Ray & Peters CPAs decided to open its own tax practice, Tax Specialists, Inc. The following transactions are the events that occurred during May, the company’s first month:
May 1 Ray and Peters each donated $20,000 cash in exchange for common stock. They also signed a note with National Bank for $25,000.
2 Tax Specialists paid $28,000 prepaid rent for the first year.
11 Office equipment was purchased on account for $17,500.
16 The company purchased insurance for two years with $6,500 cash. The policy was effective June 1.
18 A discolored piece of office equipment arrived and the supplier agreed to remove $3,500 from Tax Specialists’ account.
25 The company purchased some office furniture on sale worth $10,000 on account.
28 Tax Specialists paid off balance owed on the equipment.
30 An office manager was hired at a rate of $110 a day. The start date is June 1.
Give the journal entry for each transaction. Set up the required T-accounts and post the entries to these accounts. Prepare an unadjusted trial balance.