WiCom Servicing completed these transactions during November 2014, its first month of operations:
Nov. 1 Tait linger, the owner, invested $62,000 cash and office equipment that had a fair value of $19,000 in the business.
2 Prepaid $21,000 cash for three months' rent for an office.
4 Made credit purchases of used office equipment for $9,000 and office supplies for $1,650.
8 Completed work for a client and immediately received $5,200 cash.
12 Completed a $4,800 project for a client, who will pay within 30 days.
13 Paid the account payable created on November 4.
19 Paid $3,750 cash as the annual premium on an insurance policy.
22 Received $2,000 as partial payment for the work completed on November 12.
24 Completed work for another client for $3,600 on credit.
28 Unger withdrew $5,300 from the business for personal use.
29 Purchased $1,700 of additional office supplies on credit.
30 Paid $19,000 in wages.
30 Paid $1,650 for the month's utility bill.
Required
1. Prepare General Journal entries to record the transactions. Use General Journal page 1.
2. Set up the following accounts (use the balance column format or T-accounts): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Tait Unger, Capital (301); Tait Unger, Withdrawals (302); Service Fees Earned (401); Wages Expense (680); and Utilities Expense (690).
3. Post the entries to the accounts, and enter the balance after each posting.
4. Prepare a trial balance at November 30, 2014.
Analysis Component: Is the November 29 purchase of office supplies recorded as a debit to an asset or an expense account? Explain.