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Accounting entries to establish security alarm maintenance

For each Transaction, describe the event (including amounts) that caused the entry to be made. See attached file for the complete question.

Jill and Phil have just established a security alarm maintenance service. They charge $20 per hour per person and are usually paid by check upon completion of the job. For certain customers, they send a bill immediately and are paid promptly by return mail. Their out-of-pocket expenses are rather low - usually only supplies and transportation. Following are the entries to the accounting system that were made for the first 12 transactions of the company.

( Balance Sheet Accounts ) (Income Statement Accounts)
Account Cash + Other Assets = Liabilities + Equity +
Revenues -Expenses
A. Cash Investment by Owner 200 200
B. Cash Supplies -115 115
C. Cash Notes Payable 391 391
D. Cash Supplies -80 80
E. Cash Accounts Receivable Sales 390 160 550
F. Cash Notes payable -300 -300
G. Cash Accounts Receivable 100 100
H. Supplies Expense -55 -55
I. Supplies Expense -65 -65
J. Cash Accounts Receivable Sales 575 150 725
K. Cash Accounts Receivable 90 -90
I. Cash Retained Earnings -800 -800

For each Transaction, describe the event (including amounts that caused the entry to be made.


Solution Preview

A) The Owners have invested in the business by providing cash = 200. They were issued equity for 200 against this investment of 200.
B) Supplies were purchased for cash. Cash decreases by 115 and inventory increases by 115.
C) Borrowings in form of notes payable to the tune of 391. Cash increases by 391 and liabilities in the form of notes payable ...

Solution Summary

The solution describes the events (including amounts) that caused the entry to be made.