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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

On March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. images

  1. a. Gervais deposited $25,000 in a bank account in the name of the business.
  2. b. Bought a truck from Kelly Motors for $26,329, paying $8,000 in cash and placing the balance on account, Ck. No. 500.
  3. c. Bought catering equipment on account from Luigi’s Equipment, $3,795.
  4. d. Paid the rent for the month, $1,255, Ck. No. 501.
  5. e. Bought insurance for the truck for one year, $400, Ck. No. 502.
  6. f. Sold catering services for cash for the first half of the month, $3,012.
  7. g. Bought supplies for cash, $185, Ck. No. 503.
  8. h. Sold catering services on account, $4,307.
  9. i. Received and paid the heating bill, $248, Ck. No. 504.
  10. j. Received a bill from GC Gas and Lube for gas and oil for the truck, $128.
  11. k. Sold catering services for cash for the remainder of the month, $2,649.
  12. l. Gervais withdrew cash for personal use, $1,550, Ck. No. 505.
  13. m. Paid the salary of the assistant, $1,150, Ck. No. 506.

Required

  1. 1. Record the transactions and the balance after each transaction.
  2. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.

1.

To determine

Record the figures in the given transactions for the respective accounts, and balance the figures after recording every transaction.

Explanation

Transaction: The economic events which bring about any changes in the financial items of a business and can be measured in the monetary units is referred to as a transaction.

Accounting equation: Accounting equation is a concept expressed in the form of equation, which creates a relation between resources or assets of a company and claims of resources to creditors and owners. Fundamental accounting equation is expressed as shown below:

Assets = Liabilities + Owners' EquityAssets = Liabilities+{(Owners' Capital

2.

To determine

Sum the balances of accounts to verify whether the balances on left side and on the right side in the accounting equation are equal.

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