Event 1: Collins Consultants was established on January 1, 2005, when it acquired $15,000 cash from Collins.

1. Increase assets (cash).

2. Increase equity (common stock).

= +

Debit Credit Debit Credit+ - - +15,000 15,000

Assets Liabilities EquityCash Common Stock

Event 2: On February 1, Collins Consultants issued a 12%, $10,000 note payable to the National Bank to borrow cash.

1. Increase assets (cash).

2. Increase liabilities (notes payable).

= +

Debit Credit Debit Credit+ - - +10,000 10,000

EquityCash Notes Payable

Assets Liabilities

Event 3: On February 17, Collins Consultants purchased $850 of office supplies on account from Morris Supply Company.

1. Increase assets (supplies).

2. Increase liabilities (accounts payable).

= +

Debit Credit Debit Credit+ - - +

850 850

Assets Liabilities EquitySupplies Accounts Payable

Event 4: On February 28, Collins Consultants signed a contract to evaluate the internal control system used by Kendall Food Stores. Kendall paid Collins $5,000 in advance for these future services.

1. Increase assets (cash).

2. Increase liabilities (unearned revenue).

= +

Debit Credit Debit Credit+ - - +5,000 5,000

EquityCash Unearned Revenue

Assets Liabilities

Event 5: On March 1, Collins Consultants received $18,000 from signing a contract to provide professional advice to Harwood Corporation over a one-year period.

1. Increase assets (cash).

2. Increase liabilities (unearned revenue).

= +

Debit Credit Debit Credit+ - - +18,000 18,000

Assets Liabilities EquityCash Unearned Revenue

Event 6: On April 10, Collins Consultants provided $2,000 of services to Rex Company on account.

1. Increase assets (accounts receivable).

2. Increase equity (consulting revenue).

= +

Debit Credit Debit Credit+ - - +2,000 2,000

EquityAccounts Receivable Consulting Revenue

Assets Liabilities

Event 7: On April 29, Collins Consultants performed services and received $8,400 cash.

1. Increase assets (cash).

2. Increase equity (consulting revenue).

= +

Debit Credit Debit Credit+ - - +8,400 8,400

Assets Liabilities EquityCash Consulting Revenue

Event 8: On May 1, Collins Consultants loaned Reston Company $6,000. Reston issued a 9% note to Collins.

1. Increase assets (notes receivable).

2. Decrease assets (cash).

= +

Debit Credit Debit Credit+ - + -

6,000 6,000

EquityNotes Receivable

AssetsCash

Liabilities

Event 9: On June 30, Collins purchased office equipment for $42,000 cash.

1. Increase assets (office equipment).

2. Decrease assets (cash).

= +

Debit Credit Debit Credit+ - + -

42,000 42,000

Liabilities EquityOffice Equipment

AssetsCash

Event 10: On July 31, Collins paid $3,600 cash in advance for a one year lease to rent office space for a one-year period beginning August 1.

1. Increase assets (prepaid rent).

2. Decrease assets (cash).

= +

Debit Credit Debit Credit+ - + -

3,600 3,600

EquityPrepaid Rent

AssetsCash

Liabilities

Event 11: On August 8, Collins Consultants collected $1,200 from Rex Company as partial payment of the accounts receivable (see Event 6).

1. Increase assets (cash).

2. Decrease assets (accounts receivable).

= +

Debit Credit Debit Credit+ - + -1,200 1,200

Liabilities EquityAccounts Receivable

AssetsCash

Event 12: On September 4, Collins Consultants paid employees who worked for the company $2,400 in salaries.

1. Decrease assets (cash).

2. Decrease equity (salaries expense).

= +

Debit Credit Debit Credit+ - - +

2,400 2,400

EquityCash Salaries Expense

Assets Liabilities

Event 13: On September 20, Collins Consultants paid a $1,500 cash dividend to its owner.

1. Decrease assets (cash).

2. Decrease equity (dividends).

= +

Debit Credit Debit Credit+ - - +

1,500 1,500

Assets Liabilities EquityCash Dividends

Event 14: On October 10, Collins Consultants paid Morris Supply Company the $850 owed from purchasing office supplies on account (see Event 3).

1. Decrease assets (cash).

2. Decrease liabilities (accounts payable).

= +

Debit Credit Debit Credit+ - - +

850 850

EquityCash Accounts Payable

Assets Liabilities

Event 15: On November 15, Collins completed its consulting evaluation of the internal control system used by Kendall Food Stores (see Event 4).

1. Decrease liabilities (unearned revenue).

2. Increase equity (consulting revenue).

= +

Debit Credit Debit Credit- + - +5,000 5,000

EquityConsulting RevenueUnearned Revenue

Assets Liabilities

Event 16: On December 18, Collins Consultants received a $900 bill from Creative Ads for advertisements which had appeared in regional magazines. Collins plans to pay the bill later.

1. Increase liabilities (accounts payable).

2. Decrease equity (advertising expense).

= +

Debit Credit Debit Credit- + - +

900 900

Assets Liabilities EquityAdvertising ExpenseAccounts Payable

Adjustment 1: Collins Consultants recognized accrued interest on the $6,000 note receivable from Reston (see Event 8).

1. Increase assets (interest receivable).

2. Increase equity (interest revenue).

Principal

Annual interest

rate Time

outstanding = Interest revenue

6,000$ 0.09 8/12 = 360$

= +

Debit Credit Debit Credit+ - - +

360 360

EquityInterest Receivable Interest Revenue

Assets Liabilities

Adjustment 2: Collins Consultants recognized accrued interest expense on the $10,000 note payable it issued to National Bank (see Event 2).1. Increase liabilities

(interest payable).

2. Decrease equity (interest expense).

Principal

Annual interest

rate Time

outstanding = Interest

expense

10,000$ 0.12 11/12 = 1,100$

= +

Debit Credit Debit Credit- + - +

1,100 1,100

EquityInterest ExpenseInterest Payable

Assets Liabilities

Adjustment 3: Collins Consultants recognized $800 of accrued but unpaid salaries.

1. Increase liabilities (salaries payable).

2. Decrease equity (salaries expense).

= +

Debit Credit Debit Credit- + - +

800 800

Assets Liabilities EquitySalaries ExpenseSalaries Payable

Adjustment 4: Collins Consultants recognized $4,000 of depreciation on the office equipment it had purchased on June 30 (see Event 9).1. Decrease assets

(accumulated depreciation).

2. Decrease equity (depreciation expense).

= +

Debit Credit Debit Credit+ - - +

4,000 4,000

EquityAccumulated Depr. Salaries Expense

Assets Liabilities

(Cost Salvage Value) = Depreciation Expense42,000$ $2,000) = $4,000

Straight-Line Depreciation Useful Life

5 years

Adjustment 5: Collins Consultants recognized rent expense for the portion of prepaid rent used up since entering the lease agreement on July 31 (see Event 10).

1. Decrease assets (prepaid rent).

2. Decrease equity (rent expense).

= +

Debit Credit Debit Credit+ - - +

1,500 1,500

Assets Liabilities EquityPrepaid Rent Rent Expense

$ 3,600 12 months 300$ 5 months

$300 per month $1,500 rent expense

Adjustment 6: A physical count at the end of the year indicates that $125 worth of the supplies purchased on February 17 are still on hand (see Event 3).

1. Decrease assets (supplies).

2. Decrease equity (supplies expense).

= +

Debit Credit Debit Credit+ - - +

725 725

EquitySupplies Supplies Expense

Assets Liabilities

Beginning Balance

+ Purchases =Asset

Available for Use

-Ending

Balance=

Asset Used

-$ + 850$ = 850$ - 125$ = 725$

Adjustment 7: Collins Consultants adjusted its accounting records to reflect revenue earned to date on the contract to provide services to Harwood Corporation for a one-year period beginning March 1 (see Event 5).

1. Decrease liabilities (unearned revenue).

2. Increase equity (consulting revenue).

= +

Debit Credit Debit Credit- + - +

15,000 15,000

Assets Liabilities EquityConsulting RevenueUnearned Revenue

$ 18,000 12 months 1,500$ 10 months

$1,500 per month $15,000 revenue