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.

a. Record each of the above transactions in general journal form. Include a brief explanation of the transaction as part of each journal entry.

b. Post each entry to the appropriate ledger accounts

c. Prepare a trial balance dated July 31, 2011.

d. Explain why the Retained Earnings account has a zero balance in the trial balance.