Analyzing the Efffects of Transaction Using T-Accounts and Preparing an Unadjusted Trial Balance
Jessica Pothier opened FunFlatables on June 1, 2011. The company rents out moon walks and inflatable slides for parties and corporate events. The business also has obtained the use of an abandoned ice rink located in a local shopping mall, where its rental products are displayed andavailable for casual hourly rental by mall patrons. The following transactions occurred during thefirst month of operations.
a. Received $50,000 cash contributions from Jessica to establish the sole proprietorship.
b. Purchased inflatable rides and inflation equipment, paying $20,000 cash.
c. Received $5,000 cash from casual hourly rentals at the mall.
d. Rented rides and equipment to customers for $10,000. Received cash of $2,000; the rest is due from customers.
e. Received $2,500 from a large corporate customer as a deposit on a party booking for July 4.
f. Began to prepare for the July 4 party by purchasing various party supplies on account for $600.
g. Paid $12,000 in cash for renting the mall space in June, July, and August.
h. Received $1,000 from customers on accounts receivable.
i. Paid $4,000 in wages to employees for work done during the month.
j. Paid $1,000 for running a television ad this month.
k. Jessica Pothier withdrew $6,000 cash from the business.
1. Set up appropriate T-accounts for Cash; Accounts Receivable; Supplies; Prepaid Rent;Equipment; Accounts Payable; Unearned Rent Revenue; J. Pothier, Capital; J. Pothier,Drawing; Rent Revenue; Wages Expense; and Advertising Expense. All accounts begin with zero balances.
2. Record in the T-accounts the effects of each transaction for FunFlatables in June, referencing each transaction in the accounts with the transaction letter. Show the unadjusted ending balances in the T-accounts.
3. Prepare an unadjusted trial balance for the end of June 2011.