Answer:
1. Stockholders invest $90,000 cash to start the business.
Dr Cash 90,000
Cr Common stock 90,000
2. Purchased three digital copy machines for $400,000, paying $118,000 cash and signing a 5-year, 6% note for the remainder.
Dr Copy machines 400,000
Cr Cash 118,000*
Cr Notes payable 282,000
*Where did they get the extra cash from?
3. Purchased $5,500 paper supplies on credit.
Dr Supplies 5,500
Cr Accounts payable 5,500
4. Cash received for photocopy services amounted to $8,400.
Dr Cash 8,400
Cr Service revenue 8,400
5. Paid $500 cash for radio advertising.
Dr Advertising expense 500
Cr Cash 500
6. Paid $800 on account for paper supplies purchased in transaction 3.
Dr Accounts payable 800
Cr Cash 800
7. Dividends of $1,600 were paid to stockholders.
Dr Dividends 1,600
Cr Cash 1,600
8. Paid $1,200 cash for rent for the current month.
Dr Rent expense 1,200
Cr Cash 1,200
9. Received $2,200 cash advance from a customer for future copying.
Dr Cash 2,200
Cr Unearned service revenue 2,200
10. Billed a customer for $500 for photocopy services completed.
Dr Accounts receivable 500
Cr Service revenue 500
