Concept explainers
1.
A journal records a transaction by debiting one account and giving credit to another account. All the transactions affecting the business entity are passed through the journal recording.
To Prepare:
Journal entries to record the transactions occurred for April in the books of LW.
1.
Answer to Problem 1PSA
When assets are invested into the business, all assets are debited, and the capital account is credited.
Expenses paid in advance before they are accrued represents asset and hence debited and cash is credited.
Asset purchase on credit requires the asset accounts to be debited and the liability for payable is credited.
Income earned in cash requires the cash account to be debited and income or revenue account is credited. Similarly, for income earned but not received in cash, an asset for receivable is debited and revenue is credited.
When trade payable is settled through payment, liability account is debited, and cash account is credited.
When cash is collected from the receivable asset, cash is debited, and the receivable is credited.
In case the owner withdraws cash from the business, the withdrawals account is debited, and cash is credited.
For expenses paid in cash, the expense account is debited, and cash is credited.
Explanation of Solution
LW | ||||
Journal | ||||
Date | Account Titles & Explanations | Account No. | Debit | Credit |
1-Apr | Cash | 101 | $80,000 | |
Office Equipment | 163 | $26,000 | ||
KT, Capital | 301 | $106,000 | ||
(to record the cash &equipment invested into the business) | ||||
2-Apr | Prepaid Rent | 131 | $9,000 | |
Cash | 101 | $9,000 | ||
(To record the rent paid in advance for 12 months) | ||||
3-Apr | Office Equipment | 163 | $8,000 | |
Office Supplies | 124 | $3,600 | ||
Accounts Payable | 201 | $11,600 | ||
(To record the equipment and supplies purchased on credit) | ||||
6-Apr | Cash | 101 | $4,000 | |
Service Revenue | 403 | $4,000 | ||
(Services rendered for cash) | ||||
9-Apr | 106 | $6,000 | ||
Service Revenue | 403 | $6,000 | ||
(Services rendered on credit) | ||||
13-Apr | Accounts Payable | 201 | $11,600 | |
Cash | 101 | $11,600 | ||
(Cash paid in full settlement) | ||||
19-Apr | Prepaid Insurance | 128 | $2,400 | |
Cash | 101 | $2,400 | ||
(Insurance paid in advance for 12 months) | ||||
22-Apr | Cash | 101 | $4,400 | |
Accounts Receivable | 106 | $4,400 | ||
(Cash collection as part payment) | ||||
25-Apr | Accounts Receivable | 106 | $2,890 | |
Service Revenue | 403 | $2,890 | ||
(Services rendered on credit) | ||||
28-Apr | KT, Withdrawals | 302 | $5,500 | |
Cash | 101 | $5,500 | ||
(Cash drawn for personal use) | ||||
29-Apr | Office Supplies | 124 | $600 | |
Accounts Payable | 201 | $600 | ||
(Supplies are purchased on credit) | ||||
30-Apr | Utilities Expense | 690 | $435 | |
Cash | 101 | $435 | ||
(Utility bill paid in cash) |
Under the date column, the transaction date is entered. In account titles and explanations tab, the respective accounts are recorded and the corresponding amount in debit or credit is entered in their respective column. Account numbers are maintained to identify a particular account.
2.
After the journal entries are passed, the accounts are posted to the ledger and the balances in each ledger arecalculated. Ledger preparation can have different formats depending on the business needs.
To Post:
Journal entries to the ledger accounts and computation of balances for each of those ledger accounts.
2.
Answer to Problem 1PSA
When the journal entries are posted to the ledger accounts, the following balances will appear:
Cash: $59,465
Accounts Receivable: $4,490
Office Supplies: $4,200
Prepaid Insurance: $2,400
Prepaid Rent: $9,000
Office Equipment: $34,000
KT, Withdrawals: $5,500
Utilities Expense: $435
Accounts Payable: $600
KT, Capital: $106,000
Service Revenue: $12,890
Explanation of Solution
General Ledger
Cash | Account No: 101 | ||||
Date | Debit | Credit | Balance | ||
1-Apr | $80,000 | $80,000 | |||
2-Apr | $9,000 | $71,000 | |||
6-Apr | $4,000 | $75,000 | |||
13-Apr | $11,600 | $63,400 | |||
19-Apr | $2,400 | $61,000 | |||
22-Apr | $4,400 | $65,400 | |||
28-Apr | $5,500 | $59,900 | |||
30-Apr | $435 | $59,465 | |||
Accounts Receivable | Account No: 106 | ||||
Date | Debit | Credit | Balance | ||
9-Apr | $6,000 | $6,000 | |||
22-Apr | $4,400 | $1,600 | |||
25-Apr | $2,890 | $4,490 | |||
Office Supplies | Account No: 124 | ||||
Date | Debit | Credit | Balance | ||
3-Apr | $3,600 | $3,600 | |||
29-Apr | $600 | $4,200 | |||
Prepaid Insurance | Account No: 128 | ||||
Date | Debit | Credit | Balance | ||
19-Apr | $2,400 | $2,400 | |||
Prepaid Rent | Account No: 131 | ||||
Date | Debit | Credit | Balance | ||
2-Apr | $9,000 | $9,000 | |||
Office Equipment | Account No: 163 | ||||
Date | Debit | Credit | Balance | ||
1-Apr | $26,000 | $26,000 | |||
3-Apr | $8,000 | $34,000 | |||
KT, Withdrawals | Account No: 302 | ||||
Date | Debit | Credit | Balance | ||
28-Apr | $5,500 | $5,500 | |||
Utilities Expense | Account No: 690 | ||||
Date | Debit | Credit | Balance | ||
30-Apr | $435 | $435 | |||
Accounts Payable | Account No: 201 | ||||
Date | Debit | Credit | Balance | ||
3-Apr | $8,000 | $8,000 | |||
3-Apr | $3,600 | $11,600 | |||
13-Apr | $11,600 | $0 | |||
29-Apr | $600 | $600 | |||
KT, Capital | Account No: 301 | ||||
Date | Debit | Credit | Balance | ||
1-Apr | $80,000 | $80,000 | |||
1-Apr | $26,000 | $106,000 | |||
Service Revenue | Account No: 403 | ||||
Date | Debit | Credit | Balance | ||
6-Apr | $4,000 | $4,000 | |||
9-Apr | $6,000 | $10,000 | |||
25-Apr | $2,890 | $12,890 |
Ledger entries are recorded in accordance with the journal chronologically and at each date balances are drawn.
3.
A trial balance is prepared to show the arithmetical accuracy of the ledgers so posted. However, this does not guarantee that accounts are prepared correctly. The trial balance serves as the prima facie document to show that the ledger balances are properly recorded from the journal.
To Prepare:
A trial balance as at April 30.
3.
Answer to Problem 1PSA
The debit and credit side of the trial balance are matched with the amount of $119,490.
Explanation of Solution
LW Trial Balance As of April 30 | |||
Account Title | Account No. | Debit | Credit |
Cash | 101 | $59,465 | |
Accounts Receivable | 106 | $4,490 | |
Office Supplies | 124 | $4,200 | |
Prepaid Insurance | 128 | $2,400 | |
Prepaid Rent | 131 | $9,000 | |
Office Equipment | 163 | $34,000 | |
Accounts Payable | 201 | $600 | |
K. Tanner, Capital | 301 | $106,000 | |
K. Tanner, Withdrawals | 302 | $5,500 | |
Services Revenue | 403 | $12,890 | |
Utilities Expense | 690 | $435 | |
Total | $119,490 | $119,490 |
The total of the debit side must be equal to the total of the credit side to prove the arithmetical accuracy of the ledger accounts posted.
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Chapter 2 Solutions
FINANCIAL ACCOUNTING FUNDAMENTALS
- Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2016. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 4,500. 5. Received cash from clients on account, 2,450. 9. Paid cash for a newspaper advertisement, 225. 13. Paid Office Station Co. for part of the debt incurred on April 5, 640. 15. Recorded services provided on account for the period May 115, 9,180. 16. Paid part-time receptionist for two weeks' salary including the amount owed on April 30, 750. 17. Recorded cash from cash clients for fees earned during the period May 116, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Recorded services provided on account for the period May 1620, 4,820. 25. Recorded cash from cash clients for fees earned for the period May 1723, 7,900. 27. Received cash from clients on account, 9,520. 28. Paid part-time receptionist for two weeks' salary, 750. 30. Paid telephone bill for May, 260. 31. Paid electricity bill for May, 810. 31. Recorded cash from cash clients for fees earned for the period May 2631, 3,300. 31. Recorded services provided on account for the remainder of May, 2,650. 31. Kelly withdrew 10,500 for personal use. Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2016, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2016, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during May is 275. b. Supplies on hand on May 31 are 715. c. Depreciation of office equipment for May is 330. d. Accrued receptionist salary on May 31 is 325. e. Rent expired during May is 1,600. f. Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forwardComprehensive Problem 1 8 Net income. 31,425 Kelly Pitney began her consulting business. Kelly Consulting, on April 1, 20Y8. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter During May, Kelly Consulting entered into the following transactions: May 3.Received cash from clients as an advance payment for services to be provided and recorded it as unearned tree 4,500 5.Received cash from clients on account 2,450. 9.Paid cash for a newspaper advertisement 225. 13.Raid Office Station Co for part of the debt incurred on April , 640. 15.Recorded services provided on account for the period May 1-15, 9,180. 16 Paid part-time receptionist for two weeks salary including the amount owed on April 30, 750. 17.Recorded cash from cash clients for fees earned during the period May 116, 8,360. Record the following transactions on Page 6 of the Journal 20.Purchased support on account 735. 21.Recorded services provided on account for the period May 1620. 4,820 25.Recorded cash from cash clients for fees earned for the period May 1723, 7,900 27.Received cash from clients on account 9,520. 28.Paid part-time receptionist for two weeks salary. 7S0. 30.Raid telephone bill for May. 260 31.Paid electricity bill for May, 810. 31.Recorded cash from cash clients tor lees earned for the period May 2031. 3,300. 31.Recorded services provided on account for the remainder of May, 2,650. 31.Paid dividends 10,500 Instructions 1.The chart of accounts foe Kelly Consulting is shown us Exhibit 9. and the post-closing trial balance as of April 30, 20Y8, is shown in Exhibit 17. for each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1. 20Y8. and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting cm Page of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2.Post the journal to a ledger of four-column accounts. 5.Prepare an unadjusted trial balance. 4.At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (a)Insurance expired during May is 275. (b)Supplies on hand on May II are 715. (c)Depreciation of office equipment for May is 330. (d)Accrued receptionist salary on May 31 is 325. (e)Rent expired during May is 1600. (f)Unearned fees on May 31 are 3,210 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of stockholders equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forwardThe transactions completed by PS Music during June 2016 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 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: July 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, 2016. 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, 2016. 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, 2016 (all normal balances), are as follows: Instructions 1. Enter the July 1, 2016, 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, 2016.arrow_forward
- COMPREHENSIVE PROBLEM 1, PERIOD 2: The Accounting Cycle During the month of May 20--, The Generals Favorite Fishing Hole engaged in the following transactions. These transactions required an expansion of the chart of accounts as shown below. Assets Revenues 101 Cash 401 Registration Fees 122 Accounts Receivable 404 Vending Commission Revenue 142 Office Supplies 144 Food Supplies Expenses 145 Prepaid Insurance 511 Wages Expense 146 Prepaid Subscriptions 512 Advertising Expense 161 Land 521 Rent Expense 171 Buildings 523 Office Supplies Expense 171.1 Accum. Depr.Buildings 524 Food Supplies Expense 181 Fishing Boats 525 Phone Expense 181.1 Accum. Depr.Fishing Boats 533 Utilities Expense 182 Surround Sound System 535 Insurance Expense 182.1 Accum. Depr.Surround Sound Sys. 536 Postage Expense 183 Big Screen TV 537 Repair Expense 183.1 Accum. Depr.Big Screen TV 540 Depr. Exp.Buildings 541 Depr. Exp.Surround Sound Sys. Liabilities 202 Accounts Payable 542 Depr. Exp.Fishing Boats 219 Wages Payable 543 Depr. Exp.Big Screen TV 546 Satellite Programming Exp. Owners Equity 548 Subscriptions Expense 311 Bob Night, Capital 312 Bob Night, Drawing 313 Income Summary May 1 In order to provide snacks for guests on a 24-hour basis, Night signed a contract with Snack Attack. Snack Attack will install vending machines with food and drinks and pay a 10% commission on all sales. Estimated payments are made at the beginning of each month. Night received a check for 200, the estimated commission on sales for May. 2 Night purchased a surround sound system and big screen TV with a digital satellite system for the guest lounge. The surround sound system cost 3,600 and has an estimated useful life of five years and no salvage value. The TV cost 8,000, has an estimated useful life of eight years, and has a salvage value of 800. Night paid cash for both items. 2 Paid for Mays programming on the new digital satellite system, 125. May 3 Nights office manager returned 100 worth of office supplies to Gordon Office Supply. Night received a 100 reduction on the account. 3 Deposited registration fees, 52,700. 3 Paid rent for lodge and campgrounds for the month of May, 40,000. 3 In preparation for the purchase of a nearby campground, Night invested an additional 600,000. 4 Paid Gordon Office Supply on account, 400. 4 Purchased the assets of a competing business and paid cash for the following: land, 100,000; lodge, 530,000; and fishing boats, 9,000. The lodge has a remaining useful life of 50 years and a 50,000 salvage value. The boats have remaining lives of five years and no salvage value. 5 Paid Mays insurance premium for the new camp, 1,000. (See above transaction.) 5 Purchased food supplies from Acme Super Market on account, 22,950. 5 Purchased office supplies from Gordon Office Supplies on account, 1,200. 7 Night paid 40 each for one-year subscriptions to Fishing Illustrated, Fishing Unlimited, and Fish Master. The magazines are published monthly. 10 Deposited registration fees, 62,750. 13 Paid wages to fishing guides, 30,000. (Dont forget wages payable from prior month.) 14 A guest became ill and was unable to stay for the entire week. A refund was issued in the amount of 1,000. 17 Deposited registration fees, 63,000. 19 Purchased food supplies from Acme Super Market on account, 18,400. 21 Deposited registration fees, 63,400. 23 Paid 2,500 for Mays advertising spots on National Sports Talk Radio. 25 Paid repair fee for damaged boat, 850. 27 Paid wages to fishing guides, 30,000. 28 Paid 1,800 for Mays advertising spots on billboards. 29 Purchased food supplies from Acme Super Market on account, 14,325. 30 Paid utilities bill, 3,300. 30 Paid phone bill, 1,800. 30 Paid Acme Super Market on account, 47,350. 31 Bob Night withdrew cash for personal use, 7,500. Adjustment information at the end of May is provided below. (a) Total vending machine sales were 2,300 for the month of May. A 10% commission is earned on these sales. (b) Straight-line depreciation is used for the 10 boats purchased on April 2 for 60,000. The useful life for these assets is five years and there is no salvage value. A full months depreciation was taken in April on these boats. Straight-line depreciation is also used for the two boats purchased in May. Make one adjusting entry for all depreciation on the boats. (c) Straight-line depreciation is used to depreciate the surround sound system. (d) Straight-line depreciation is used to depreciate the big screen TV. (e) Straight-line depreciation is used for the building purchased in May. (f) On April 2, Night paid 9,000 for insurance during the six-month camping season. Mays portion of this premium was used up during this month. (g) Night received his May issues of Fishing Illustrated, Fishing Unlimited, and Fish Master. (h) Office supplies remaining on hand, 150. (i) Food supplies remaining on hand, 5,925. (j) Wages earned, but not yet paid, at the end of May, 6,000. REQUIRED 1. Enter the transactions in a general journal. Enter transactions from May 14 on page 7, May 528 on page 8, and the remaining entries on page 9. To save time and space, dont enter descriptions for the journal entries. 2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles, account numbers, and balances from April 30 in the general ledger accounts.) 3. Prepare a trial balance on a work sheet. 4. Complete the work sheet. 5. Journalize the adjusting entries on page 10 of the general journal. 6. Post the adjusting entries to the general ledger. 7. Prepare the income statement. 8. Prepare the statement of owners equity. 9. Prepare the balance sheet. 10. Journalize the closing entries on page 11 of the general journal. 11. Post the closing entries to the general ledger. 12. Prepare a post-closing trial balance.arrow_forwardJournal entries and trial balance On October 1, 20Y4, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business: Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 18,000. 4. Paid rent for period of October 4 to end of month, 3,000. 10. Purchased a used truck for 23,750, paying 3,750 cash and giving a note payable for the remainder. 13. Purchased equipment on account, 10,500. 14. Purchased supplies for cash, 2,100. Oct. 15. Paid annual premiums on property and casualty insurance, 3,600. 15. Received cash for job completed, 8,950. Enter the following transactions on Page 2 of the two-column journal: 21. Paid creditor a portion of the amount owed for equipment purchased on October 13, 2,000. 24. Recorded jobs completed on account and sent invoices to customers, 14,150. 26. Received an invoice for truck expenses, to be paid in November, 700. 27. Paid utilities expense, 2,240. 27. Paid miscellaneous expenses, 1,100. 29. Received cash from customers on account, 7,600. 30. Paid wages of employees, 4,800. 31. Paid dividends, 3,500. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck 21 Notes Payable 22 Accounts Payable 31 Common Stock 33 Dividends 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 20Y4. 4. Determine the excess of revenues over expenses for October. 5. Can you think of any reason why the amount determined in (4) might not be the net income for October?arrow_forwardBrief Exercise 2-30 Transaction Analysis Galle Inc. entered into the following transactions during January. Borrowed $50,000 from First Street Bank by signing a new payable. Purchased $25,000 of equipment for cash. (Continued) Paid $500 to landlord for rent for January. Performed services for customers on account, $10,000. Collected $31000 from customers for services performed in Transaction d. Paid salaries of $2,500 for the current month. Required: Show the effect of each transaction using the following model.arrow_forward
- Journal entries and trial balance On November 1, 2016, Patty Cosgrove established an interior decorating business, Classic Designs. During the month, Patty completed the following transactions related to the business: Nov. 1. Patty transferred cash from a personal bank account to an account to be used for the business, 27,750. 1. Paid rent for period of November 1 to end of month, 4,000. 6. Purchased office equipment on account, 12,880. 8. Purchased a truck for 32,500 paying 6,500 cash and giving a note payable for the remainder. 10. Purchased supplies for cash, 1,860. 12. Received cash for job completed, 7,500. Nov. 15. Paid annual premiums on property and casualty insurance, 2,400. 23. Recorded jobs completed on account and sent invoices to customers, 12,440. 24. Received a n invoice for truck expenses, to be paid in November, 1,100. Enter the following transactions on Page 2 of the two-column journal: 29. Paid utilities expense, 3,660. 29. Paid miscellaneous expenses, 1,700. 30. Received cash from customers on account, 8,000. 30. Paid wages of employees, 4,750. 30. Paid creditor a portion of the amount owed for equipment purchased on November 6, 6,220. 30. Withdrew cash for personal use, 2,000. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted. 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck 21 Notes Payable 22 Accounts Payable 31 Patty Cosgrove, Capital 32 Patty Cosgrove, Drawing 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Classic Designs as of November 30, 2016. 4. Determine the excess of revenues over expenses for November. 5. Can you think of any reason why the amount determined in (4) might not be the net income for November?arrow_forwardJournal entries and trial balance On October 1, 2016, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business: Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business, 18,000. 4. Paid rent for period of October 4 to end of month, 3,000. 10. Purchased a used truck for 23,750, paying 3,750 cash and giving a note payable for the remainder. 13. Purchased equipment on account, 10,500. 14. Purchased supplies for cash, 2,100. 15. Paid annual premiums on property and casualty insurance, 3,600. 15. Received cash for job completed, 8,950. Enter the following transactions on Page 2 of the two-column journal: 21. Paid creditor a portion of the amount owed for equipment purchased on October 13, 2,000. 24. Recorded jobs completed on account and sent invoices to customers, 14,150. 26. Received an invoice for truck expenses, to be paid in November, 700. 27. Paid utilities expense, 2,240. Oct. 27. Paid miscellaneous expenses, 1,100. 29. Received cash from customers on account, 7,600. 30. Paid wages of employees, 4,800. 31. Withdrew cash for persona l use, 3,500. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck 21 Notes Payable 22 Accounts Payable 31 Jay Pryor, Capital 32 Jay Pryor, Drawing 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 2016. 4. Determine the excess of revenues over expenses for October. 5. Can you think of any reason why the amount determined in (4) might not be the net income for October?arrow_forwardANALYSIS OF TRANSACTIONS Nicole Lawrence opened a business called Nickies Neat Ideas in January 20--. Set up T accounts for the following accounts: Cash; Accounts Receivable; Office Supplies; Computer Equipment; Office Furniture; Accounts Payable; Nicole Lawrence, Capital; Nicole Lawrence, Drawing; Professional Fees; Rent Expense; and Utilities Expense. The following transactions occurred during the first month of business. Record these transactions in T accounts. After all transactions have been recorded, foot and balance the accounts if necessary. (a) Invested cash in the business, 18,000. (b) Purchased office supplies for cash, 500. (c) Purchased office furniture for cash, 8,000. (d) Purchased computer and printer on account, 5,000. (e) Received cash from clients for services, 4,000. (f) Paid cash on account for computer and printer purchased in transaction (d), 2,000. (g) Earned professional fees on account during the month, 7,000. (h) Paid office rent for January, 900. (i) Paid utility bills for the month, 600. (j) Received cash from clients that were billed previously in transaction (g), 3,000. (k) Withdrew cash for personal use, 4,000.arrow_forward
- ANALYSIS OF TRANSACTIONS Nicole Lawrence opened a business called Nickies Neat Ideas in January 20--. Set up T accounts for the following accounts: Cash; Accounts Receivable; Office Supplies; Computer Equipment; Office Furniture; Accounts Payable; Nicole Lawrence, Capital; Nicole Lawrence, Drawing; Professional Fees; Rent Expense; and Utilities Expense. The following transactions occurred during the first month of business. Record these transactions in T accounts. After all transactions have been recorded, foot and balance the accounts if necessary. (a) Invested cash in the business, 8,000. (b) Purchased office supplies for cash, 500. (c) Purchased office furniture for cash, 8,000. (d) Purchased computer and printer on account, 5,000. (e) Received cash from clients for services, 4,000. (f) Paid cash on account for computer and printer purchased in transaction (d), 2,000. (g) Earned professional fees on account during the month, 7,000. (h) Paid office rent for January, 900. (i) Paid utility bills for the month, 600. (j) Received cash from clients that were billed previously in transaction (g), 3,000. (k) Withdrew cash for personal use, 4,000. TRIAL BALANCE Based on the transactions recorded in Exercise 3-7B, prepare a trial balance for Nickies Neat Ideas as of January 31, 20--.arrow_forwardJournal entries and trial balance On November 1, 2018, Kris Lehman established an interior decorating business. Modem Designs. During the month, Kris completed the following transactions related to die business: Nov. 1. Kris transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 36,000. 1. Paid rent for period of November 1 to end of month, 4,000. 6. Purchased office equipment on account, 16,000. 8. Purchased a truck for 43,000 paying 4,300 cash and giving a note payable for the remainder. 10. Purchased supplies for cash, 1,860. 12. Received cash for job completed, 8,000. 15. Paid annual premiums on property and casualty insurance, 2,400. 23. Recorded jobs completed on account and sent invoices to customers, 15,500 24. Received an invoice for truck expenses, to be paid in November. 1,250 Enter the following transactions on Page 2 of the two-column journal: 29. . Paid utilities expense. 3,660. 29. Paid miscellaneous expenses, 1,700. 30. Received cash from customers on account, 10,500. 30. Paid wages of employees, 4,750. 30. Paid creditor a portion of the amount owed for equipment purchased on November 6. 4,000. 30. Paid dividends, 1,600. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted. 11 Cash 31 Common Stock 12 Accounts Receivable 33 Dividends 13 Supplies 41 Fees Earned 14 Prepaid Insurance 51 Wages Expense 16 Equipment 53 Rent Expense 18 Truck 54 Utilities Expense 21 Notes Payable 55 Truck Expense 22 Accounts Payable 59 Miscellaneous Ex 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Modern Designs as of November 30, 2018. 4. Determine the excess of revenues over expenses for November. 5. Can you think of any reason why the amount determined in (4) might not be the net income for November?arrow_forwardExercise 2-43 Transaction Analysis Goal Systems, a business consulting firm, engaged in the following transactions: Issued common stock for $75,000 cash. Borrowed $35,000 from a bank. Purchased equipment for $12,000 cash. Prepaid rent on office space for 6 months in the amount of $7.800. Performed consulting services in exchange for $6,300 cash. Perfumed consulting services on credit in the amount of $18,750. Incurred and paid wage expense of $9,500. Collected $10,200 of the receivable arising from Transaction f. Purchased supplies for $1,800 on credit. Used $1,200 of the supplies purchased in Transaction i. Paid for all of the supplies purchased in Transaction i. Required: For each transaction described above. indicate the effects on assets, liabilities, and stockholders equity using the format below.arrow_forward
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