Mulberry Services sells electronic data processing services to firms too small to own their own computing equipment. Mulberry had the following accounts and account balances as of January 1, 2009:

Accounts Payable .................$ 14,000

Accounts Receivable .................. 130,000

Common Stock .................. 114,000

Cash ....................... 6,000

Interest Payable .................. 8,000

Long-Term Notes Payable .............. 80,000

Prepaid Rent, Computing Equipment (Short-Term) .... 96,000

Retained Earnings, 12/31/2008 ............ 16,000

During 2009, the following transactions occurred (the events described below are aggregations of many individual events):

a. During 2009, Mulberry sold $690,000 of computing services, all on credit.

b. Mulberry collected $570,000 from the credit sales in transaction a and an additional $129,000 from the accounts receivable outstanding at the beginning of the year.

c. Mulberry paid the interest payable of $8,000.

d. Wages of $379,000 were paid in cash.

e. Administrative expenses of $90,000 were incurred and paid.

f. The prepaid rent at the beginning of the year was used in 2009. In addition, $28,000 of computer rental costs were incurred and paid. There is no prepaid rent or rent payable at year-end.

g. Mulberry purchased computer paper for $13,000 cash in late December.

h. None of the paper was used by year-end.

i. Advertising expense of $26,000 was incurred and paid.

j. Income tax of $10,300 was incurred and paid in 2009.

k. $10,000 of interest was paid on the long-term loan.

Required:

1. Establish a ledger for the accounts listed above and enter the beginning balances.

Use a chart of accounts to order the ledger accounts.

2. Analyze each transaction. Journalize as appropriate. (Ignore the date since these events are aggregations of individual events.)

3. Post your journal entries to the ledger accounts. Add additional ledger accounts when needed.

4. Use the ending balances in the ledger accounts to prepare a trial balance.