Chapter 13: Part 1

The Double-Entry Accounting System

Introductory Financial Accounting for Business by Edmonds

Accounting Two Weekly Study Cycle

Consistent steps each week lead to stronger skills and better results.

Image summary: A circular flow chart illustrates a six-step weekly study cycle with days of the week mapped to specific actions. The cycle begins on Sunday with previewing next week's chapters and moves through Monday attending lectures, Tuesday reviewing and organizing, Wednesday attending lectures, Thursday practicing problems, and Friday self-testing, ending with a cumulative review on Saturday. At the center, a callout emphasizes that review, practice, understanding, and repetition lead to big results.

- Best practice: Watch Learning Objective One and Learning Objective Two in Connect, getting that subscription started, and answer the reading questions. Complete the CompleteBook before coming to your next class.

- Bring your reading questions to class.

Start a Study Cycle:

- Step one is to preview before class.

- Step two is to attend class actively.

- Step three is to review within twenty four hours.

- Step four is to practice problems.

- Step five is to self-test.

- Step six is the weekly cumulative review.

Vocabulary:

- The Income Statement reflects revenues and expenses for a certain time period. The excess of revenues over expenses is referred to as net income.

- The Statement of Retained Earnings reflects net income accumulated over multiple years as well as dividends that have been paid out during the current year.

- The Balance Sheet reflects the assets, which are the resources of a business, as well as the liabilities, which are claims of third parties against assets, and the equity, which are claims of shareholders against assets. It follows the accounting equation where assets equal liabilities plus equity. The balance sheet contains only permanent accounts.

Balance Sheet:

The balances in these accounts are recorded in permanent, or real, accounts that remain open from period to period.

- Assets are probable future economic benefits obtained or controlled as a result of past transactions.

Image summary: A graphic illustrates the fundamental accounting equation showing that Assets equal Liabilities plus Equity.

- Liabilities are probable future sacrifices of economic benefits.

- Equity is the residual interest in the assets of an entity that remains after deducting liabilities.

Income Statement:

These transactions are reflected in temporary, or nominal accounts that are closed to equity at the end of every period. Further, revenues, expenses, gains and losses are all the result of transactions between the entity and third parties.

- Revenues are inflows or other enhancements of assets from delivering or producing goods or services that are related to the entity's ongoing or central operations.

- Expenses are outflows of assets or incurred liabilities during a period from delivering goods or services that are related to the entity's ongoing or central operations.

- Gains are increases in equity from peripheral or incidental transactions of an entity. Examples of such transactions are gains from sales of fixed assets or securities.

- Losses are decreases in equity from peripheral or incidental transactions of an entity. Examples of such transactions are losses from sales of fixed assets or securities.

L.O 13 to 1: Record business events in T-accounts using debit/credit terminology.

Debit and Credit Terminology

- An account form known as a T-account is a good starting point for learning how to describe increases and decreases with debit and credit terminology.

- The left side of the vertical bar is the debit side, and the right side is the credit side.

Image summary: A diagram illustrates T-accounts for Assets, Liabilities, and Stockholders' Equity. For Assets, a debit increases the balance and a credit decreases it. For Liabilities and Stockholders' Equity, a debit decreases the balance and a credit increases it.

- Whether a debit or credit represents an increase or a decrease depends on the element, such as asset, liability, or stockholders' equity, in question.

The Accounting Equation

The basic equation is Assets equals Liabilities plus Stockholders' Equity.

Image summary: A diagram illustrates the expanded accounting equation and its debit and credit rules. It shows Assets equals Liabilities plus Common Stock plus Retained Earnings, minus Dividends, plus Revenues, minus Expenses. Below each account is a row showing the effect of debits and credits: Assets increase with debits and decrease with credits, while all other accounts follow the opposite pattern, increasing with credits and decreasing with debits, except for Dividends and Expenses which increase with debits.

Debits and Credits Summary

Image summary: This diagram summarizes the effect of debits and credits on different account types. For assets and expenses, a debit increases the balance and a credit decreases it. For liabilities, equity, and revenue, a credit increases the balance and a debit decreases it.

Debit and Credit Terminology

In every transaction, the total dollar value of all debits equals the total dollar value of all credits.

Image summary: An accounting equation diagram shows that Assets equal Liabilities plus Stockholders' Equity. Assets increase with a debit and decrease with a credit, while Liabilities and Stockholders' Equity decrease with a debit and increase with a credit.

Image summary: A detailed table breaks down the accounting equation further. It confirms that for Assets, a debit is an increase and a credit is a decrease. Conversely, for both Liabilities and Stockholders' Equity, which are categorized as Claims, a debit is a decrease and a credit is an increase.

Accrual-Based Accounting, not Cash Basis

Transaction Analysis.

- The heart of accounting and financial statement preparation is transaction analysis. A company may incur hundreds, thousands, or millions of transactions each day that require attention to the rules of accounting to provide integrity to the financial statements.

From accounting we know that transaction analysis is a process where we are trying to answer the following questions:

- What accounts are involved?

- For each account involved, what type of account is it, such as an asset, liability, or stockholders' equity?

- Is the account balance increasing or decreasing as a result of the transaction?

We know that each transaction will involve a minimum of two accounts. It can certainly be more, but no less than two.

One other important rule to remember is that for each transaction the accounting equation must be in balance, where Assets equals Liabilities plus Stockholders Equity.

- Debits increase assets, dividends, and expenses.

- Credits increase liabilities, stockholders' equity, and revenues.

The general ledger is a collection of T-accounts that are arranged in the order of assets, liabilities, stockholders' equity, revenues and expenses.

What is the Accounting Cycle?

- Transactions lead to journal entries.

- Journal entries go into the general journal.

- Information is summarized into a general ledger.

- This leads to a trial balance.

- Then financial statements are produced.

Image summary: A T-account diagram for Accounts Payable shows the debit side is empty, while the credit side contains a beginning balance and an ending balance, reflecting the normal credit balance of a liability account.

Accountants initially record data from source documents into journals, which can be special or general journals. Moving information from the journal to the ledger is called posting.

L.O 13 to 2: Record transactions using the general journal format.

The Rules of Debits and Credits

- Debits increase asset accounts, while credits decrease asset accounts.

- Debits decrease liability and stockholders' equity accounts, while credits increase liability and stockholders' equity accounts.

- Debits decrease the total amounts of stockholders' equity, and credits increase the total amount of stockholders' equity.

How I approach a Journal Entry

- What accounts do I need to use?

- What type of account am I using, such as Asset, Liability, Equity, Revenue, or Expense?

- Is this a Contra Account?

- Do I want the account to increase or decrease?

- Most common Journal Entries seem to involve cash. Did we gain cash, for example, someone paid us, we earned interest, or we received a check? Or did we spend cash, for example, we had to pay someone else, pay interest, or write a check?

- A gain in cash will be a debit to increase cash.

- A loss in cash will be a credit to decrease cash.

Double-Entry Accounting

Let's see how debits and credits work by looking at transactions for Collins Brokerage Services.

The General Journal

- Accountants initially record data from source documents into journals, which can be special or general journals.

- Providing services for one thousand dollars in cash on August 1 would be recorded in general journal format as follows:

Image summary: A journal entry table for August 1 shows a debit to the Cash account for one thousand dollars and a credit to the Service Revenue account for one thousand dollars.

Collins Brokerage Services, Inc.

- To illustrate this step-wise approach, we record the Year 2 accounting events for a small business: Collins Brokerage Services, Inc.

- Collins begins the accounting period with the following balances in its balance sheet accounts: Cash, 5,000 dollars; Common Stock, 4,000 dollars; and Retained Earnings, 1,000 dollars.

Exhibit 13.1 Transaction Summary

Transaction Summary

- Event 1: Acquired 25,000 dollars cash from the issue of common stock.

- Event 2: Purchased 850 dollars of supplies on account.

- Event 3: Collected 1,800 dollars cash as an advance to provide future services over a one-year period starting March 1.

- Event 4: Provided 15,760 dollars of services on account.

- Event 5: Purchased land for 26,000 dollars cash.

- Event 6: Paid 1,200 dollars cash for a one-year insurance policy with coverage starting August 1.

- Event 7: Collected 13,400 dollars cash for accounts receivable.

- Event 8: Paid 9,500 dollars cash for salaries expense.

- Event 9: Paid an 800 dollar cash dividend.

- Event 10: Paid 850 dollars cash to settle accounts payable.

- Event 11: Recognized 1,900 dollars other operating expenses on account.

Adjustments

- Adjustment 1: Recognized 1,500 dollars of deferred service revenue.

- Adjustment 2: Recognized 800 dollars of accrued salaries expense.

- Adjustment 3: Recognized 500 dollars of deferred insurance expense.

- Adjustment 4: Recognized 725 dollars of deferred supplies expense.

Collins Brokerage Services, Inc. Year 2, Event 1

Acquired 25,000 dollars cash from the issue of common stock.

Image summary: A table displays the impact of this transaction on the financial statements. The balance sheet shows assets increasing by 25,000 dollars in cash, with a corresponding increase of 25,000 dollars in stockholders' equity under common stock. The income statement shows no change, and the statement of cash flows records a 25,000 dollar increase from financing activities.

Image summary: A journal entry table is shown with columns for date or entry number, account title, debit, and credit. The entry records a debit to cash for 25,000 dollars and a credit to common stock for 25,000 dollars, with a description stating: To record the issuance of 25,000 dollars of common stock.

Collins Brokerage Services, Inc. Year 2, Event 2

Purchased 850 dollars of supplies on account.

Image summary: A balance sheet and income statement diagram illustrating the transaction. The balance sheet shows an increase of 850 dollars in assets under supplies, offset by an increase of 850 dollars in liabilities under accounts payable, keeping the equation balanced. The income statement and statement of cash flows show no effect, marked as not applicable.

Image summary: A general journal table with columns for date or journal entry number, account title, debit, and credit. The current entry is left blank, followed by a description stating: to record the purchase of 580 dollars of supplies on account.

Collins Brokerage Services, Inc. Year 2, Event 3

Collected 1,800 dollars cash as an advance to provide future services over a one-year period starting March 1.

Image summary: An accounting equation table shows that Assets increase by 1,800 dollars in Cash, while Liabilities increase by 1,800 dollars in Unearned Revenue. The corresponding Income Statement and Statement of Cash Flows show no change to net income, but recording 1,800 dollars as an operating activity.

Image summary: A journal entry table is shown with empty columns for Date or JE Number, Account Title, Debit, and Credit. A descriptive note at the bottom specifies that this entry is to record the collection of 1,800 dollars cash as an advance to provide future services over a one-year period starting March 1.

Collins Brokerage Services, Inc. Year 2, Event 4

Provided 15,760 dollars of services on account.

Image summary: A diagram shows the impact of the transaction on the accounting equation and financial statements. It indicates that assets, specifically accounts receivable, increase by 15,760 dollars, and stockholders' equity, through service revenue, also increases by 15,760 dollars, resulting in a net income increase of 15,760 dollars.

Image summary: A journal entry table is shown to record the transaction. It contains columns for date or journal entry number, account title, debit, and credit, with a description at the bottom stating that this is to record the provision of 15,760 dollars of services on account.

Collins Brokerage Services, Inc. Year 2, Event 5

Purchased land for 26,000 dollars cash.

Image summary: A balance sheet equation table shows the impact of the transaction. Under Assets, cash decreases by 26,000 dollars and land increases by 26,000 dollars, resulting in a zero net change to the total assets, liabilities, and equity.

Image summary: A journal entry table is shown, but it is currently blank, except for a description at the bottom which reads: To record the purchase of land for 26,000 dollars cash.

Collins Brokerage Services, Inc. Year 2, Event 6

Paid 1,200 dollars cash for a one-year insurance policy with coverage starting August 1.

Image summary: A financial accounting diagram showing the impact of the transaction. In the accounting equation, cash decreases by 1,200 and prepaid insurance increases by 1,200. On the balance sheet, these assets offset each other, resulting in no change to liabilities or stockholders' equity, and there is no impact on the income statement.

Image summary: A journal entry table with columns for Date or JE Number, Account Title, Debit, and Credit. The entry is described in the bottom row as being to record the purchase of an insurance policy for 1,200 dollars.

Collins Brokerage Services, Inc. Year 2, Event 7

Collected 13,400 dollars cash from accounts receivable.

Image summary: A diagram illustrates the accounting equation impact for this event. It shows a debit of 13,400 dollars to cash and a credit of 13,400 dollars to accounts receivable, resulting in no change to total assets, liabilities, stock equity, or net income, and a 13,400 dollar increase in cash flows from operating activities.

Image summary: A journal entry table shows a debit to Cash and a credit to Accounts Receivable for 13,400 dollars, with a description stating this is to record the collection of 13,400 dollars cash for accounts receivable.

Collins Brokerage Services, Inc. Year 2, Event 8

Paid 9,500 dollars cash for salaries expense.

Image summary: A table showing the accounting impact of the transaction across the balance sheet and income statement. Cash assets and retained earnings both decrease by 9,500 dollars, while salaries expense increases by 9,500 dollars, resulting in a net income decrease of 9,500 dollars and a 9,500 dollar cash outflow.

Image summary: A journal entry table with columns for date or journal entry number, account title, debit, and credit. The entry records a debit to salaries expense for 9,500 dollars and a credit to cash for 9,500 dollars, with a description stating 'To record payment to employees of 9,500 dollars'.

Collins Brokerage Services, Inc. Year 2, Event 9

Paid an 800 dollar cash dividend.

Image summary: A financial accounting table shows the impact of the transaction on the balance sheet and income statement. For the balance sheet, cash decreases by 800 dollars and retained earnings decrease by 800 dollars. The income statement and statement of cash flows show no impact on net income but note a cash outflow of 800 dollars for financing activities.

Image summary: A blank journal entry table is shown with columns for date or journal entry number, account title, debit, and credit. A description at the bottom reads: To record payment of a 800 dollar cash dividend.

Collins Brokerage Services, Inc. Year 2, Event 10

Paid 850 dollars cash to settle accounts payable.

Image summary: A series of accounting tables show the impact of the transaction on the balance sheet and income statement. The balance sheet reflects a decrease of 850 dollars in both Cash assets and Accounts Payable liabilities, while the income statement and statement of cash flows show no effect on revenue or expenses, and a cash outflow of 850 dollars for operating activities.

Image summary: A journal entry table is shown with headers for Date or JE Number, Account Title, Debit, and Credit. Below the blank entry rows, a description reads: To record the payment of 850 dollars accounts payable.

Collins Brokerage Services, Inc. Year 2, Event 11

Recognized 1,900 dollars other operating expenses on account.

Image summary: A balance sheet and income statement equation table shows the financial impact of the event. On the balance sheet, liabilities increase by 1,900 dollars in accounts payable and stockholders' equity decreases by 1,900 dollars in retained earnings. The income statement shows expenses increasing by 1,900 dollars, resulting in a net income decrease of 1,900 dollars.

Image summary: A journal entry table records the transaction. It shows a debit to Other Operating Expense for 1,900 dollars and a credit to Accounts Payable for 1,900 dollars, with a description stating this is to record the recognition of 1,900 dollars of other operating expenses on account.

Collins Brokerage Services, Inc. Year 2, Adjustment 1

As of December 31, Year 2, Collins had earned 1,500 dollars of the 1,800 dollars in revenue it deferred in Event 3.

Image summary: A diagram showing the accounting flow from a transaction to the financial statements. It illustrates that a change in assets is balanced by a decrease in liabilities, specifically unearned revenue, and an increase in stockholders' equity through service revenue, which ultimately flows into the income statement as net income.

Image summary: A journal entry table recording the adjustment. The entry recognizes 1,500 dollars of deferred service revenue by debiting Unearned Revenue and crediting Service Revenue.

Collins Brokerage Services, Inc. Year 2, Adjustment 2

As of December 31, Year 2, Collins had 800 dollars of accrued salary expenses that will be paid in Year 3.

Image summary: A diagram illustrating the impact of an accounting adjustment on the balance sheet and income statement. It shows a 800 dollar increase in liabilities under salaries payable and a 800 dollar decrease in stockholders' equity via retained earnings on the balance sheet, which corresponds to a 800 dollar expense on the income statement resulting in a 800 dollar decrease in net income.

Image summary: A journal entry table showing the account titles and amounts to be debited and credited. The entry describes the action to recognize 800 dollars of salaries payable.

Collins Brokerage Services, Inc. Year 2, Adjustment 3

As of December 31, Year 2, Collins had used 500 dollars of the 1,200 dollars of insurance coverage that was prepaid in Event 6.

Image summary: A table showing the impact of the adjustment on the financial statements. It indicates that Prepaid Insurance assets decrease by 500 dollars, Retained Earnings in the Balance Sheet decrease by 500 dollars, and Expenses in the Income Statement increase by 500 dollars, resulting in a 500 dollar decrease in Net Income. There is no effect on the Statement of Cash Flows.

Image summary: A journal entry table with columns for Date or JE Number, Account Title, Debit, and Credit. The entry is labeled to recognize 500 dollars of Insurance Expense.

Collins Brokerage Services, Inc. Year 2, Adjustment 4

As of December 31, Year 2, a physical count of the supplies on hand revealed that 125 dollars of unused supplies were available for future use. This means 850 dollars minus 125 dollars equals 725 dollars of supplies used.

Image summary: A table illustrates the accounting impact of the adjustment across the balance sheet and income statement. On the balance sheet, assets for supplies decrease by 725 dollars, and stockholders' equity for retained earnings decreases by 725 dollars. On the income statement, expenses increase by 725 dollars, leading to a decrease in net income of 725 dollars.

Image summary: A journal entry table shows a debit to Supplies Expense and a credit to Supplies, both for 725 dollars. The accompanying note states that this is to recognize 725 dollars of Supplies Expense.

L.O 13.2: Record transactions using the general journal format.

The General Journal

- To simplify record keeping, businesses rely on source documents, such as cash register tapes, as the basis for entering transaction data into the accounting system.

- Accountants further simplify record keeping by initially recording data from source documents into journals.

- Journals are books of original entry.

- Companies may use different special journals to record specific types of recurring transactions. For example, a company may use one special journal to record sales on account, another to record purchases on account, a third to record cash receipts, and a fourth to record cash payments.

- Transactions that do not fall into any of these categories are recorded in the general journal.

Exhibit 13.1 General Journal Entries

Image summary: A table showing General Journal Entries, listing event numbers, account titles, and their corresponding debit and credit values. It records various business transactions, including acquisitions of supplies and land, revenue earned, and expenses paid, with the debits and credits balancing for each entry.

Step 2 - Post J.E's to t-acccts – General Ledger

Image summary: A series of T-accounts representing the general ledger. Most accounts, including Accounts Payable, Other Operating Expenses, Insurance Expense, Land, Prepaid Insurance, Salaries Payable, Unearned Service Revenue, Dividends, Salaries Expenses, and Supplies Expense, show zero balances. The Cash account shows a balance of 5,000, Common Stock shows a balance of 4,000, and Retained Earnings shows a balance of 1,000. Service Revenue and Accounts Receivable are currently empty.

Exhibit 13.2 General Ledger

Image summary: An image of a general ledger displaying the accounting equation: Assets equals Liabilities plus Stockholders' Equity. It shows multiple T-accounts for Cash, Accounts Receivable, Prepaid Insurance, Supplies, Land, Accounts Payable, Salaries Payable, Unearned Service Revenue, Common Stock, Service Revenue, Retained Earnings, Other Operating Expenses, and Salaries Expense, with various debit and credit entries and balances.

Part 1 – helpful for multiple homework questions

Image summary: A table comparing the Balance Sheet and the Income Statement. Under the Balance Sheet, it shows the equation Assets equals Liability plus Equity. Under the Income Statement, it shows Revenue minus Expenses. The table includes rows for Increase and Decrease for each of these accounting categories.

B.E.13-1

The following events pertain to Outdoor Entertainment Incorporated, which specializes in hosting outdoor music festivals across the nation:

- First, they borrowed 119,000 dollars cash from a local bank to assist in funding the next outdoor festival.

- Second, they paid 34,500 dollars cash for supplies related to the festival.

- Third, they received 159,500 dollars cash for ticket sales related to the festival.

- Fourth, they paid 53,800 dollars in cash for employee salaries.

Required: Record each of the following Outdoor Entertainment Incorporated events in T-accounts.

Image summary: The slide displays four blank T-accounts labeled Cash, Supplies, Notes Payable, and Sales Revenue, as well as a fifth T-account for Salary Expense, intended for recording the mentioned financial transactions.

B.E.13-2

The following events pertain to Big Axe Corporation which owns several axe-throwing venues:

- First, received 84,000 dollars cash from the issuance of common stock.

- Second, purchased land for 47,000 dollars in cash.

- Third, purchased 12,000 dollars of supplies on account.

- Fourth, collected 13,300 dollars cash on accounts receivable.

The requirement is to record each of the transactions in general journal form.

Image summary: A blank general journal table is provided for the transactions. It contains columns for the transaction identifier, the general journal entry, debits, and credits, with rows labeled a through d.

Required: Complete the following table by indicating whether each of the following accounts normally has a debit balance or a credit balance.

Image summary: A table with two columns titled Account and Normal Balance. The account column lists twelve items from a to l: Rent Expense, Service Revenue, Unearned Revenue, Cash, Accounts Receivable, Common Stock, Accounts Payable, Supplies, Dividends, Prepaid Rent, Wages Payable, and Utilities Expense. The Normal Balance column is currently blank for all accounts.

Accounting Transactions and Financial Statements

Image summary: The slide displays two large tables. The left table maps business transactions to the accounts debited and credited. The right table shows how those same transactions impact the Balance Sheet, Income Statement, and Statement of Cash Flows.

- Transaction one: Received cash by issuing common stock.

- Transaction two: Paid salaries payable.

- Transaction three: Paid cash for operating expenses.

- Transaction four: Provided services on account.

- Transaction five: Received cash for services to be performed in the future.

- Transaction six: Received cash in payment of accounts receivable.

- Transaction seven: Purchased supplies on account.

- Transaction eight: Recognized expense for supplies used during the period.

Statement of Cash Flows categories include:

- Operating involves Current Assets, Current Liabilities, and Income Statement items.

- Investing involves Long Term Assets and Investing activities.

- Financing involves Long Term Liabilities and Equity.

Davos Company performed services on account for 160,000 dollars in Year 1. Davos collected 120,000 dollars cash from accounts receivable during Year 1, and the remaining 40,000 dollars was collected in cash during Year 2.

- Part a. and f. Record the Year 1 transactions in T-accounts and close the Year 1 Service Revenue account to the Retained Earnings account. Record the Year 2 cash collection in the appropriate T-accounts.

Image summary: A set of T-accounts showing financial entries. The accounts include Cash, Accounts Receivable, Stockholders' Equity, Retained Earnings, and Service Revenue, with columns for debits and credits across Year 1 and Year 2.

- Part b. and g. Show the Year 1 and Year 2 transactions in a horizontal statements model.

Image summary: A horizontal statements model table comprising a Balance Sheet, Income Statement, and Statement of Cash Flows. It maps how transactions affect Assets, Liabilities, Equity, Revenue, Expenses, and Net Income across Year 1 and Year 2.

- Part c. Determine the amount of revenue Davos would report on the Year 1 income statement.

- Part d. Determine the amount of cash flow from operating activities Davos would report on the Year 1 statement of cash flows.

- Part h. Assuming no other transactions occur in Year 2, determine the amount of net income and the net cash flow from operating activities for Year 2.

Using a T-account to determine cash flow from operating activities

River Company began the accounting period with a 132,000 dollar debit balance in its Accounts Receivable account. During the accounting period, River Company earned revenue on account of 180,000 dollars. The ending Accounts Receivable balance was 116,000 dollars.

Required: Based on this information alone, determine the amount of cash inflow from operating activities during the accounting period. As a hint, use a T-account for Accounts Receivable. Enter the debits and credits for the given events, and solve for the missing amount.

Image summary: A table and a T-account for Accounts Receivable are shown. The T-account has columns for Debit and Credit, with rows for theBeginning Balance and Ending Balance, used to calculate the cash inflow from operating activities.

Using a T-account to determine cash flow from operating activities

The Garden Company began the accounting period with a 60,000 dollar credit balance in its Accounts Payable account. During the accounting period, Garden Company incurred expenses on account of 152,000 dollars. The ending Accounts Payable balance was 64,000 dollars.

Required: Based on this information, determine the amount of cash outflow for expenses during the accounting period. Hint: Use a T-account for Accounts Payable. Enter the debits and credits for the given events, and solve for the missing amount.

Image summary: A T-account diagram for Accounts Payable is shown, with a Debit column on the left and a Credit column on the right. It includes placeholders for the Beginning Balance and Ending Balance on the Credit side.

Accounting transactions for Montgomery Company for Year 1

The following events apply to Montgomery Company for Year 1, its first year of operation:

- First, received cash of 48,000 dollars from the issue of common stock.

- Second, performed 67,000 dollars of services on account.

- Third, incurred 10,300 dollars of other operating expenses on account.

- Fourth, paid 40,000 dollars cash for salaries expense.

- Fifth, collected 44,000 dollars of accounts receivable.

- Sixth, paid a 4,900 dollar dividend to the stockholders.

- Seventh, performed 11,400 dollars of services for cash.

- Eighth, paid 7,400 dollars of the accounts payable.

Requirement a: Record the preceding transactions in general journal form.

Requirement b: Post the entries to T-accounts.

Requirement c and d: Determine the amount of total assets at the end of Year 1, and the amount of net income for Year 1.

Image summary: This visual shows two sets of accounting tables. On the left is a general journal with columns for number, general journal entries, debit, and credit. On the right are eight T-accounts representing Cash, Accounts Receivable, Accounts Payable, Common Stock, Dividends, Service Revenue, Salaries Expense, and Other Operating Expense, each with debit and credit columns.