Answer:
The accounting entry for each transaction is given below.
May 2 Olivia decides that she will need insurance for a one-day special event at the end of the month and pays Eli $300 in advance.
Debit Prepaid Insurance expense $ 300
Credit Cash Asset $ 300
May 5 Olivia provides maintenance services to Eli’s insurance offices on account, $425.
Debit Receivable $ 425
Credit Income $ 425
May 7 Eli borrows $500 from Olivia by signing a note.
Debit Note Receivable $ 500
Credit Cash $ 500
May 14 Olivia purchases maintenance supplies from Spot Corporation, paying cash of $200.
Debit Supplies Asset $ 200
Credit Cash $ 200
May 19 Eli pays $425 to Olivia for maintenance services provided on May 5.
Debit Cash $ 425
Credit Receivable $ 425
May 25 Eli pays the utility bill for the month of May, $135.
Debit Utility expense $ 135
Credit Cash $ 135
May 28 Olivia receives insurance services from Eli equaling the amount paid on May 2.
Debit Insurance expense $ 300
Credit Prepaid Insurance expense $ 300
May 31 Eli pays $500 to Olivia for money borrowed on May 7.
Debit Cash $ 500
Credit Note Receivable $ 500
The transactions for (Olivia’s) Maintenance Services are :
1. May 2
Dr Prepaid insurance $300
Cr Cash $300
(To record Insurance)
2. May 5
Dr Accounts receivable $425
Cr Service revenue $425
(To record maintenance supplies)
3. May 7
Dr Notes receivable $500
Cr Cash $500
( To record note receivable)
4. May 14
Dr Supplies $200
Cr Cash $200
(To record maintenance services)
5. May 19
Dr Cash $425
Cr Accounts receivable $425
(To record maintenance supplies)
6. May 25
No journal entry required
7. May 28
Dr Insurance expense $300
Cr Prepaid insurance $300
(To record insurance services)
8. May 31
Dr Cash $500
Cr Notes receivable $500
(To record cash amount)
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