Reference no: EM132905805

On January 1st, the business borrowed $5,00 from the bank at 11%. The interest on the loan is payable monthly (on the 1st). Also on the first, the business received a payment of $3,000 from Abigail Ross for dog walking services to be performed for one year (from this point forward). New leashes, bowls and crates were purchased on January 1st for $1,500 cash as equipment for the pet sitting part of the business. The useful life of this equipment is 8 years with no salvage value. A customer was billed $475 for weekend pet sitting services. On January 15th monthly salaries of $20,000 were paid to employees. The next payday is February 15th. On January 28th Mr Johnson took out $50 worth of grooming supplies to use on his own dogs. At the end of the month, Scott did an inventory of his supplies and noticed that $400 of them had been used up. Only $100 remained. He also acknowledged that another insurance amount must be recorded for this period. The full insurance payment for one year ($2,880) was prepaid on October 1st of last year.

Problem 1: Identify each event that would have to be recorded for the month (both transactions and adjustments)

Problem 2: Identify the accounts affected in each entry

Problem 3: Identify the amount and type of change (debit/credit; increase/decrease)