Hobson Nolan is a human resources professional who operates a consulting practice under the name HN HR Consulting. The company had the following balances in its general ledger at February 28, 2014: Cash, $3,500; Accounts Receivable, $14,450; Equipment, $15,100; Accounts Payable, $18,750; and H. Nolan, Capital, $14,300. The following events and transactions occurred during March 2014.
Mar. 1 Borrowed $12,000 cash from the bank, signing a note payable.
2 Paid $13,000 to creditors on account.
3 Paid the monthly insurance premium of $145.
10 Paid the monthly charge of $550 for keeping the company's website up to date. The company uses the website to advertise its services.
16 Collected accounts receivable of $8,000.
18 Paid an additional $5,000 to creditors on account.
30 Miscellaneous expenses were paid in cash, $580.
31 Consulting services provided in March were for $2,000 cash and $5,000 on account.
31 Paid salaries, $1,650.
31 Paid the bank $555 on the note payable, of which $55 is interest and $500 is a partial payment of the note.
31 Paid March and April's rent, which totalled $1,900 ($950 per month).
31 Withdrew $1,000 cash for personal use.
(a) Prepare journal entries to record each of the March transactions.
(b) Open ledger accounts for each of the accounts listed in the trial balance, and enter the February 28, 2014, balances. Use T accounts.
(c) Post the journal entries to the accounts in the ledger.
(d) Prepare a trial balance as at the end of March.
TAKING IT FURTHER Is the March 31 rent payment an asset or an expense? Explain.