Set up T accounts for Cash; Accounts Receivable; Supplies; Accounts Payable; Common Stock; Dividends; Professional Fees;...

Set up T accounts for Cash; Accounts Receivable; Supplies; Accounts Payable; Common Stock; Dividends; Professional Fees; and Operating Expenses. (a) In the T accounts, record the following transactions of Potter Pool Services for June, identifying each entry by number: (1) Stockholders invested $12,500 cash in the business by purchasing common stock. (2) Purchased supplies on account, $6,250. (3) Paid operating expenses, $5,500. (4) Billed clients for fees, $7,440. (5) Received cash from cash clients, $4,700. (6) Paid creditors on account, $1,400. (7) Received $3,100 from clients on account. (8) Paid $1,500 cash dividends. (b) Prepare a trial balance as of June 30 for Potter Pool Services. (c) Assuming that supplies expense (which has not been recorded) amounts to $1,500 for June, determine the following: (1) Net income for the month. (2) Stockholders' equity as of June 30.

Expert Solution

Requirement a:

Cash
(1)	$12,500	(3)	$5,500
(5)	$4,700	(6)	$1,400
(7)	$3,100	(8)	$1,500
Bal.	$11,900

Accounts receivable
(4)	$7,440	(7)	$3,100
Bal.	$4,340

Supplies
(2)	$6,250
Bal.	$6,250

Accounts payable
(6)	$1,400	(2)	$6,250
		Bal.	$4,850

Common stock
		(1)	$12,500
		Bal.	$12,500

Dividends
(8)	$1,500
Bal.	$1,500

Professional Fees
		(4)	$7,440
		(5)	$4,700
		Bal.	$12,140

Operating Expenses
(3)	$5,500
Bal.	$5,500

Requirement b:

Trial Balance
Account title	Debit	Credit
Cash	$11,900
Accounts receivable	$4,340
Supplies	$6,250
Accounts payable		$4,850
Common stock		$12,500
Dividends	$1,500
Professional Fees		$12,140
Operating expenses	$5,500
Total	$29,490	$29,490

Requirement c:
1.

Professional Fees		$12,140
Expenses:
Operating expenses	$5,500
Supplies expense	$1,500
Total expenses		$7,000
Net income		$5,140

2.

Common stock	$12,500
Retained earnings	$3,640
[5,140 Net income -1,500 dividends]
Stockholders' equity	$16,140

ekkarill92 answered 2 years ago

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