Question

Three former college classmates decided to open a store near campus to sell wireless equipment to students. They created a public company, The Wire, and issued stock to interested investors. They plan on creating monthly financial statements.

Required: Several transactions occurred in March. Each is described separately in this folder. For each transaction, indicate the accounts for The Wire that are affected, whether they increase or decrease, and the amount of the increase or decrease.

YOU MUST FOLLOW THE INSTRUCTIONS BELOW. IF YOU DON'T, YOU MAY KNOW THE CORRECT ENTRY BUT THE COMPUTER WILL NOT RECOGNIZE IT AND WILL NOT GIVE YOU CREDIT.

After each transaction description, there are several "Account" submission boxes and corresponding "Amount" submission boxes. To indicate the accounts that you think are affected, choose them from the drop-down menu. But you MUST select them in the order that they are listed in the menu. FOR EXAMPLE, if you think that Cash and Inventory are affected by a particular transaction, you must record the effect on the Cash account first and the effect on the Inventory account second, since that is the order in which they are listed in the drop-down menu. If you record the Inventory effect first and the Cash effect second, even if they are the correct accounts with the correct dollar amounts, your answer will be considered wrong.

When you record the dollar amounts, be sure to use a minus sign to indicate a decrease in the account. You don't need to use a plus sign to indicate an increase. Also, don't use a dollar sign or spaces.

There are always more "Account" and "Amount" submission boxes available than are necessary. When you have indicated all the accounts that are affected by the transaction, select "Leave Blank" from the drop-down menu for EACH of the remaining "Account" submission boxes (you can leave the "Amount" boxes blank).

Transaction 3
A one-year store rental lease was signed on March 1 for $1,000 per month, and rent for the first 2 months was paid in advance. [Note: Record the complete entry for the March 1 transaction first and the complete adjusting entry on March 31 second.]

     Account:           Dollar amount:   

      Account:            Dollar amount:   

      Account:               Dollar amount:   

     Account:            Dollar amount:   

                Account:             Dollar amount:   

Answer 1

	For Transaction 3:
	Accounts Affected: Bank A/c, Advance Rent A/c and Rent A/c
	Efffect:
	Advance rent A/c		: Increase in Balance
	Bank A/c		: Decrease in Balance
	Rent A/c		: Increase in Expenses
	Journal Entries
	Date	Account Titles and Explanation					Dr Amount	Cr Amount
	01-Mar	Advance Rent A/c					2000
			To Bank A/c					2000
		(being Advance rent paid for 2 months)
	31-Mar	Rent Expenses A/c					1000
			To Advance Rent A/c					1000
	(being rent expenses booked against advance paid earlier