Fundamental Accounting Principles
Santo Birch opens a Web consulting business called Show-Me-the-Money Consultants and completes the following transactions in March:
March 1 Birch invested $150,000 cash along with $22,000 of office equipment in the business.
2 Prepaid $6,000 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $6,000.)
3 Made credit purchases of office equipment for $3,000 and office supplies for $1,200.
Payment is due within 10 days.
6 Completed services for a client and immediately received $4,000 cash.
9 Completed a $7,500 project for a client, who must pay within 30 days.
10 Paid $4,200 cash to settle the account payable created on March 3.
19 Paid $5,000 cash for the premium on a 12-month insurance policy.
22 Received $3,500 cash as partial payment for the work completed on March 9.
25 Completed work for another client for $3,820 on credit.
29 Birch withdrew $5,100 cash for personal use.
30 Purchased $600 of additional office supplies on credit.
31 Paid $200 cash for this month’s utility bill.
Required
1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).
2. Open the following accounts-their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); S. Birch, Capital (301); S. Birch, Withdrawals (302); Services Revenue (403); and Utilities Expense (690). Post the journal entries from part 1 to the accounts and enter the balance after each posting.
3. Prepare a trial balance as of the end of this month’s operations.