Thanh Nguyen started a business, Nguyen Import Services, on August 1, 2014. After consulting with a friend who had tak
Thanh Nguyen started a business, Nguyen Import Services, on August 1, 2014. After consulting with a friend who had taken introductory accounting, Thanh created a chart of accounts for the business as follows: No. 101 Cash; No. 112 Accounts Receivable; No. 126 Supplies; No. 151 Equipment; No. 201 Accounts Payable; No. 209 Unearned Revenue; No. 301 T. Nguyen, Capital; No. 306 T. Nguyen, Drawings; No. 400 Service Revenue; No. 610
Advertising Expense; No. 726 Rent Expense; and No. 737 Utilities Expense. During August, the following events and transactions occurred:
Aug. 1 Thanh transferred $25,000 cash from his personal bank account to a bank account under the company name, Nguyen Import Services.
1 Signed a one-year rental agreement for $750 per month. Paid the first month's rent.
2 Paid $250 for utilities for August.
3 Purchased equipment for $5,250 cash.
5 Purchased $675 of supplies on account.
8 Provided services to a client and billed them $1,270.
12 Paid $945 for advertising the opening of the company.
20 Provided services to a client and collected $1,320 cash.
24 Received a $2,500 cash advance for a consulting engagement to be started in September.
25 Paid the balance due for the purchase of supplies on August 5.
28 Received $970 cash from the client billed in the August 8 transaction.
29 Paid Thanh, the owner, $1,225 cash for his personal use.
31 Received a $225 utility bill for August. It will be paid on September 1.
(a) Journalize the transactions.
(b) Post to the ledger accounts. Use the standard form of account.
(c) Prepare a trial balance at August 31, 2014.
TAKING IT FURTHER Thanh asks why separate drawings, revenue, and expense accounts are necessary since all of these accounts are owner's equity accounts. Thanh thinks he should be able to use one account. Explain if he is correct or not.