Question

Donegan’s Lawn Care Service began operations in July 2011. The company uses the following general ledger accounts:
Cash..........................Capital Stock
Accounts Receivable.....................Retained Earnings
Office Supplies.......................Mowing Revenue
Mowing Equipment....................Salaries Expense
Accounts Payable.....................Fuel Expense
Notes Payable
The company engaged in the following transactions during its first month of operations:
July 18 Issued 500 shares of capital stock to Patrick Donegan for $1,500.
July 22 Purchased office supplies on account for $100.
July 23 Purchased mowing equipment for $2,000, paying $400 cash and issuing a 60-day note payable for the remaining balance.
July 24 Paid $25 cash for gasoline. All of this fuel will be used in July.
July 25 Billed Lost Creek Cemetery $150 for mowing services. The entire amount is due July 30.
July 26 Billed Golf View Condominiums $200 for mowing services. The entire amount is due
August 1.
July 30 Collected $150 from Lost Creek Cemetery for mowing services provided on July 25.
July 31 Paid $80 salary to employee Teddy Grimm for work performed in July.
Record each of the above transactions in general journal form. Include a brief explanation of the transaction as part of each journal entry.
Post each entry to the appropriate ledger accounts
Prepare a trial balance dated July 31, 2011.
Explain why the Retained Earnings account has a zero balance in the trial balance.



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  • CreatedApril 17, 2014
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