Concept explainers
The transactions completed by PS Music during June 20Y5 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business’s operations:
July 1. Peyton Smith made an additional investment in PS Music in exchange for common stock by depositing $5,000 in PS Music’s checking account.
1. Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, $1,750.
1. Paid a premium of $2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period.
2. Received $1,000 on account.
3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600. Any additional hours beyond 80 will be billed to KXMD at $40 per hour. In accordance with the contract, Peyton received $7,200 from KXMD as an advance payment for the first two months.
3. Paid $250 on account.
4. Paid an attorney $900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.)
5. Purchased office equipment on account from Office Mart, $7,500.
8. Paid for a newspaper advertisement, $200.
11. Received $1,000 for serving as a disc jockey for a party.
13. Paid $700 to a local audio electronics store for rental of digital recording equipment.
14. Paid wages of $1,200 to receptionist and part-time assistant.
Enter the following transactions on Page 2 of the two-column journal:
16. Received $2,000 for serving as a disc jockey for a wedding reception.
18. Purchased supplies on account, $850.
21. Paid $620 to Upload Music for use of its current music demos in making various music sets.
22. Paid $800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July.
23. Served as disc jockey for a party for $2,500. Received $750, with the remainder due August 4, 20Y5.
27. Paid electric bill, $915.
28. Paid wages of $1,200 to receptionist and part-time assistant.
29. Paid miscellaneous expenses, $540.
30. Served as a disc jockey for a charity ball for $1,500. Received $500, with the remainder due on August 9, 20Y5.
31. Received $3,000 for serving as a disc jockey for a party.
31. Paid $1,400 royalties (music expense) to National Music Clearing for use of various artists’ music during July.
31. Paid dividends, $1,250.
PS Music’s chart of accounts and the balance of accounts as of July 1, 20Y5 (all normal balances), are as follows:
Instructions
1. Enter the July 1, 20Y5, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column, and place a check mark (✓) in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.)
2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting
3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting.
4. Prepare an unadjusted
(2) and (3)
Journalize the transactions of July in a two column journal beginning on page 18.
Explanation of Solution
Journal:
Journal is the book of original entry. Journal consists of the day today financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.
Rules of debit and credit:
“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.
Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.
Journalize the transactions of July in a two column journal beginning on page 1.
Journal Page 1 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
20Y5 | Cash | 11 | 5,000 | ||
July | 1 | Common stock | 31 | 5,000 | |
(To record the common stock) | |||||
1 | Office rent expense | 51 | 1,750 | ||
Cash | 11 | 1,750 | |||
(To record the payment of rent for the month of July) | |||||
1 | Prepaid insurance | 15 | 2,700 | ||
Cash | 11 | 2,700 | |||
(To record the payment of insurance premium) | |||||
2 | Cash | 11 | 1,000 | ||
Accounts receivable | 12 | 1,000 | |||
(To record the receipt of cash from customers) | |||||
3 | Cash | 11 | 7,200 | ||
Unearned revenue | 23 | 7,200 | |||
(To record the cash received for the service yet to be provide) | |||||
3 | Accounts payable | 21 | 250 | ||
Cash | 11 | 250 | |||
(To record the payment made to creditors on account) | |||||
4 | Miscellaneous expense | 59 | 900 | ||
Cash | 11 | 900 | |||
(To record the payment made for Miscellaneous expense) | |||||
5 | Office equipment | 17 | 7,500 | ||
Accounts payable | 21 | 7,500 | |||
(To record the purchase of equipment on account) | |||||
8 | Advertising expense | 55 | 200 | ||
Cash | 11 | 200 | |||
(To record the payment of advertising expense) | |||||
11 | Cash | 11 | 1,000 | ||
Fees earned | 41 | 1,000 | |||
(To record the receipt of cash) | |||||
13 | Equipment rent expense | 52 | 700 | ||
Cash | 11 | 700 | |||
(To record the payment made to equipment) | |||||
14 | Wages expense | 50 | 1,200 | ||
Cash | 11 | 1,200 | |||
(To record the payment of wages) |
Table (1)
Journal Page 2 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
20Y5 | 16 | Cash | 11 | 2,000 | |
July | Fees earned | 41 | 2,000 | ||
(To record the receipt of cash) | |||||
18 | Supplies | 14 | 850 | ||
Accounts payable | 21 | 850 | |||
(To record the purchase of supplies) | |||||
21 | Music expense | 54 | 620 | ||
Cash | 11 | 620 | |||
(To record the payment incurred for music) | |||||
22 | Advertising expense | 55 | 800 | ||
Cash | 11 | 800 | |||
(To record the payment of advertising expense) | |||||
23 | Cash | 11 | 750 | ||
Accounts receivable | 12 | 1,750 | |||
Fees earned | 41 | 2,500 | |||
(To record the receipt of cash for the service performed party for cash and party on account) | |||||
27 | Utilities expense | 53 | 915 | ||
Cash | 11 | 915 | |||
(To record the payment of electricity) | |||||
28 | Wages expense | 50 | 1,200 | ||
Cash | 11 | 1,200 | |||
(To record the payment made for salary and commission expense) | |||||
29 | Miscellaneous expense | 59 | 540 | ||
Cash | 11 | 540 | |||
(To record the revenue earned and billed) | |||||
30 | Cash | 11 | 500 | ||
Accounts receivable | 12 | 1,000 | |||
Fees earned | 41 | 1,500 | |||
(To record the purchase of land party for cash and party on signing a note) | |||||
31 | Cash | 11 | 3,000 | ||
Fees earned | 41 | 3,000 | |||
(To record the receipt of cash) | |||||
31 | Music expense | 54 | 1,400 | ||
Cash | 11 | 620 | |||
(To record the payment incurred for music) | |||||
31 | Dividends | 32 | 1,250 | ||
Cash | 11 | 1,250 | |||
(To record the withdrawal of cash for personal use) |
Table (2)
(1) and (3)
Record the balance of each account in the appropriate balance column of a four-column account and post them to the ledger.
Explanation of Solution
General ledger: General ledger is a record of all accounts of assets, liabilities, and stockholders’ equity, necessary to prepare financial statements.
Record the balance of each account in the appropriate balance column:
Account: Cash Account no. 11 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 3,920 | |||
1 | 1 | 5,000 | 8,920 | ||||
1 | 1 | 1,750 | 7,170 | ||||
1 | 1 | 2,700 | 4,470 | ||||
2 | 1 | 1,000 | 5,470 | ||||
3 | 1 | 7,200 | 12,670 | ||||
3 | 1 | 250 | 12,420 | ||||
4 | 1 | 900 | 11,520 | ||||
8 | 1 | 200 | 11,320 | ||||
11 | 1 | 1,000 | 12,320 | ||||
13 | 1 | 700 | 11,620 | ||||
14 | 1 | 1,200 | 10,420 | ||||
16 | 2 | 2,000 | 12,420 | ||||
21 | 2 | 620 | 11,800 | ||||
22 | 2 | 800 | 11,000 | ||||
23 | 2 | 750 | 11,750 | ||||
27 | 2 | 915 | 10,835 | ||||
28 | 2 | 1,200 | 9,635 | ||||
29 | 2 | 540 | 9,095 | ||||
30 | 2 | 500 | 9,595 | ||||
31 | 2 | 3,000 | 12,595 | ||||
31 | 2 | 1,400 | 11,195 | ||||
31 | 2 | 1,250 | 9,945 |
Table (3)
Account: Accounts Receivable Account no. 12 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 1,000 | |||
2 | 1 | 1,000 | – | – | |||
23 | 2 | 1,750 | 1,750 | ||||
30 | 2 | 1,000 | 2,750 |
Table (4)
Account: Supplies Account no. 14 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 170 | |||
18 | 2 | 850 | 1,020 |
Table (5)
Account: Prepaid Insurance Account no. 15 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | 1 | 2,700 | 2,700 |
Table (6)
Account: Office equipment Account no. 17 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 5 | 1 | 7,500 | 7,500 |
Table (7)
Account: Accounts Payable Account no. 21 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 250 | |||
3 | 1 | 250 | – | – | |||
5 | 1 | 7,500 | 7,500 | ||||
18 | 2 | 850 | 8,350 |
Table (8)
Account: Unearned Revenue Account no. 23 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 3 | 1 | 7,200 | 7,200 |
Table (9)
Account: Common stock Account no. 31 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 4000 | |||
1 | 1 | 5,000 | 9,000 |
Table (10)
Account: Dividends Account no. 33 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 500 | |||
31 | 2 | 1,250 | 1,750 |
Table (11)
Account: Fees earned Account no. 41 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 6,200 | |||
11 | 1 | 1,000 | 7,200 | ||||
16 | 2 | 2,000 | 9,200 | ||||
23 | 2 | 2,500 | 11,700 | ||||
30 | 2 | 1,500 | 13,200 | ||||
31 | 2 | 3,000 | 16,200 |
Table (12)
Account: Wages expense Account no. 50 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 400 | |||
14 | 1 | 1,200 | 1,600 | ||||
28 | 2 | 1,200 | 2,800 |
Table (13)
Account: Office rent expense Account no. 51 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 800 | |||
1 | 1 | 1,750 | 2,550 |
Table (14)
Account: Equipment rent expense Account no. 52 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 675 | |||
13 | 1 | 700 | 1,375 |
Table (15)
Account: Utility expense Account no. 53 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 300 | |||
27 | 2 | 915 | 1,215 |
Table (16)
Account: Music expense Account no. 54 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 1,590 | |||
21 | 2 | 620 | 2,210 | ||||
31 | 2 | 1,400 | 3,610 |
Table (17)
Account: Advertising expense Account no. 55 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 500 | |||
8 | 1 | 200 | 700 | ||||
22 | 2 | 800 | 1,500 |
Table (18)
Account: Supplies expense Account no. 56 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 180 |
Table (19)
Account: Miscellaneous expense Account no. 59 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y5 | |||||||
July | 1 | Balance | ✓ | 415 | |||
4 | 1 | 900 | 1,315 | ||||
29 | 2 | 540 | 1,855 |
Table (20)
(4)
Prepare an unadjusted trial balance of Company PS Music at July 31, 20Y5.
Explanation of Solution
Unadjusted trial balance:
The unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts before making adjusting journal entries.
Prepare an unadjusted trial balance of Company PSM at July 31, 20Y5 as follows:
Company PSM Unadjusted Trial Balance July 31, 20Y5 | |||
Particulars |
Account No. | Debit $ | Credit $ |
Cash | 11 | 9,945 | |
Accounts receivable | 12 | 2,750 | |
Supplies | 14 | 1,020 | |
Prepaid insurance | 15 | 2,700 | |
Office Equipment | 17 | 7,500 | |
Accounts payable | 21 | 8,350 | |
Unearned revenue | 23 | 7,200 | |
Common Stock | 31 | 9,000 | |
Dividends | 33 | 1,750 | |
Fees earned | 41 | 16,200 | |
Wages expense | 50 | 2,800 | |
Office Rent expense | 51 | 2,550 | |
Equipment Rent expense | 52 | 1,375 | |
Utilities expense | 53 | 1,215 | |
Music expense | 54 | 3,610 | |
Advertising expense | 55 | 1,500 | |
Supplies expense | 56 | 180 | |
Miscellaneous expense | 59 | 1,855 | |
Total | 40,750 | 40,750 |
Table (21)
The debit column and credit column of the unadjusted trial balance are agreed, both having balance of $40,750.
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Chapter 2 Solutions
Financial And Managerial Accounting
- The transactions completed by PS Music during June 2018 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the businesss operations: July 1. Peyton Smith made an additional investment in PS Musk in exchange for common stock by depositing 5,000 in PS Music s checking account. 1. Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, 1,750. 1. Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2. Received 1,000 on account. 3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3. Paid 250 on account. 4. Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, 7,500. 8. Paid for a newspaper advertisement, 200. 11. Received 1,000 for serving as a disc jockey for a party. 13. Paid 700 to a local audio electronics store for rental of digital recording equipment. 14. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on lage 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22. Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2018. 27. Paid electric bill, 915. 28. Paid wages of 1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, 540. 30. Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2018. 31. Received 3,000 for serving as a disc jockey for a party. July 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31. Paid dividends, 1,250. PS Musics chart of accounts and the balance of accounts as of July 1, 2018 (all normal balances), are as follows: 11 Cash 3,920 41 Fees Earned 6,200 12 Accounts Receivable 1,000 50 Wages Expense 400 14 Supplies 170 51 Office Rent Expense 800 15 Prepaid Insurance 52 Equipment Rent Expense 675 17 Office Equipment 53 Utilities Expense 300 21 Accounts Payable 250 54 Music Expense 1,590 23 Unearned Revenue 55 Advertising Expense 500 31 Common Stock 4,000 56 Supplies Expense 180 33 Dividends 500 59 Miscellaneous Expense 415 Instructions 1. Enter the July 1, 2018, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column, and place a check mark () in the Posting Reference column. {Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance as of July 31, 2018.arrow_forwardIn July of this year, M. Wallace established a business called Wallace Realty. The account headings are presented below. Transactions completed during the month follow. a. Wallace deposited 24,000 in a bank account in the name of the business. b. Paid the office rent for the current month, 650, Ck. No. 1000. c. Bought office supplies for cash, 375, Ck. No. 1001. d. Bought office equipment on account from Dellos Computers, 6,300. e. Received a bill from the City Crier for advertising, 455. f. Sold services for cash, 3,944. g. Paid on account to Dellos Computers, 1,500, Ck. No. 1002. h. Received and paid the bill for utilities, 340, Ck. No. 1003. i. Paid on account to the City Crier, 455, Ck. No. 1004. j. Paid truck expenses, 435, Ck. No. 1005. k. Wallace withdrew cash for personal use, 1,500, Ck. No. 1006. Required 1. Record the transactions and the balance after each transaction. 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.arrow_forwardThe transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the businesss operations: July 1.Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Musics checking account. 1.Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, 1,750. 1.Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2.Received 1,000 cash from customers on account. 3.On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3.Paid 250 to creditors on account. 4.Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5.Purchased office equipment on account from Office Mart, 7,500. 8.Paid for a newspaper advertisement, 200. 11.Received 1,000 for serving as a disc jockey for a party. 13.Paid 700 to a local audio electronics store for rental of digital recording equipment. 14.Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16.Received 2,000 for serving as a disc jockey for a wedding reception. 18.Purchased supplies on account, 850. July 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22.Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23.Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2019. 27.Paid electric bill, 915. 28.Paid wages of 1,200 to receptionist and part-time assistant. 29.Paid miscellaneous expenses, 540. 30.Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2019. 31.Received 3,000 for serving as a disc jockey for a party. 31.Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31.Withdrew 1,250 cash from PS Music for personal use. PS Musics chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: Instructions 1. Enter the July 1, 2019, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column and place a check mark () in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance as of July 31, 2019.arrow_forward
- The transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business's operations: July 1. Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Music's checking account. 1. Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music: store. Paid rent for July, 1,750. 1. Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2. Received 1,000 cash from customers on account. 3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for SO hours per month for a monthly fee of 3,600. Any additional hours beyond SO will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3. Paid 250 to creditors on account. 4. Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, 7,500. 8. Paid for a newspaper advertisement, 200. 11. Received 1,000 for serving as a disc jockey for a party. 13. Paid 700 to a local audio electronics store for rental of digital recording equipment. 11. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. July 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22. Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2019. 27. Paid electric bill, 915. 28. Paid wages of 1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, 540. 30. Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2019. 31. Received 3,000 for serving as a disc jockey for a party. 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists' music during July. 31. Withdrew l,250 cash from PS Music for personal use. PS Music's chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: 11 Cash 3,920 12 Accounts receivable 1,000 14 Supplies 170 15 Prepaid insurance 17 Office Equipment 21 Accounts payable 250 23 Unearned Revenue 31 Peyton smith, Drawing 4,000 32 Fees Earned 500 41 Wages Expense 6,200 50 Office Rent Expense 400 51 Equipment Rent Expense 800 52 Utilities Expense 675 53 Supplies Expense 300 54 music Expense 1,590 55 Advertising Expense 500 56 Supplies Expense 180 59 Miscellaneous Expense 415 Instructions 1.Enter the July 1, 2019, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column and place a check mark () in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2.Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3.Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4.Prepare an unadjusted trial balance as of July 31, 2019.arrow_forwardOn March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501. e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012. g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307. i. Received and paid the heating bill, 248, Ck. No. 504. j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128. k. Sold catering services for cash for the remainder of the month, 2,649. l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506. Required 1. Record the transactions and the balance after each transaction. 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.arrow_forwardOn March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501 (Rent Expense). e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012 (Catering Income). g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307 (Catering Income). i. Received and paid the heating bill, 248, Ck. No. 504 (Utilities Expense). j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128 (Gas and Oil Expense). k. Sold catering services for cash for the remainder of the month, 2,649 (Catering Income). l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506 (Salary Expense). Required 1. In the equation, write the owners name above the terms Capital and Drawing. 2. Record the transactions and the balance after each transaction. Identify the account affected when the transaction involves revenues or expenses. 3. Write the account totals from the left side of the equals sign and add them. Write the account totals from the right side of the equals sign and add them. If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forward
- During February of this year, H. Rose established Rose Shoe Hospital. The following asset, liability, and owners equity accounts are included in the chart of accounts: The following transactions occurred during the month of February: a. Rose deposited 25,000 cash in a bank account in the name of the business. b. Bought shop equipment for cash, 1,525, Ck. No. 1000. c. Bought advertising on account from Milland Company, 325. d. Bought store shelving on account from Inger Hardware, 750. e. Bought office equipment from Sharas Office Supply, 625, paying 225 in cash and placing the balance on account, Ck. No. 1001. f. Paid on account to Inger Hardware, 750, Ck. No. 1002. g. Rose invested his personal leather working tools with a fair market value of 800 in the business h. Sold services for the month of February for cash, 250. PART 1: The Accounting Cycle for a Service Business: Analyzing Business Transactions Required 1. Write the account classifications (Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit. 2. Write the account names on the T accounts under the classifications, place the plus and minus signs for each T account, and label the debit and credit sides of the T accounts. 3. Record the amounts in the proper positions in the T accounts. Write the letter next to each entry to identify the transaction. 4. Foot and balance the accounts.arrow_forwardJournal entries and trial balance On August 1, 20Y7, Rafael Masey established Planet Realty, which completed the following transactions during the month: a. Rafael Masey transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 17,500. b. Purchased supplies on account, 2,300. c. Earned sales commissions, receiving cash, 13,300. d. Paid rent on office and equipment for the month, 3,000. e. Paid creditor on account, 1,150. f. Paid dividends, 1,800. g. Paid automobile expenses (including rental charge) for month, 1,500, and miscellaneous expenses, 400. h. Paid office salaries, 2,800. i. Determined that the cost of supplies used was 1,050. Instructions 1. Journalize entries for transactions (a) through (i), using the following account titles: Cash, Supplies, Accounts Payable, Common Stock, Dividends, Sales Commissions, Rent Expense, Office Salaries Expense, Automobile Expense, Supplies Expense, Miscellaneous Expense. Journal entry explanations may be omitted. 2. Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance. 3. Prepare an unadjusted trial balance as of August 31, 20Y7. 4. Determine the following: a. Amount of total revenue recorded in the ledger. b. Amount of total expenses recorded in the ledger. c. Amount of net income for August. 5. Determine the increase or decrease in retained earnings for August.arrow_forwardDuring December of this year, G. Elden established Ginnys Gym. The following asset, liability, and owners equity accounts are included in the chart of accounts: During December, the following transactions occurred: a. Elden deposited 35,000 in a bank account in the name of the business. b. Bought exercise equipment for cash, 8,150, Ck. No. 1001. c. Bought advertising on account from Hazel Company, 105. d. Bought a display rack on account from Cyber Core, 790. e. Bought office equipment on account from Office Aids, 185. f. Elden invested her exercise equipment with a fair market value of 1,200 in the business. g. Made a payment to Cyber Core, 200, Ck. No. 1002. h. Sold services for the month of December for cash, 800. Required 1. Write the account classifications (Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit. 2. Write the account names on the T accounts under the classifications, place the plus and minus signs for each T account, and label the debit and credit sides of the T accounts 3. Record the amounts in the proper positions in the T accounts. Write the letter next to each entry to identify the transaction. 4. Foot and balance the accounts.arrow_forward
- In March, T. Carter established Carter Delivery Service. The account headings are presented below. Transactions completed during the month of March follow. a. Carter deposited 25,000 in a bank account in the name of the business. b. Bought a used truck from Degroot Motors for 15,140, paying 5,140 in cash and placing the remainder on account. c. Bought equipment on account from Flemming Company, 3,450. d. Paid the rent for the month, 1,000, Ck. No. 3001. e. Sold services for cash for the first half of the month, 6,927. f. Bought supplies for cash, 301, Ck. No. 3002. g. Bought insurance for the truck for the year, 1,200, Ck. No. 3003. h. Received and paid the bill for utilities, 349, Ck. No. 3004. i. Received a bill for gas and oil for the truck, 218. j. Sold services on account, 3,603. k. Sold services for cash for the remainder of the month, 4,612. l. Paid wages to the employees, 3,958, Ck. Nos. 30053007. m. Carter withdrew cash for personal use, 1,250, Ck. No. 3008. Required 1. Record the transactions and the balance after each transaction 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.arrow_forwardP. Schwartz, Attorney at Law, opened his office on October 1. The account headings are presented below. Transactions completed during the month follow. a. Schwartz deposited 25,000 in a bank account in the name of the business. b. Bought office equipment on account from QuipCo, 9,670. c. Schwartz invested his personal law library, which cost 2,800. d. Paid the office rent for the month, 1,700, Ck. No. 2000. e. Bought office supplies for cash, 418, Ck. No. 2001. f. Bought insurance for two years, 944, Ck. No. 2002. g. Sold legal services for cash, 8,518. h. Paid the salary of the part-time receptionist, 1,820, Ck. No. 2003. i. Received and paid the telephone bill, 388, Ck. No. 2004. j. Received and paid the bill for utilities, 368, Ck. No. 2005. k. Sold legal services for cash, 9,260. l. Paid on account to QuipCo, 2,670, Ck. No. 2006. m. Schwartz withdrew cash for personal use, 2,500, Ck. No. 2007. Required 1. Record the transactions and the balance after each transaction. 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.arrow_forwardIn March, T. Carter established Carter Delivery Service. The account headings are presented below. Transactions completed during the month of March follow. a. Carter deposited 25,000 in a bank account in the name of the business. b. Bought a used truck from Degroot Motors for 15,140, paying 5,140 in cash and placing the remainder on account. c. Bought equipment on account from Flemming Company, 3,450. d. Paid the rent for the month, 1,000, Ck. No. 3001 (Rent Expense). e. Sold services for cash for the first half of the month, 6,927 (Service Income). f. Bought supplies for cash, 301, Ck. No. 3002. g. Bought insurance for the truck for the year, 1,200, Ck. No. 3003. h. Received and paid the bill for utilities, 349, Ck. No. 3004 (Utilities Expense). i. Received a bill for gas and oil for the truck, 218 (Gas and Oil Expense). j. Sold services on account, 3,603 (Service Income). k. Sold services for cash for the remainder of the month, 4,612 (Service Income). l. Paid wages to the employees, 3,958, Ck. Nos. 30053007 (Wages Expense). m. Carter withdrew cash for personal use, 1,250, Ck. No. 3008. Required 1. In the equation, write the owners name above the terms Capital and Drawing. 2. Record the transactions and the balance after each transaction. Identify the account affected when the transaction involves revenues or expenses. 3. Write the account totals from the left side of the equals sign and add them. Write the account totals from the right side of the equals sign and add them. If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forward
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