Analysis & Journal Entries for Rowand Enterprises & Byte Repair

Rowand Enterprises had the following selected transactions.

1. Aaron Rowand invested $4,000 cash in the business in exchange for common stock.
2. Paid office rent of $1,100.
3. Performed consulting services and billed a client $5,200.
4. Paid $700 cash dividend.
(a) Indicate the effect each transaction has on the basic equation (Assets = Liabilities + Owner's Equity).
ASSETS = LIABILITIES + STOCKHOLDER'S EQUITY

(B) Journalize the transactions
ACCOUNT/DESCRIPTION DEBIT CREDIT

BYTE REPAIR SERVICE, INC.
Trial Balance
December 31, 2007

Cash $8,000
Accounts Receivable 15,000
Parts Inventory 13,000
Prepaid Rent 3,000
Shop Equipment 21,000
Accounts Payable $19,000
Common Stock 30,000
Retained Earnings 11,000
$60,000 $60,000

Summarized transactions for January 2008 were as follows:

1. Advertising costs, paid in cash, $1,000.
2. Additional repair parts inventory acquired on account $4,000.
3. Miscellaneous expenses, paid in cash, $2,000.
4. Cash collected from customers in payment of accounts receivable $14,000.
5. Cash paid to creditors for accounts payable due $15,000.
6. Repair parts used during January $4,000. (Hint: Debit this to Repair Parts Expense.)
7. Repair services performed during January: for cash $6,000; on account $9,000.
8. Wages for January, paid in cash, $3,000.
9. Dividends paid in January were $3,000.

Instructions

(a) Prepare journal entries to record each of the January transactions. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)

b) Open T accounts for each of the accounts listed in the trial balance, and enter the opening balances for 2008. Post the journal entries to the accounts in the ledger.

(c) Prepare a trial balance as of January 31, 2008.

BYTE REPAIR SERVICE, INC.
Trial Balance
January 31, 2008
Cash

Accounts Receivable

Parts Inventory

Prepaid Rent

Shop Equipment

Accounts Payable

Common Stock

Retained Earnings

Dividends

Repair Services Revenue

Advertising Expense

Miscellaneous Expense

Repair Parts Expense

Wage Expense.