Concept explainers
Problem 2-2A Preparing and posting
P2
Aracle Engineering completed the following transactions in the month of June.
a. Jena Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000.
and $60,000 of drafting equipment to launch the company in exchange for common stock.
b. The company purchased land worth $49,000 for an office by paying $6,300cash and
signing a long-term note payable for $42,700.
c. The company purchased a portable building with $55,000 cash and moved it onto the land
acquired in b.
d. The company paid $3,000 cash for the premium on an 18-month insurance policy.
e. The company completed on delivered a set of plans for a client and collected $6,200 cash.
f. The company purchased $20,000 of additional drafting equipment by paying $9,500 cash
and signing a long-term note payable for $10,500.
g. The company completed $14,000 of engineering services for a client. This amount is to be
received in 30 days.
h. The company purchased $1,150 of additional office equipment on credit.
i. The company completed engineering services for $22,000 on credit.
j. The company received a bill for rent of equipment that was used on a recently completed
job. The $1,333 rent cost must be paid within 30 days.
k. The company completed $7,000 cash is partial payment from the client described in
transaction g.
l. The company paid $1,200cash for wages to a drafting assistant.
m. The company paid $1,150 cash to settle the account payable credit in transaction h.
n. The company paid $925 cash for minor maintenance of its drafting equipment.
o. The company paid $9480 cash in dividends.
p. The company paid$1,200 cash for wages to drafting assistant.
q. The company paid $2,500cash for advertisements on the web during June.
Required
1. Prepare general journal entries to record these transactions (use the account titles listed in
part 2).
2. Open the following ledger accounts—their account numbers are in parentheses (use the
balance column format): Cash (101):
office Equipment (163): Drafting Equipment (164): Building (170): Land (172): Accounts
Payable (201): Notes Payable (250): Common stock (307): Dividends (319):Engineering
Fees Earned (402): Wages Expense (601); Equipment Rental Expense (602); Advertising
Expense (603): and Repair Expense (604). Post the journal entries from part 1to the
accounts and enter the balance after each posting.
Check (2 )Ending balances : Cash. $22,945; Accounts Receivable,$29,000;Accounts
payable.$1,333
3. Prepare a trial balance as of the end of June.
(3)Trial balance totals, $261,733
1.
To prepare: Journal entry.
Explanation of Solution
Journal entries to record the accounting transactions.
a.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Cash |
|
100,000 |
|
|
|
Office Equipment |
|
5000 |
|
|
Drafting Equipment |
|
60,000 |
|
|
JA’s Capital account |
|
|
165,000 |
|
( Being cash and equipment has been invested by the owner.) |
|
|
|
Table (1)
- Cash and all the equipment has been converted into capital to invest in the business so the entire amount has been debited.
- Amount invested in the business is actually generated from all the cash and equipment and owner invested the entire amount in business so credited.
b.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Land |
|
$49,000 |
|
|
|
Cash |
|
$6,300 |
|
|
Notes Payable |
|
$42,700 |
|
|
( Being land has been purchased for cash and notes payable.) |
|
|
|
Table (2)
- Land is debited because it has been purchased and own by owner now.
- Cash and notes payable are credited as they have been paid to acquire the land.
c.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Building |
|
$55,000 |
|
|
|
Cash |
|
$55,000 |
|
|
( Being building has been purchased for cash.) |
|
|
|
Table (3)
- Building is debited as it has been purchased by the owner.
- Cash is credited as it has been paid to acquire the building.
d.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Prepaid Insurance |
|
$3,000 |
|
|
|
Cash |
|
$3,000 |
|
|
( Being 18 month insurance policy has been purchased for cash.) |
|
|
|
Table (4)
- Prepaid insurance is debited because it has been added to owner’s account.
- Cash is credited as it is reduced for purchasing the policy.
e.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Cash |
|
6,200 |
|
|
|
Fees earned for project |
|
6,200 |
|
|
( Being client billed for completed project.) |
|
|
|
Table (5)
- Cash is debited because it has been earned for completing the client’s work.
- Project is credited because it has been delivered after its completion.
f.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Drafting equipment |
|
20,000 |
|
|
|
Cash |
|
9,500 |
|
|
Notes Payable |
|
10,500 |
|
|
( Being drafting equipment has been purchased for cash and notes payable.) |
|
|
|
Table (6)
- Drafting equipment is debited because it has been purchased and own by owner now.
- Cash and notes payable is credited as they have been paid to acquire the drafting equipment.
g.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Account receivable |
|
14,000 |
|
|
|
Fees earned for engineering services |
|
14,000 |
|
|
( Being amount to be collected for delivering the project in 30 days.) |
|
|
|
Table (7)
- Since cash is going to receive in nest 30 days so it has been debited under the accounts receivables.
- Engineering services is credited because it has been delivered after its completion.
h.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Office Equipment |
|
1,050 |
|
|
|
Account payable |
|
1,050 |
|
|
( Being amount to be paid for purchasing the equipment.) |
|
|
|
Table (8)
- Office equipment has been acquired so it will be debited.
- Since amount is to be paid later on so it will be credited under accounts payable.
i.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Account receivable |
|
22,000 |
|
|
|
Fees earned for engineering services |
|
22,000 |
|
|
( Being amount collected for delivering the project.) |
|
|
|
Table (9)
- Since cash is going to receive later so it has been debited under the accounts receivables.
- Engineering services is credited because it has been delivered after its completion.
j.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Equipment rental expense |
|
1,333 |
|
|
|
Account payable |
|
1,333 |
|
|
( Being incurred equipment rental expense.) |
|
|
|
Table (10)
- Office equipment on rent has been received so it will be debited.
- Since amount is to be paid later on so it will be credited under accounts payable.
k.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Cash |
|
7,000 |
|
|
|
Account receivable |
|
7,000 |
|
|
( Being half of the amount received.) |
|
|
|
Table (11)
- Cash has been received so it will be debited.
- Since amount is received which was credit so recorded under account receivables.
l.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Wages Expenses |
|
1,200 |
|
|
|
Cash |
|
1,200 |
|
|
( Being cash has been paid for wages expense.) |
|
|
|
Table (12)
- Wages expenses have been debited because they have used up by the company.
- Since transaction is done on cash not on credit so cash has been credit for paying the amount.
m.
Date Account Title and Explanation Post. ref Debit ($) Credit ($) Accounts payable 1,150 Cash 1,150 (Being cash has been paid for previous expenses.) Table (13)
- Accounts payable is debited because amount has been paid for using services on credit previously.
- Amount has been paid in cash so it has been credit.
n.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Repair Expense |
|
925 |
|
|
|
Cash |
|
925 |
|
|
( Being cash has been paid for repair expense.) |
|
|
|
Table (14)
- Maintenance has been received by the drafting equipment so it is debited.
- Amount for expenses has been paid in cash so it is credited.
o.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Dividends |
|
9,480 |
|
|
|
Cash |
|
9,480 |
|
|
( Being cash has been paid to shareholders in the form of dividends) |
|
|
|
Table (15)
- Dividends have been paid to shareholders by the company so it will be debited.
- Cash is credited because dividend is paid in the form of cash.
p.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Wages expenses |
|
1,200 |
|
|
|
Cash |
|
1,200 |
|
|
( Being assistant’s wages paid off) |
|
|
|
Table (16)
- Since assistant’s service has been received so his wages has been debited.
- The assistant received his wages in cash so cash has been credited.
q.
Date |
Account Title and Explanation |
Post. ref |
Debit ($) |
Credit ($) |
Advertising expenses |
|
1,200 |
|
|
|
Cash |
|
1,200 |
|
|
( Being cash paid for advertising expense) |
|
|
|
Table (17)
- Advertising expenses has been incurred so debited.
- Amount for expenses has been paid in cash so credited.
2
To prepare: ledger account
Explanation of Solution
General ledgers
Cash No.101 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
JA’s capital account |
100,000 |
100,000 |
|||
Land |
6,300 |
93,700 |
|||
Building |
55,000 |
38,700 |
|||
Prepaid Insurance |
3,000 |
35,700 |
|||
Project delivered |
6,200 |
41,900 |
|||
Drafting equipment |
9,500 |
32,400 |
|||
Account receivable |
7,000 |
39,400 |
|||
Wages expenses |
1,200 |
38,200 |
|||
Accounts payable |
1,150 |
37,050 |
|||
Repair expenses |
925 |
36,125 |
|||
Dividend payment |
9,480 |
26,645 |
|||
Wages |
1,200 |
25,445 |
|||
Advertising |
2,500 |
22,945 |
Table (18)
So, the ending balance is $22,945.
Accounts receivable 106 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Project completion |
14,000 |
14,000 |
|||
Project completion |
22,000 |
36,000 |
|||
Cash |
7,000 |
29,000 |
Table (19)
So, the ending balance is $29,000.
Prepaid Insurance 108 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
g. |
Cash |
3,000 |
3,000 |
Table (20)
So, the ending balance is $3,000.
General ledger
Office Equipment 163 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
a. |
Cash |
5,000 |
5,000 |
||
f. |
Office Equipment |
1,150 |
6,150 |
Table (21)
So, the ending balance is $6,150.
Drafting Equipment 164 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
60,000 |
60,000 |
|||
Cash |
20,000 |
80,000 |
Table (22)
So, the ending balance is $80,000.
Building No.170 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
55,000 |
55,000 |
Table (23)
So, the ending balance is $55,000.
Building No.170 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
49,000 |
49,000 |
Table (24)
So, the ending balance is $49,000.
General ledger
Accounts payable 201 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Office expense |
1,150 |
1,150 |
|||
Equipment rental |
1,333 |
2,483 |
|||
Cash |
1,150 |
1,333 |
Table (25)
So, the ending balance is $1,333.
General ledger
Notes Payable .250 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Land |
42,700 |
42,700 |
|||
Cash |
10,500 |
53,200 |
Table (26)
So, the ending balance is $53,200.
JA’s Capital No.301 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
165,000 |
165,000 |
Table (27)
So, the ending balance is $165,000.
Dividend No.301 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
9,480 |
9,480 |
Table (28)
So, the ending balance is $9,480.
Engineering fees earned .402 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
6,200 |
6,200 |
|||
Accounts Receivable |
14,000 |
20,200 |
|||
Accounts Receivable |
22,000 |
42,000 |
Table (29)
So, the ending balance is $42,200.
Wages Expenses 601 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
1,200 |
1,200 |
|||
Cash |
1,200 |
2,400 |
Table (30)
So, the ending balance is $2,400.
Equipment rental expense No.602 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Accounts Payable |
1,333 |
1,333 |
Table (31)
So, the ending balance is $1,333.
Advertising expense no 603 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
2,500 |
2,500 |
Table (32)
So, the ending balance is $2,500.
Repairs expense no 604 |
|||||
Date |
Account Title and Explanation |
Post ref |
Debit ($) |
Credit ($) |
Balance ($) |
Cash |
925 |
925 |
Table (33)
So, the ending balance is $925.
3.
To prepare: Trial balance.
Explanation of Solution
Trial balance
Company A |
||
Trial Balance |
||
June 30, 20XX |
||
Accounts Title |
Amount ($) |
Amount ($) |
Cash |
22,945 |
|
Accounts Payable |
1,333 |
|
Accounts Receivable |
29,000 |
|
Prepaid Insurance |
3,000 |
|
Office Equipment |
6,150 |
|
Drafting Equipment |
80,000 |
|
Building |
55,000 |
|
Land |
49,000 |
|
Note Payable |
53,200 |
|
Capital |
165,000 |
|
Dividends |
9,480 |
|
Engineering fees earned |
42,200 |
|
Wages Expenses |
2,400 |
|
Equipment rental expenses |
1,333 |
|
Advertising Expense |
2500 |
|
Repairs Expense |
925 |
|
Totals |
261,733 |
261,733 |
Table (34)
So, total trial balance is $261,733.
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Chapter 2 Solutions
FINANCIAL+MANAG...(LL)-W/ACCESS>CUSTOM<
- Journal entries and trial balance On October 1, 2018, 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 lie debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry 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 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, 2018. 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_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_forwardEntries into T accounts and trial balance Ken Jones, an architect, organized Jones Architects on April 1, 2018. During the month, Jones Architects completed the following transactions: A. Transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 18,000. B. Purchased used automobile for 19,500, paying 2,500 cash and giving a note payable for the remainder. C. Paid April rent for office and workroom, 3,150. D. Paid cash for supplies, 1,450. E. Purchased office and computer equipment on account 6,500. F. Paid cash for annual insurance policies on automobile and equipment, 2,400. G. Received cash from a client for plans delivered, 12,000. H. Paid cash to creditors on account, 1,800. I. Paid cash for miscellaneous expenses, 375. J. Received invoice for blueprint service, due in May, 2,500. K. Recorded fees earned on plans delivered, payment to be received in May. 15,650. L. Paid salary of assistant. 2,800. M. Paid cash for miscellaneous expenses. 200. N. Paid installment due on note payable, 300. O. Paid gas, oil, and repairs on automobile for April, 550. Instructions 1. Record these transactions directly in the following T accounts, without journalizing: Cash. Accounts Receivable, Supplies. Prepaid Insurance, Automobiles, Equipment, Notes Payable, Accounts Payable, Common Stock, Professional Fees, Rent Expense, Salary Expense, Blueprint Expense, Automobile Expense, Miscellaneous Expense. To the left of each amount entered in the accounts, place the appropriate letter to identify the transaction. 2. Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance. 3. Prepare an unadjusted trial balance for Jones Architects as of April 50, 2018. 4. Determine the net income or net loss for April.arrow_forward
- Journal 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, 1300, 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 lx 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_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_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
- Journal entries and trial balance Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2018, follows: The following business transactions were completed by Elite Realty during April 2018: Apr 1. Paid rent on office for month, 6,500. 2. Purchased office supplies on account, 2,300. 5. Paid insurance premiums, 6,000. 10. Received cash from clients on account, 52,300. 15. Purchased land for a future building site for 200,000, paying 30,000 in cash and giving a note payable for the remainder. 17. Paid creditors on account, 6,450. 20. Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, 325. 23. Paid advertising expense, 4300. Enter the following transactions on Page 19 of the two-column journal: 27. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, 2,500. 28. Paid automobile expense (including rental charges for an automobile), 1,500. 29. Paid miscellaneous expenses, 1,400. 30 Recorded revenue earned and billed to clients during the month, 57,000. 30. Paid salaries and commissions for the month, 11,900. 30. Paid dividends, 4,000. 30. Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of 10,000. Instructions 1. Record the April 1, 2018, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of April 30, 2018. 5. Assume that the April 30 transaction for salaries and commissions should have been 19,100. (A) Why did the unadjusted trial balance in (4) balance? (B) Journalize the correcting entry. (C) Is this error a transposition or slide?arrow_forwardJournal entries and trial balance Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 2018, follows: The following business transactions were completed by Valley Realty during August 2018: Aug. 1. Purchased office supplies on account, 3,150. 2. Paid rent on office for month, 7,200. 3. Received cash from clients on account, 83,900. 5. Paid insurance premiums, 12,000. 9. Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, 400. 17. Paid advertising expense, 8,000. 23. Paid creditors on account, 13,750. Enter the following transactions on Page 19 of the two-column journal: 29. Paid miscellaneous expenses, 1,700. 30. Paid automobile expense (including rental charges for an automobile), 2,500. 31. Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, 2,000. 31. Paid salaries and commissions for the month, 53,000. 31. Recorded revenue earned and billed to clients during the month, 183,500. 31. Purchased land for a future building site for 75,000, paying 7,500 in cash and giving a note payable for the remainder. 31. Paid dividends, 1,000. 31. Rented land purchased on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of 5,000. Instructions 1. Record the August 1 balance of each account in the appropriate balance column of a four- column account, write Balance in the item section, and place a check mark (0 in the Posting Reference column. 2. Journalize the transactions for August in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of August 31, 2018. 5. Assume that the August 31 transaction for dividends should have been 10,000. (A) Why did the unadjusted trial balance in (4) balance? (B) Journalize the correcting entry. (C) Is this error a transposition or slide?arrow_forwardExercise 2-40 Transaction Analysis Amanda Webb opened a home health care business under the name Home Care Inc. During its first month of operations. the business had the following transactions: Issued common stock to Ms. Webb and other stockholders in exchange for $30,000 cash. Paid $18,500 cash for a parcel of land on which the business will eventually build an office building. Purchased supplies for $2350 on credit. Used the supplies purchased in Transaction c. Paid rent for the month on office space and equipment. $800 cash. Performed services for clients in exchange for $3,910 cash. Paid salaries for the month. $1,100. Paid $650 cash for advertising in the current month. Paid $1,900 on account for supplies purchased in Transaction c. Performed services for clients on credit in the amount of 51,050. Paid a $600 dividend to stockholders Required: Prepare an analysis of the effects of these transactions on the accounting equation of the business. Use the format below.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_forwardProblem 2-56A Analyzing Transactions Luis Madero, after working for several years with a large public accounting firm decided to open his own accounting service. The business is operated as a corporation under the name Madero Accounting Services. The following captions and amounts summarize Maderos balance sheet at July 31, 2019. The following events occurred during August 2019. Issued common stock to Ms. Garriz in exchange for $15,000 cash. Paid $850 for first months rent on office space. Purchased supplies of $2,250 on credit. Borrowed $8,000 from the bank. Paid $1,080 on account for supplies purchased earlier on credit. Paid secretarys salary for August of $2,150. Performed amounting services for clients who paid cash upon completion of the service in the total amount of $4,700. Used $3,180 of the supplies on hand. Perfumed accounting services for clients on credit in the total amount of $1,920. Purchased $500 in supplies for cash. Collected $1,290 cash from clients for whom services were performed on credit. Paid $1,000 dividend to stockholders. Required: Record the effects of the transactions listed above on the accounting equation. Use the format given in the problem, starting with the totals at July 31, 20l9. Prepare the trial balance at August 31, 2019.arrow_forwardEntries into T accounts and trial balance Kimberly Manis, an architect, organized Manis Architects on January 1, 2016. During the month, Manis Architects completed the following transactions: a. Issued common stock to Kimberly Manis in exchange for 15,000. b. Paid January rent for office and workroom, 1,950. c. Purchased used automobile for 28,500, paying 5,700 cash and giving a note payable for the remainder. d. Purchased office and computer equipment on account, 4,500. e. Paid cash for supplies, 1,875. f. Paid cash for annual insurance policies, 3,600. g. Received cash from client for plans delivered, 13,650. h. Paid cash for miscellaneous expenses, 2,600. i. Paid cash to creditors on account, 3,000. j. Paid installment due on note payable, 950. k. Received invoice for blueprint service, due in February, 3,750. l. Recorded fees earned on plans delivered, payment to be received in February, 21,900. m. Paid salary of assistants. 4,100. n. Paid gas, oil, and repairs on automobile for January, 1,300. Instructions 1. Record these transactions directly in the following T accounts, without journalizing: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Automobiles, Equipment, Notes Payable, Accounts Payable, Common Stock, Professional Fees, Salary Expense, Blueprint Expense, Rent Expense, Automobile Expense, Miscellaneous Expense, To the left of the amount entered in the accounts, place the appropriate letter to identify the transaction. 2. Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance. 3. Prepare an unadjusted trial balance for Manis Architects as of January 31, 2016. 4. Determine the net income or net loss for January.arrow_forward
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