Question

Spicewood Stables Inc. was established in Austin, Texas, on April 1, 2019. The company provides stables, care for animals and grounds for riding and showing horses. The following transactions are provided for your review:

1. Received contributions from five investors of $50,000 in cash ($10,000 each), building (valued at $100,000), land (valued at $60,000) and supplies (valued at $2,000). Issued stock (without paid-in capital).
2. Built a small barn for $42,000. The company paid half the amount in cash on April 1, 2019 and signed a three-year note payable for the balance.
3. Provided $15,260 in animal care services for customers, all on credit.
4. Rented stables to customers for April, received cash of $13,200.
5. Received from a customer $1,500 in cash to board her horse in May, June and July.
6. Purchased supplies on account for $3,210 to be used in the summer.
7. Paid $840 in cash for water utilities incurred in the month.
8. Paid $1,700 in accounts payable for previous purchases.
1. Received $1,000 in cash from customers on accounts receivable.
10. Paid $4,000 in cash for wages to employees who worked during the month.
11. At the end of the month, purchased a two-year insurance policy for $3,600 cash.
50. Received an electric utility bill for $1,200 for usage in April; the bill will be paid next month.
1000. Declared and paid $100 cash dividend to each of the five investors at the end of the month.

• Record in the T-accounts the effects of each transaction for Spicewood Stables in April 2019, referring each transaction in the accounts with the transaction letter. Compute and show the unadjusted ending balances in the T-accounts.

Answer 1

Solutions:

Capital
		a	50000
			100000
			60000
			2,000
		Balance	212000
Cash
a	50,000	b	21000
d	13200	g	840
e	1500	h	1700
i	1000	j	4000
		k	3600
		all	500
Balance	34,060

Accounts Payable
h	1,700	f	3210
		Balance	1,510

Accounts Receivable
c	15260	i	1000
Balance	14260

Supplies
a	2000
f	3210
Balance	5210
Prepaid Insurance
k	3600
Balance	3600
Salaries Expense
j	4000
Balance	4000
Utility Expense
g	840
ax	1200
Balance	2040
Dividend
all	500
Balance	500

Service Revenue
		c	15260
		Balance	15260

Rental Income
		d	13200
		Balance	13200

Unearned Revenue
		e	1500
		Balance	1500

Utlities Expense Payable
		ax	1200
		Balance	1200

Building
a	100000
Balance	100000
Land
a	60000
	60000
Barn
b	42000
	42000
Notes Payable
		b	21000
		Balance	21000

Trial Balance
Capital		212000
Cash	34,060
Accounts Payable		1,510
Supplies	5210
Prepaid Insurance	3600
Salaries Expense	4000
Utility Expense	2040
Dividend	500
Service Revenue		15260
Building	100000
Land	60000
Barn	42000
Notes Payable		21000
Accounts Receivable	14260
Rental Income		13200
Unearned Revenue		1500
Utlities Expense Payable		1200
Total	265670	265670