Concept explainers
Journalizing transactions, posting to T-accounts, and preparing a
Consider the following transactional data for the first month of operations for Crystal Clear Cleaning.
Nov. 1 | Stockholders contributed $35,000 and a truck, with a market value of $7,000, to the business in exchange for common stock. |
2 | The business paid $2,000 to Pleasant Properties for November through February rent. (Debit Prepaid Rent) |
3 | Paid $1,800 for a business insurance policy for the term November 1, 2017 through October 31, 2018. (Debit Prepaid Insurance) |
4 | Purchased cleaning supplies on account, $220. |
5 | Purchased on account an industrial vacuum cleaner costing $2,000. The invoice is payable November 25. |
7 | Paid $1,200 for a computer and printer. |
9 | Performed cleaning services on account in the amount of $3,800. |
10 | Received $300 for services rendered on November 9. |
15 | Paid employees, $350. |
16 | Received $12,000 for a 1-year contract beginning November 16 for cleaning services to be provided. Contract begins November 16, 2017, and ends November 15, 2018. (Credit Unearned Revenue) |
17 | Provided cleaning services and received $1,000 cash. |
18 | Received a utility bill for $250 with a due date of December 4, 2017. (Use Accounts Payable) |
20 | Borrowed $96,000 from bank with interest rate of 9% per year. |
21 | Received $900 on account for services performed on November 9. |
25 | Paid $1,000 on account for vacuum cleaner purchased on November 5. |
29 | Paid $500 for advertising. |
30 | Cash dividends of $200 were paid to stockholders. |
Requirements
1. Journalize the transactions, using the following accounts: Cash; Accounts Receivable; Cleaning Supplies; Prepaid Rent; Prepaid Insurance; Equipment; Truck; Accounts Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Advertising Expense; and Utilities Expense. Explanations are not required.
2. Open a T-account for each account.
3.
4. Prepare a trial balance as of November 30, 2017.
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Horngren's Financial & Managerial Accounting, The Managerial Chapters, Student Value Edition (5th Edition)
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