Dr. Cravati,

2035 Words Dec 19th, 2012 9 Pages
ACCT201/EXERCISE QUESTION 4/CH.3

Question DMD., opened a dental clinic on August 1, 2007. The business transactions for August are shown below:

|Aug 1 |Dr. Cravati invested $280,000 cash in the business in exchange for 1,000 shares of capital stock. |
|Aug 1 |Rented an office and paid 3-month rent in advance, $2,000 |
|Aug 4 |Land and building were purchased for $400,000. Of this amount, $60,000 applied to the land and $340,000 to|
| |the building which has an estimated useful life of 80 years. A cash payment of $80,000 was made at the |
| |time of the purchase, and a note payable was issued for
…show more content…
|
|Aug 30 |Collected dividend revenue, $1,300. That amount was transferred to company’s bank account. |
|Aug 31 |Received electricity bill for the month, $400 |
|Aug 31 |Paid employees $2,200 for salaries earned by administrative personnel in August. |

Note: Physical count revealed that $3,000 cost of supplies still remained at the end of the month.

Required a. Prepare journal entries for the above transactions b. Post to ledger accounts c. Prepare a trial balance as of August 31 d. Prepare the adjusting entries e. Prepare the adjusted trial balance f. Prepare financial statements

Solution

|a. | | | | | |
|General Journal |
| | | | | | |
|2007 | | | | |
|Aug. | 1 | Cash on

More about Dr. Cravati,