Barbara Fair is a licensed architect. During the first month of operation of her business, the following events and transactions occurred.

Apr. 1 Invested $45,000 cash.

1 Hired a secretary-receptionist at a salary of $500 per week payable monthly.

2 Paid office rent for the month $800.

3 Purchased architectural supplies on account from Dakin Company for $1,500.

10 Completed blueprints on a carport and billed client $1,800 for services performed.

11 Received $500 cash advance from D. Ellington for the design of a new home.

20 Received $1,500 cash for services completed and delivered to L. Leno.

30 Paid secretary-receptionist $2,000 for the month.

30 Paid $600 to Dakin Company for accounts payable due.

Barbara uses the following chart of accounts:

No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Revenue, No. 301 B. Fair, Capital, No. 400 Service Revenue, No. 726 Salaries Expense, and No. 729 Rent Expense.

Instructions

a. Journalize the transactions.

b. Post the journal entries to the ledger accounts. (Use the ledger format provided in Illustration 2.20.)

c. Prepare a trial balance at April 30, 2021.

Taking it further

Barbara believes credit balances are favourable and debit balances are unfavourable.

Is Barbara correct? Discuss.