Wickers Restoration Services had the following transactions on May.

1. Received from sale of common stock.
2. Paid rent on office for the month, .
3. Purchased supplies on account, .
4. Earned fees, receiving cash, .
5. Paid creditor on account, .
6. Paid automobile expenses for month, , and miscellaneous expenses, .
7. Paid office salaries for the month, .
8. Earned fees that the customer will pay next month, .
9. Determined that the cost of supplies used was .
10. Paid dividends, .
    a. Prepare the journal entries for the above transactions on May. If an amount box does not require an entry, leave is blank.

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a. Journal Entries for May

1. Received $48,000 from sale of common stock.

   Debit: Cash .................................... $48,000
       Credit: Common Stock ............................ $48,000
   

2. Paid rent on office for the month, $880.

   Debit: Rent Expense ............................. $880
       Credit: Cash ........................................ $880
   

3. Purchased supplies on account, $1,750.

   Debit: Supplies .................................. $1,750
       Credit: Accounts Payable .......................... $1,750
   

4. Earned fees, receiving cash, $12,600.

   Debit: Cash .................................... $12,600
       Credit: Service Revenue ............................ $12,600
   

5. Paid creditor on account, $1,000.

   Debit: Accounts Payable .................... $1,000
       Credit: Cash ........................................ $1,000
   

6. Paid automobile expenses for month, $375, and miscellaneous expenses, $250.

   Debit: Automobile Expense ................... $375
   Debit: Miscellaneous Expense .............. $250
       Credit: Cash ........................................ $625
   

7. Paid office salaries for the month, $3,900.

   Debit: Salaries Expense ...................... $3,900
       Credit: Cash ........................................ $3,900
   

8. Earned fees that the customer will pay next month, $2,400.

   Debit: Accounts Receivable ............... $2,400
       Credit: Service Revenue ............................ $2,400
   

9. Determined that the cost of supplies used was $280.

   Debit: Supplies Expense ....................... $280
       Credit: Supplies .................................... $280
   

10. Paid dividends, $2,400.

    Debit: Dividends ................................ $2,400
        Credit: Cash ........................................ $2,400
    

• Debits and Credits: In each journal entry, the total debits equal the total credits, maintaining the accounting equation’s balance.
• Accounts Explained:
  • Cash: Asset account increasing with debits and decreasing with credits.
  • Common Stock: Equity account; issuing stock increases equity.
  • Rent Expense, Salaries Expense, Automobile Expense, Miscellaneous Expense, Supplies Expense: Expense accounts reducing equity.
  • Supplies: Asset account; purchasing supplies increases assets, using supplies decreases assets.
  • Accounts Payable: Liability account; purchasing on account increases liabilities, paying reduces them.
  • Service Revenue: Revenue account increasing equity.
  • Accounts Receivable: Asset account representing money to be received.
  • Dividends: Distribution to shareholders, reducing retained earnings (equity).