Hiroshi Mori began an upholstery cleaning business on October 1 and engaged in the following transactions during the month:

Oct. 1 Began business by depositing $12,000 in a bank account in the name of the corporation in exchange for 12,000 shares of $1 par value common stock.

2 Ordered cleaning supplies, $1,000.

3 Purchased cleaning equipment for cash, $2,800.

4 Made two months’ van lease payment in advance, $1,200.

7 Received the cleaning supplies ordered on October 2 and agreed to pay half the amount in 10 days and the rest in 30 days.

9 Paid for repairs on the van with cash, $80.

12 Received cash for cleaning upholstery, $960.

17 Paid half the amount owed on supplies purchased on October 7, $500.

21 Billed customers for cleaning upholstery, $1,340.

24 Paid cash for additional repairs on the van, $80.

27 Received $600 from the customers billed on October 21.

31 Declared and paid a dividend of $700.

REQUIRED

1. Set up the following T accounts: Cash, Accounts Receivable, Cleaning Supplies, Prepaid Lease, Cleaning Equipment, Accounts Payable, Common Stock, Dividends, Cleaning Revenue, and Repair Expense.

2. Record transactions directly in the T accounts. Identify each entry by date.

3. Prepare a trial balance for Mori Upholstery Cleaning, Inc., as of October 31, 2011.

4. Compare and contrast how the issues of recognition, valuation, and classification are settled in the transactions of October 7 and 9.