ADDITIONAL EX SOLUTION TRANSACTION ANALYSIS (A, L, SE, R AND E)

ERTYU Inc. entered into the following transactions during May 2014.
Analyze each of the following transactions and prepare the journal entry required to record the
related transaction. Then post amounts to T-accounts (see the following page).

(a) Borrowed $25,000, using a note payable to the bank;

(b) Purchased equipment for use in the business at a cost of $45,000; two-third was paid in cash
and the company signed a note for the balance (due in nine months);
(c) Lent $6,000 to one of the investors who signed a note due in nine months;
(d) One of the company owners borrowed $15,000 for personal use from a local bank, signing a
two-year note.
(e) Provided $30,000 in service to the customers, with $10,000 on account and the rest on cash;
(f) Received $5,000 on account paid by customers (ref. transaction (e));
(g) Paid employees $8,000 earned;
(h) Paid $1,500 rent for next month in advance;
(i) Received $700 telephone bill for previous month, to be paid next month;
(j) Received $1,000 utility bill for this month, to be paid immediately;
(k) Received $40,000 in cash from clients in advance of services ERTYU Inc. will provide next
month.
(l) Ordered $500 in supplies (no payment, no delivery).

TR. ACCOUNTS +/– A, L or SE DEBIT CREDIT

Cash +A $ 25,000
a)
Notes Payable +L 25,000
Equipment +A $ 45,000
b) Cash -A 30,000
Notes Payable +L 15,000
Notes Receivable +A $ 6,000
c)
Cash -A 6,000
d) There is no transaction to record, according to the "Separate-Entity assumption" .
Accounts Receivable +A $ 10,000
e) Cash +A 20,000
Service Revenue + R + SE 30,000
Cash +A $ 5,000
f)
Accounts Receivable -A 5,000
Wage Expense + E – SE 8,000
g)
Cash –A 8,000
Prepaid Expenses +A 1,500
h)
Cash –A 1,500
Telephone Expense + E – SE 700
i)
Accounts Payable +L 700
Utilities Expense + E – SE 1,000
j)
Cash –A 1,000
Cash +A $ 40,000
k)
Unearned Serv. Revenue +L 40,000
l) The exchange of promises is not considered a transaction, according to Acc. Persp.
 ASSETS LIABILITIES STOCKHOLDERS' EQ.
Beg. May $20,000 = Beg. May $5,000 + Beg. May $15,000
+ Cash - - Accounts Payable + - Contributed Capital +
Beg. 14,000 (b) 30,000 Beg. 5,000 Beg. 10,000
(a) 25,000 (c) 6,000 (i) 700
(e) 20,000 (g) 8,000
(f) 5,000 (h) 1,500
(k) 40,000 (j) 1,000
End 57,500 End 5,700 End 10,000
+ Supplies - - Notes Payable + - Retained Ernings +
Beg. 1,000 Beg. 0.00 Beg. 5,000
(a) 25,000
(b) 15,000
End 1,000 End 40,000 End 5,000
+ Equipment - - Unearned Ser. Reven. + - Service Revenue +
Beg. 5,000 Beg. 0.00 Beg. 0.00
(b) 45,000 (k) 40,000 (e) 30,000
End 50,000 End 40,000 End 30,000
+ Accounts Receivable - + Wage Expense -
Beg. 0.00 (f) 5,000 Beg. 0.00
(e) 10,000 (g) 8,000
End 5,000 End 8,000
+ Prepaid Expenses - + Utilities Expense -
Beg. 0.00 Beg. 0.00
(h) 1,500 (j) 1,000
End 1,500 End 1,000
+ Notes Receivable - + Telephone Expense -
Beg. 0.00 Beg. 0.00
(c) 6,000 (i) 700
End 6,000 End 700

End. May $121,000 = End. May $85,700 + End. May $35,300