Answer:
1. Record each transaction.
March 1 Issue common stock in exchange for cash of $3,000.
Dr Cash 3,000
Cr Common stock 3,000
March 3 Purchase sewing equipment by signing a note with the local bank, $2,700.
Dr Equipment 2,700
Cr Notes payable 2,700
March 5 Pay rent of $600 for March.
Dr Rent expense 600
Cr Cash 600
March 7 Martha, a customer, places an order for alterations to several dresses. Ute estimates that the alterations will cost Martha $800. Martha is not required to pay for the alterations until the work is complete.
no journal entry required since no work has been done nor nay money has been received
March 12 Purchase sewing supplies for $130 on account. This material will be used to provide services to customers.
Dr Supplies 130
Cr Accounts payable 130
March 15 Ute delivers altered dresses to Martha and receives $800.
Dr Cash 800
Cr Service revenue 800
March 19 Ute agrees to alter 10 business suits for Bob, who has lost a significant amount of weight recently. Ute receives $700 from Bob and promises the suits to be completed by March 25.
Dr Cash 700
Cr Unearned revenue 700
March 25 Ute delivers 10 altered business suits to Bob.
Dr Unearned revenue 700
Cr Service revenue 700
March 30 Pay utilities of $95 for the current period.
Dr Utilities expense 95
Cr Cash 95
March 31 Pay dividends of $150 to stockholders.
Dr Retained earnings 150
Cr Cash 150
2. Post each transaction to the appropriate T-accounts.
3. Calculate the balance of each account at March 31.
cash common stock
debit credit debit credit
3000 3000
600
800
700
95
150
3655
equipment notes payable
debit credit debit credit
2700 2700
rent expense service revenue
debit credit debit credit
600 800
700
1500
supplies accounts payable
debit credit debit credit
130 130
unearned revenue utilities expense
debit credit debit credit
700 95
700
retained earnings dividends
debit credit debit credit
150
4. Prepare a trial balance as of March 31.
first we need to calculate net income = $1,500 - $95 - $600 = $805
retained earnings = $805 - $150 = $655
Ute Sewing Shop
Balance Sheet
For the Month Ended March 31, 202x
Assets:
Cash $3,655
Supplies $130
Equipment $2,700
total Assets: $6,485
Liabilities and stockholders' equity:
Accounts Payable $130
Notes Payable $2,700
Common Stock $3,000
Retained earnings $655
total liabilities and stockholders' equity: $6,485