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A dog training business began on December 1. The following transactions occurred during its first month.

December 1 Receives $32,000 cash as an owner investment in exchange for common stock.
December 2 Pays $7,440 cash for equipment.
December 3 Pays $4,320 cash (insurance premium) for a 12-month insurance policy. Coverage began on December 1.
December 4 Pays $1,240 cash for December rent expense.
December 7 Provides all-day training services for a large group and immediately collects $1,700 cash.
December 8 Pays $260 cash in wages for part-time help.
December 9 Provides training services for $2,640 and rents training equipment for $720. The customer is billed $3,360 for these services.
December 19 Receives $3,360 cash from the customer billed on Dec. 9.
December 20 Purchases $2,120 of supplies on credit from a supplier.
December 23 Receives $1,840 cash in advance of providing a 4-week training service to a customer.
December 29 Pays $1,360 cash as a partial payment toward the accounts payable of Dec. 20.
December 30 Distributed a $560 cash dividend to the owner.
Information for month-end adjustments follows:

December 31 One month of the 12-month, $4,320 insurance policy is expired by December 31. This leaves $3,960 not yet expired.
December 31 A physical count of supplies on December 31 shows that only $1,260 of supplies remain of the $2,120 supplies purchased.
December 31 The $7,440 of equipment purchased at the beginning of December has a useful life of 5 years and will be worth nothing at the end of 5 years (60 months). The business uses straight-line depreciation to allocate the $7,440 net cost over 60 months. On December 31, 1 month of depreciation must be recorded.
December 31 The business agreed on December 23 to provide a 4-week training service to a customer for a fixed fee of $1,840 paid in advance. By December 31, the business has provided 1 of the 4 weeks of services and earned one-fourth of the fee. No revenue is yet recorded.
December 31 On December 31, wages of $660 are owed to a part-time employee for work done over the past 3 weeks. Those wages are not yet paid or recorded.
December 31 The business agreed to provide 6 weeks of training services to a customer for a fee of $4,560, or $760 per week. The customer agrees to pay the full $4,560 at the end of 6 weeks when services are complete. By December 31, 2 weeks of services have been provided, but the business has not yet billed the customer or recorded the 2 weeks of services provided.



Answer :

Let's analyze each transaction and adjustment and record them accordingly:

1. December 1:

  - Cash increased by $32,000.

  - Common stock increased by $32,000.

2. December 2:

  - Equipment increased by $7,440.

  - Cash decreased by $7,440.

3. December 3:

  - Prepaid insurance increased by $4,320 (for one month).

  - Cash decreased by $4,320.

4. December 4:

  - Rent expense increased by $1,240.

  - Cash decreased by $1,240.

5. December 7:

  - Cash increased by $1,700.

  - Service revenue increased by $1,700.

6. December 8:

  - Wage expense increased by $260.

  - Cash decreased by $260.

7. December 9:

  - Accounts receivable increased by $3,360.

  - Service revenue increased by $3,360.

  - Rent expense increased by $720.

  - Cash increased by $1,920 ([$3,360 - $720] - $720).

8. December 19:

  - Cash increased by $3,360.

  - Accounts receivable decreased by $3,360.

9. December 20:

  - Supplies increased by $2,120.

  - Accounts payable increased by $2,120.

10. December 23:

  - Unearned revenue increased by $1,840.

  - Cash increased by $1,840.

11. December 29:

  - Accounts payable decreased by $1,360.

  - Cash decreased by $1,360.

12. December 30:

  - Dividends increased by $560.

  - Cash decreased by $560.

Adjustments on December 31:

1. Insurance Expense:

  - Insurance expense increased by $360 ($4,320 / 12 months).

  - Prepaid insurance decreased by $360.

2. Supplies Expense:

  - Supplies expense increased by $860 ($2,120 - $1,260).

  - Supplies decreased by $860.

3. Depreciation Expense:

  - Depreciation expense increased by $124 ($7,440 / 60 months).

  - Accumulated depreciation increased by $124.

4. Revenue Recognition:

  - Service revenue increased by $460 ($1,840 / 4 weeks).

  - Unearned revenue decreased by $460.

5. Accrued Wages:

  - Wage expense increased by $660.

  - Wages payable increased by $660.

6. Unbilled Services:

  - Service revenue increased by $1,520 ($760 per week * 2 weeks).

  - Accounts receivable increased by $1,520.

These entries should accurately reflect the transactions and adjustments for the first month of the dog training business.

Answer:

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