Connect Access Card for Fundamental Accounting Principles
Connect Access Card for Fundamental Accounting Principles
23rd Edition
ISBN: 9781259693878
Author: John J Wild
Publisher: McGraw-Hill Education
Question
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Chapter 2, Problem 2BPSB
To determine

Concept Introduction:

Journal entry: In double entry system of accounting, journalizing is the recording of the given accounting transactions by giving effects to debits and credits.

Ledger accounts: Ledger accounts are the refinement of journal entries by presenting them in an understandable form that helps in finding out the balance of an account at a given point in time.

Trial balance: Trial balance is the first step in the preparation of the final accounts and for ensuring that the arithmetical accuracy of the books of accounts prepared.

To write: The general journal entries, ledger accounts and the trial balance

Expert Solution & Answer
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Explanation of Solution

The journal entries are passed; ledger accounts and trial balance is prepared.

The debit-credit rules for recording the journal entries are as under –

  1. Debit what comes in, credit what goes out.
  2. Debit the receiver, credit the giver.
  3. Debit the expenses and assets, credit the incomes and liabilities.

1. The journal entries in the books of Softworks are passed as under-

S. No Particulars Account No Debit ($) Credit ($)
a. Cash account 101 65,000  
  Office equipment account 163 5,750  
  Computer equipment account 164 30,000  
  B. Grechus, capital account 301   100,750
b. Land account 172 22,000  
  Cash account 101   5,000
  Notes payable account 250   17,000
c. Building account 170 34,500  
  Cash account 101   34,500
d. Prepaid insurance account 108 5,000  
  Cash account 101   5,000
e. Cash account 101 4,600  
  Fees earned account 402   4,600
f. Computer equipment account 164 4,500  
  Cash account 101   800
  Notes payable account 250   3,700
g. Accounts receivable account 106 4,250  
  Fees earned account 402   4,250
h. Office equipment account 163 950  
  Accounts payable account 201   950
i. Accounts receivable account 106 10,200  
  Fees earned account 402   10,200
j. Computer rental expense account 602 580  
  Accounts payable account 201   580
k. Cash account 101 5,100  
  Accounts receivable account 106   5,100
l. Wages expense account 601 1,800  
  Cash account 101   1,800
m. Accounts payable account 201 950  
  Cash account 101   950
n. Repairs expense account 604 608  
  Cash account 101   608
o. B. Grechus withdrawals 302 6,230  
  Cash account 101   6,230
p. Wages expense account 601 1,800  
  Cash account 101   1,800
q. Advertising expense 603 750  
  Cash account 101   750

2. Ledger accounts in the books of Softworks are passed as under-

Cash account
Date Particulars Debit ($) Credit ($) Account #101
Balance (Dr)
  Opening balance ---    
  B. Grechus, capital account 65,000   65,000
  Land account   5,000 60,000
  Building account   34,500 25,500
  Prepaid insurance account   5,000 20,500
  Fees earned account 4,600   25,100
  Computer equipment account   800 24,300
  Accounts receivable account 5,100   29,400
  Wages expense account   1,800 27,600
  Accounts payable account   950 26,650
  Repairs expense account   608 26,042
  B. Grechus, withdrawals account   6,230 19,812
  Wages expense account   1,800 18,012
  Advertising expense account   750 17,262
Accounts receivable account
Date Particulars Debit ($) Credit ($) Account #106
Balance (Dr)
  Opening balance ---    
  Fees earned account 4,250   4,250
  Fees earned account 10,200   14,450
  Cash account   5,100 9,350
Prepaid insurance account
Date Particulars Debit ($) Credit ($) Account #108
Balance (Dr)
  Opening balance ---    
  Cash account 5,000   5,000
Office equipment account
Date Particulars Debit ($) Credit ($) Account #163
Balance (Dr)
  Opening balance ---    
  B. Grechus, capital account 5,750   5,750
  Accounts payable account 950   6,700
Computer equipment account
Date Particulars Debit ($) Credit ($) Account #164
Balance (Dr)
  Opening balance ---    
  B. Grechus, capital account 30,000   30,000
  Cash account 800   30,800
  Notes payable account 3,700   34,500
Building account
Date Particulars Debit ($) Credit ($) Account #170
Balance (Dr)
  Opening balance ---    
  Cash account 34,500   34,500
Land account
Date Particulars Debit ($) Credit ($) Account #172
Balance (Dr)
  Opening balance ---    
  Cash account 5,000   5,000
  Notes payable account 17,000   22,000
Accounts payable account
Date Particulars Debit ($) Credit ($) Account #201
Balance (Cr)
  Opening balance ---    
  Office equipment account   950 950
  Computer rental expense account   580 1,530
  Cash account 950   580
Notes payable account
Date Particulars Debit ($) Credit ($) Account #250
Balance (Cr)
  Opening balance ---    
  Land account   17,000 17,000
  Computer equipment account   3,700 20,700
B. Grechus, capital account
Date Particulars Debit ($) Credit ($) Account #301
Balance (Cr)
  Opening balance ---    
  Cash account   65,000 65,000
  Office equipment account   5,750 72,750
  Computer equipment account   30,000 100,750
B. Grechus, withdrawal account
Date Particulars Debit ($) Credit ($) Account #302
Balance (Dr)
  Opening balance ---    
  Cash account 6,230   6,230
Fees earned account
Date Particulars Debit ($) Credit ($) Account #402
Balance (Cr)
  Opening balance ---    
  Cash account   4,600 4,600
  Accounts receivable account   4,250 8,850
  Accounts receivable account   10,200 19,050
Wages expense account
Date Particulars Debit ($) Credit ($) Account #601
Balance (Dr)
  Opening balance ---    
  Cash account 1,800   1,800
  Cash account 1,800   3,600
Computer rental expense account
Date Particulars Debit ($) Credit ($) Account #602
Balance (Dr)
  Opening balance ---    
  Accounts payable account 580   580
Advertising expense account
Date Particulars Debit ($) Credit ($) Account #603
Balance (Dr)
  Opening balance ---    
  Cash account 750   750
Repairs expense account
Date Particulars Debit ($) Credit ($) Account #604
Balance (Dr)
  Opening balance ---    
  Cash account 608   608

3. The trial balance of Softworks as on April, 30

S. No Ledger No Ledger Name Debit ($) Credit ($)
1 101 Cash 17,262  
2 106 Accounts receivable 9,350  
3 108 Prepaid insurance 5,000  
4 163 Office equipment 6,700  
5 164 Computer equipment 34,500  
6 170 Building 34,500  
7 172 Land 22,000  
8 201 Accounts payable   580
9 250 Notes payable   20,700
10 301 B.Grechus, capital   100,750
11 302 B.Grechus, withdrawals 6,230  
12 402 Fees earned   19,050
13 601 Wages expense 3,600  
14 602 Computer rental expense 580  
15 603 Advertising expense 750  
16 604 Repairs expense 608  
TOTAL 141,080 141,080

The journal entries are thus passed and the ledger accounts and trial balance are thus prepared.

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Chapter 2 Solutions

Connect Access Card for Fundamental Accounting Principles

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