,050
Wages Payable $3,050
3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year.
Account Debit Credit
Prepaid Rent $24,000
Cash $24,000
4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months.
Account Debit Credit
Furniture and Equipment $30,000
Cash $10,000
Accounts Payable $10,000
5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.
Account Debit Credit
Prepaid Insurance $1,800
Cash $1,800
6. Purchased basic office supplies for $420 cash.
Account Debit Credit
Office supplies $420
Cash $420
7. Purchased more office supplies for $1,500 on account.
Account Debit Credit
Supplies $1,500
Accounts Payable $1,500
8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account.
Account Debit Credit
Revenue $20,000
Cash $8,000
Accounts Receivable $12,000
9. Paid $400 to suppliers for accounts payable due.
Account Debit Credit
Accounts Payable $400
Cash $400
10. Received $3,000 from customers in payment of accounts receivable.
Account Debit Credit
Accounts Receivable $3,000
Cash $3,000
11. Received utility bills in the amount of $380, to be paid next month.
Account Debit Credit
Utility Expense $380
Accounts Payable $380
12. Paid the monthly salaries of the two employees, totaling $6,100.
Account Debit Credit
Wage Expense $3,050
Wages Payable $3,050
