Geo Inc. had the following account balances on January 1, Year 2: Accounts Payab

Question

Geo Inc. had the following account balances on January 1, Year 2: Accounts Payable $ 740 Accounts Receivable 2,700 Cash 2,700 Common Stock 25,000 Equipment 3,900 Note Payable 5,200 Retained Earnings 5,036 Salaries and Wages Expense 5,200 Supplies 2,140 Required: Prepare journal entries for each of the following January activities, and post results to the relevant T-accounts. Compute the ending balance of each T-account. Beginning balances have been entered. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) A. Paid $740 on account for utilities that were used during December Year 1. B. Purchased $508 of supplies for cash. C. Signed a rental agreement for office space and paid $6,900 in advance for six months of rent beginning February 1, Year 2. D. Purchased $20,000 of new equipment, signing a promissory note. E. Provided $34,500 of services. $21,500 was received in cash and $13,000 was provided on credit. F. Paid workers $8,200 for work done in January.

Explanation / Answer

Journal entries year 1 Debit Credit Accounts payable 740 to cash 740 Supplies 508 to Cash 508 Prepaid rent 6,900 to Cash 6,900 year 2 Equipment 20,000 to Notes payable 20,000 Account receivable 13,000 Cash 21,500 to Service revenue 34,500 Salary expense 8,200 to cash 8,200 T- Accounts Cash oening bal 2,700 sal 8,200 21,700 balance 16,200 Common stock opening bal 25,000 Equipment balance 3,900 notes 20,000 balance 23,900 Accounts payab;e cash 740 opening 740 account receivable opening 2,700 13,000 bal 15,700 notes payable opeing 5,200 20,000 bal 25,200 Retained earnings opening 5,036 Salaries and wages opening 5,200 8,200 bal 13,400 Supplies opening 2,140

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