The chart of accounts of Clara’s Design Service of Montreal includes the following: Cash, 111; Accounts Receivable, 112; Office Equipment, 121; Design Equipment, 122; Accounts Payable, 211; Clara Benson, Capital, 311; Clara Benson, Withdrawals, 312; Design Fees Earned, 411; Advertising Expense, 511; Repair Expense, 512; Salaries Expense, 513; and Telephone Expense, 514. The following transactions occurred for Clara’s Design Service during the month of March 2014:
A. Clara invested $33,000 in the business from her personal savings account.
B. Bought design equipment on account, $14,000.
C. Advertising bill was received but not yet paid, $1,150.
D. Bought office equipment for cash, $3,300.
E. Received cash for design services rendered, $5,900.
F. Paid salaries expense, $1,720.
G. Paid repair expense for design equipment, $320.
H. Billed customers for design services rendered, $4,300.
I. Paid telephone bill, $150.
J. Received $2,000 as partial payment of transaction H.
K. Clara paid home telephone bill from company bank account, $66.
L. Paid $700 on the bill received in transaction C.
As Clara’s newly employed accountant, your task is to:
1. Setup T accounts in a ledger.
2. Record transactions in the T accounts. (Place the letter of the transaction next to the entry.)
3. Foot the T accounts where appropriate.
4. Prepare a trial balance for the end of March 2014.
5. Prepare from the trial balance, in proper form.
a. An income statement for the month of March.
b. A statement of owner’s equity for the month ended March 31.
c. A balance sheet as of March 31, 2014.