Latinovich Legal Services had the following transactions during its first month of operations:

May 1 Latinovich Legal Services received $20,000 cash and issued common stock to the stockholders.
May 1 Paid the May rent, $5,000.
May 3 Purchased equipment on account for $3,000.
May 5 Purchased supplies for $2,000 on account.
May 8 Performed services for a client and received cash of $11,800.
May 12 Performed services for a client and billed the client $12,200. The client promised to pay within 10 days.
May 15 Paid for the equipment purchased May 3 on account.
May 22 Received payment from a client on account, $12,200.
May 28 Borrowed $10,000, by signing a promissory note, from First National Bank for use in the business.
May 31 Employees were paid $3,000 for working during the current month.
May 31 Received and paid the utility bill of $1,800.

Required: Record the transactions of the business in a journal. Include an explanation for each entry.

Date Account Dr Cr

May 1 Cash 20,000
Common Stock 20,000
Issued common stock.

1 Rent expense 5,000
Cash 5,000
Paid May rent.

3 Equipment 3,000
Accounts Payable 3,000
Purchased equipment on account.

5 Supplies 2,000
Accounts payable 2,000
Purchased supplies on account.

8 Cash 11,800
Service Revenue 11,800
Performed services for cash.

12 Accounts Receivable 12,200
Service Revenue 12,200
Performed services on account.

15 Accounts payable 3,000
Cash 3,000
Paid cash on account.

22 Cash 12,200
Accounts Receivable 12,200
Collected cash on account.

28 Cash 10,000
Note Payable 10,000
Borrowed from bank.

31 Salary Expense 3,000
Cash 3,000
Paid salaries for month.

31 Utility Expense 1,800
Cash 1,800
Paid utility expense.