Schrand Aerobics, Inc., rents studio space (including a sound system) and specializes in offering aerobics classes. On January 1, 2013, its beginning account balances are as follows: Cash, $5,000; Accounts Receivable, $5,200; Equipment, $0; Notes Payable, $2,500; Accounts Payable, $1,000; Common Stock, $5,500; Retained Earnings, $1,200; Services Revenue, $0; Rent Expense, $0; Advertising Expense, $0; Wages Expense, $0; Utilities Expense, $0; Interest Expense, $0. The following transactions occur

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Question:

Schrand Aerobics, Inc., rents studio space (including a sound system) and specializes in offering aerobics classes. On January 1, 2013, its beginning account balances are as follows: Cash, $5,000; Accounts Receivable, $5,200; Equipment, $0; Notes Payable, $2,500; Accounts Payable, $1,000; Common Stock, $5,500; Retained Earnings, $1,200; Services Revenue, $0; Rent Expense, $0; Advertising Expense, $0; Wages Expense, $0; Utilities Expense, $0; Interest Expense, $0.
The following transactions occurred during January.
(1) Paid $600 cash toward accounts payable
(2) Paid $3,600 cash for January rent
(3) Billed clients $11,500 for January classes
(4) Received $500 invoice from supplier for T-shirts given to January class members as an advertising promotion
(5) Collected $10,000 cash from clients previously billed for services rendered
(6) Paid $2,400 cash for employee wages
(7) Received $680 invoice for January utilities expense
(8) Paid $20 cash to bank as January interest on notes payable
(9) Declared and paid $900 cash dividend to stockholders
(10) Paid $4,000 cash on January 31 to purchase sound equipment to replace the rental system
Required:
a. Prepare journal entries for each of the transactions 1 through 10.
b. Set up acounts,including beginning balances,for cach of the accounts used in part a. Post the journal entries to those T-accounts.

Answers

Answer:Schrand Aerobics, Inc.a. Journal Entries:Debit Accounts Payable $600Credit Cash $600To record the payment of cash.Debit Rent $3,600Credit Cash $3,600To record the payment of cash.Debit Accounts Receivable $11,500Credit Service Revenue $11,500To record the billing of clients.Debit Advertising $500Credit Accounts Payable $500To record advertising promotionDebit Cash $10,000Credit Accounts receivable $10,000To record the receipt of cash.Debit Wages $2,400Credit Cash $2,400To record the payment of cashDebit Utilities $680Credit Accounts Payable $680To record utilities expense.Debit Interest $20Credit Cash $20To record the payment of interest on notes payable.Debit Retained Earnings $900Credit Cash $900To record the payment of dividends.Debit Equipment $4,000Credit Cash $4,000To record the payment for purchase of sound equipments.b. T-Accounts:                              CashDescription                 Debit       Credit         BalanceBalance                                                        $5,000Accounts payable                        $600        4,400Rent                                              3,600           800Accounts receivable 10,000                        10,800Wages                                          2,400        8,400Interest                                              20        8,380Dividend                                         900         7,480Equipment                                  4,000         3,480                                 Accounts ReceivableDescription           Debit       Credit         BalanceBalance                                                  $5,200Service Revenue 11,500                         16,700Cash                                      10,000       6,700                        EquipmentDescription           Debit       Credit         BalanceCash                  $4,000                           $4,000                             Notes PayableDescription           Debit       Credit       BalanceBalance                                                  $2,500                            Accounts PayableDescription           Debit       Credit       BalanceBalance                                                  $1,000Cash                   $600                               400Advertising                           $500            900Utilities                                    680          1,580                      Common StockDescription        Debit       Credit       BalanceBalance                                                $5,500                      Retained EarningsDescription       Debit       Credit        BalanceBalance                                                $1,200Dividends        $900                                300                       Services RevenueDescription           Debit       Credit       BalanceAccounts receivable           $11,500      $11,500                       Rent ExpenseDescription           Debit       Credit       BalanceCash                   $3,600                        $3,600                       Advertising ExpenseDescription           Debit       Credit        BalanceAccounts payable $500                           $500                       Wages ExpenseDescription          Debit       Credit         BalanceCash                 $2,400                           $2,400                       Utilities ExpenseDescription           Debit       Credit         BalanceUtilities payable   $680                           $680                       Interest ExpenseDescription           Debit       Credit         BalanceCash                      $20                              $20Explanation:Journal entries record the transactions initially with debit and credit to the accounts affected.The T-accounts is the general ledger accounts where transactions are summarized and a balance for each account is obtained.

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