Answer:
1. October 2 Receive membership dues for the month of October totaling $8,500.
Dr Cash 8,500
Cr Service revenue 8,500
2. October 5 Issue common stock in exchange for cash, $12,000.
Dr Cash 12,000
Cr Common stock 12,000
3. October 9 Purchase additional boxing equipment for $9,600, paying one-half of the amount in cash and issuing a note payable to the seller for the other one-half due by the end of the year.
Dr Equipment 9,600
Cr Cash 4,800
Cr Notes payable 4,800
4. October 12 Pay $1,500 for advertising regarding a special membership rate available during the month of October.
Dr Advertising expense 1,500
Cr Cash 1,500
5. October 19 Pay dividends to stockholders, $4,400.
Dr Retained earnings 4,400
Cr Dividends payable 4,400
Dr Dividends payable 4,400
Cr Cash 4,400
6. October 22 Pay liability insurance to cover accidents to members for the next six months, starting November 1, $6,900.
Dr Prepaid insurance 6,900
Cr Cash 6,900
7. October 25 Receive cash in advance for November memberships, $5,600.
Dr Cash 5,600
Cr Unearned revenue 5,600
8. October 30 Receive, but do not pay, utilities bill for the month, $5,200.
Dr Utilities expense 5,200
Cr Accounts payable 5,200
9. October 31 Pay employees' salaries for the month, $7,300.
Dr Wages expense 7,300
Cr Cash 7,300
Cash account
Debit Credit
8,500 4,800
12,000 1,500
5,600 4,400
6,900
7,300
1,200
Balboa's Gym
Cash Flow Statement
October 31, xx
Cash flow from operating activities:
Cash inflows:
Cash from October membership dues $8,500
Cash from November memberships $5,600
Total cash inflows $14,100
Cash outflows:
Advertisement expense ($1,500)
Prepaid insurance ($6,900)
Employees' salaries ($7,300)
Total cash outflows ($15,700)
Cash flow from operating activities ($1,600)
Cash flow from investing activities:
Purchase of new equipment ($4,800)
Cash flow from financing activities:
Issuance of common stock $12,000
Dividends paid ($4,400)
Cash flow from investing activities $7,600
Net increase in cash $1,200
