Chapter D, Problem 12E

1. Prepare general journal entries for the following transactions of Valdez Services.
a. Brina Valdez invested $20,000 cash in the company in exchange for common stock.
b. The company provided services to a client and immediately received $900 cash.
c. The company received $10,000 cash from a client in payment for services to be provided next year.
d. The company received $3,500 cash from a client in partial payment of accounts receivable.
e. The company borrowed $5,000 cash from the bank by signing a note payable.
2. Transactions a, c, d, and e did not yield revenue. Match each transaction (a, c, d, and e) with one of the
following reasons for not recording revenue.
______This transaction changed the form of an asset from a receivable to cash. Total assets were not
increased (revenue was recognized when the services were originally provided).
______This transaction brought in cash (increased assets), and it also increased a liability by the
same amount (represented by the signing of a note to repay the amount).
______This transaction brought in cash, but this is an owner investment.
______This transaction brought in cash, but it created a liability to provide services to the client in
the next year.

Exercise D-12
Analyzing and journalizing transactions involving receipt of cash P1