Exercise 2-15 continues with the consulting business of Alex Kerr, begun in Serial Exercise 1-16. Here you will account for Kerr Consulting's transactions as it is actually done in practice.
Kerr Consulting began operations and completed the following transactions during December 2013:
Dec. 2 Received $30,000 cash from owner Alex Kerr. The business gave owner's equity in the business to Kerr.
2 Paid office rent for December with cash, $3,000.
3 Paid cash for a Dell computer, $2,000. The computer is expected to remain in service for five years.
4 Purchased office furniture on account, $6,000. The furniture should last for five years.
5 Purchased supplies on account, $500.
9 Performed consulting services for a client on account, $2,000.
12 Paid utility expenses with cash, $250.
18 Performed consulting services for a client and received cash of $2,000.
21 Received $2,000 in advance for client services to be performed evenly over the next 30 days. Credit the liability account Unearned Revenue.
22 Hired an office manager on a part-time basis. She will be paid $2,000 per month, and she started work immediately.
23 Paid $500 cash for the supplies purchased on December 5.
28 Collected $1,500 from the consulting client invoiced on December 9.
30 Alex Kerr withdrew $2,000 cash for personal use.
Required
1. Open T-accounts in the ledger: Cash; Accounts Receivable; Supplies; Equipment; Furniture; Accounts Payable; Unearned Revenue; Alex Kerr, Capital; Alex Kerr, Withdrawals; Service Revenue; Rent Expense; Salaries Expense; and Utilities Expense. (Some of these T-accounts will be used in later chapters.)
2. Journalize the transactions. Explanations are not required.
3. Post to the T-accounts. Identify all items by date, and label an account balance as Bal. Formal posting references are not required.
4. Prepare a trial balance at December 31, 2013.