Question

Prepare journal entries for each transaction and identify the financial statement impact of each entry. The financial statements are automatically generated based on the journal entries recorded. Assume Wright Services began the year with the following balances: Cash, $59,000; Accounts receivable, $11,800; and Common stock, $70,800. Jan. 1 Kay Wright invested $21,800 cash in the company in exchange for common stock. Jan. 2 The company provided services to a client and immediately received $6,300 cash. Jan. 3 The company received $11,800 cash from a client in payment for services to be provided next year. Jan. 4 The company received $7,100 cash from a client in partial payment of accounts receivable. Jan. 5 The company borrowed $14,000 cash from the bank by signing a note payable.

Answer 1

Jan. 1

Cash $21,800 (debit)

Common Stock $21,800 (credit)

Effect : Assets = Increase $21,800, Equity = Increase $21,800, Liabilities = No Effect

Jan. 2

Cash $6,300 (debit)

Service Revenue $6,300 (credit)

Effect : Assets = Increase $6,300, Equity = Increase $6,300, Liabilities = No Effect

Jan. 3

Cash $11,800 (debit)

Deferred Revenue $11,800 (credit)

Effect : Assets = Increase $11,800, Equity = No Effect, Liabilities = Increase $11,800

Jan. 4

Cash $7,100 (debit)

Trade Payable $7,100 (credit)

Effect : Assets = Increase $7,100, Equity = No Effect, Liabilities = Decrease $7,100

Jan. 5

Cash $14,000 (debit)

Trade Payable $7,100 (credit)

Effect : Assets = Increase $14,000, Equity = No Effect, Liabilities = Increase $14,000

Step-by-step explanation:

The following items will appear in Balance Sheet :

1. Assets
2. Liability
3. Equity

The following items will appear in Income Statement :

1. Revenue
2. Income
3. Expenses

The Following Items will Appear in Statement of Cash flow :

1. Common Stocks