Shown as follows are selected transactions of the architectural firm of Baxter, Claxter and Stone. Inc. April 5 Prepared building plans for Spangler Construction Company. Sent Spangle: an invoice for $13,200 requesting payment within 30 days, (The appropriate revenue account is entitled Drafting Fees Earned.)
May 17 Declared a cash dividend of S2.400. The dividend will not he paid until June 25.
May 29 Received a SS.4(H) bill from Bob Needham. CPA. for accounting services performed during May Payment is due by June 10. (The appropriate expense account is entitled Professional Expenses.)
June 4 Received full payment from Spangler Construction Company for the invoice sent April 5.
June 10 Paid Bob Needham, CPA, for the bill received on May 29.
June 25 Paid the cash dividend declared On May 17.

Required:
a. Prepare journal entries to record the transactions in the firm's accounting records.
b. Identify any of these transactions that will not result in a change in the company's net income.

Baxter, Claxter and Stone. Inc.

a. Journal Entries:

April 5:

Debit Accounts Receivable (Spangler) $13,200

Credit Drafting Fees Earned $13,200

To record the provision of building plans to customer.

May 17:

Debit Dividend Expense $2,400

Credit Dividends Payable $2,400

To record the declaration of cash dividend.

May 29:

Debit Professional Expenses $

Credit Professional Expenses Payable $

To record the receipt of bill from Bob Needham, CPA for accounting services.

June 4:

Debit Cash Account $13,200

Credit Accounts Receivable (Spangler) $13,200

To record the receipt of full payment.

June 10:

Debit Professional Expenses Payable $

Credit Cash Account $

To record the payment of bill to Bob Needham.

June 25:

Debit Dividends Payable $2,400

Credit Cash Account $2,400

To record the payment of dividend.

b. Transactions that will not result in a change in the company's net income are:

May 17 Declared a cash dividend of S2.400. The dividend will not he paid until June 25.

June 4 Received full payment from Spangler Construction Company for the invoice sent April 5.

June 10 Paid Bob Needham, CPA, for the bill received on May 29.

June 25 Paid the cash dividend declared On May 17.

Explanation:

The listed transactions will not affect the net income of the company.  Dividends are paid out of net income.  The other transactions are transactions involving cash flow.  They are not revenue and expenses transactions, which affect net income.

a. money supply  

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