Thrifty Tax Services, Inc. was organized in 2018 to provide tax and accounting services to small businesses. The following are balance sheet values…

Thrifty Tax Services, Inc. was organized in 2018 to provide tax and accounting services to small businesses. The following are balance sheet values as of June 1, 2018:

Cash                                       $ 1,400

Accounts receivable                    750

Supplies                                      210

Equipment                                 8,200

Patent                                       5,900

Accounts payable                                               600

Notes payable                                                        -0-

Common Stock                                                2,000

Additional Paid in Capital                         12,000

Retained earnings                                            1,860 

Total                                       $16,460         $16,460

Consider the following transactions that occurred during June 2018: 

  1. Sold 1,000 shares of $1 par value stock for $10 per share to investors.
  2. Borrowed $7,500 from a local bank signing a promissory note due at the end of two years.
  3. Purchased miscellaneous supplies on account for $350.
  4. Billed a client $2,000 for tax preparation services.
  5. Paid a $650 bill from the local newspaper for advertising for the month of June. The ad appeared in the paper during June.
  6. Received $500 from the client billed in entry (4).
  7. Received cash of $1,400 for services provided in preparing a client’s tax return.
  8. Purchased computer equipment for $4,000 in cash.
  9. Paid $1,650 in salaries and wages for June.
  10. Received and paid the $700 bill for June utilities.

Required

1. Enter beginning balances in T-accounts.

2. Prepare journal entries for each transaction.

3. Post the entries to the T-accounts. Key your entries with the transaction letters used here.

4. Prepare classified balance sheet for the month ended June 30, 2018. The ending balance in Retained Earnings as of June 30, 2018 (after closing entries) is $2,260.

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