Richardson Services Ltd. was formed on May 1, 2017. The following transactions took place during the first month.
Transactions on May 1:
1. Shareholders invested £50,000 cash in exchange for ordinary shares.
2. Hired two employees to work in the warehouse. They will each be paid a salary of £2,800 per month.
3. Signed a 2-year rental agreement on a warehouse; paid £24,000 cash in advance for the first year.
4. Purchased furniture and equipment costing £30,000. A cash payment of £6,000 was made immediately; the remainder will be paid in 6 months.
5. Paid £1,800 cash for a one-year insurance policy on the furniture and equipment.
Transactions during the remainder of the month:
6. Purchased basic office supplies for £940 cash.
7. Purchased more office supplies for £1,300 on account.
8. Total revenues recognized were £18,000-£5,000 cash and £13,000 on account.
9. Paid £400 to suppliers for accounts payable due.
10. Received £3,000 from customers in payment of accounts receivable.
11. Received utility bills in the amount of £260, to be paid next month.
12. Paid the monthly salaries of the two employees, totalling £5,600.
Instructions
(a) Prepare journal entries to record each of the events listed. (Omit explanations.)
(b) Post the journal entries to T-accounts.
(c) Prepare a trial balance as of May 31, 2017.