Answer:
Montgomery Company
a. General Journal
1. Debit Cash $45,00
Credit Common stock $45,000
To record the issuance of common stock for cash.
2. Debit Accounts Receivable $64,000
Credit Service Revenue $64,000
To record the performance of services on account.
Debit Operating Expenses $9,700
Credit Accounts Payable $9,700
To record expenses incurred on account.
3. Debit Salaries Expense $37,000
Credit Cash $37,000
To record payment of salaries for cash.
4. Debit Dividend $4,600
Credit Cash $4,600
To record the payment of dividend to shareholders.
5. Debit Accounts Payable $7,100
Credit Cash $7,100
To record the payment on account
6. Debit Cash $42,500
Credit Accounts receivable $42,500
To record receipt of cash on account.
7. Debit Cash $11,100
Credit Service Revenue $11,100
To record the receipt of cash for services.
b. T-accounts:
Cash
Account Titles Debit Credit
Common stock $45,000
Salaries Expense $37,000
Dividend 4,600
Accounts Payable 7,100
Accounts receivable 42,500
Service Revenue 11,100
Balance $49,900
Common Stock
Account Titles Debit Credit
Cash $45,000
Accounts Receivable
Account Titles Debit Credit
Service Revenue $64,000
Cash $42,500
Balance 21,500
Service Revenue
Account Titles Debit Credit
Accounts Receivable $64,000
Cash 11,100
Balance $75,100
Operating Expenses
Account Titles Debit Credit
Accounts Payable $9,700
Accounts Payable
Account Titles Debit Credit
Operating Expenses $9,700
Cash $7,100
Balance $2,600
Salaries Expenses
Account Titles Debit Credit
Cash $37,000
Dividends
Account Titles Debit Credit
Cash $4,600
Explanation:
a) Data and Analysis:
1. Cash $45,000 Common stock $45,000
2. Accounts Receivable $64,000 Service Revenue $64,000
Operating Expenses $9,700 Accounts Payable $9,700
3. Salaries Expense $37,000 Cash $37,000
4. Dividend $4,600 Cash $4,600
5. Accounts Payable $7,100 Cash $7,100
6. Cash $42,500 Accounts receivable $42,500
7. Cash $11,100 Service Revenue $11,100
