During the first month of operations, the following events and transactions occurred for Astromech Accounting Services Inc.:
May 1 Issued common shares for $20,000 cash.
1 Paid office rent of $950 for the month.
4 Hired a secretary-receptionist at a salary of $2,000 per month. She started work the same day.
4 Purchased $750 of supplies on account from Read Supply Corp.
11 Completed an income tax assignment and billed client $2,725 for services provided.
12 Received $3,500 in advance on a management consulting engagement.
15 Received $2,350 for services completed for Arnold Corp.
20 Received $1,725 from client for work completed and billed on May 11.
22 Paid one third of balance due to Read Supply Corp. (See May 4 transaction.)
25 Received a $275 telephone bill for May, to be paid next month.
29 Paid secretary-receptionist $2,000 salary for the month.
29 Paid monthly income tax instalment, $300.
29 Paid $250 dividend.
Instructions
(a) Journalize the transactions.
(b) Using T accounts, post the May journal entries to the general ledger.
(c) After the accountant finished journalizing and posting the above transactions, she complained that this process took too much time. She thought it would be more efficient to omit the journal entry step in the accounting cycle and record the transactions directly in the general ledger. Explain to the accountant whether you think this is a good idea or not, and why.