Nuncio Consulting complete the following transactions during June.
- Armand Nuncio, the owner, invested $35,000 cash along with office equipment valued at $11,000 in the new company in exchange for common stock.
- The company purchased land valued at $7,500 and a building valued at $40,000. The purchase is paid with $15,000 cash and a long−term note payable for $32,500.
- The company purchased $500 of office supplies on credit.
- Nuncio invested his personal automobile in the company in exchange for more common stock. The automobile has a value of $8,000 and is to be used exclusively in the business.
- The company purchased $1,200 of additional office equipment on credit.
- The company paid $1,000 cash salary to an assistant.
- The company provided services to a client and collected $3,200 cash.
- The company paid $540 cash for this month’s utilities.
- The company paid $500 cash to settle the payable created in transaction c.
- The company purchased $3,400 of new office equipment by paying $3,400 cash.
- The company completed $4,200 of services for a client, who must pay within 30 days.
- The company paid $1,000 cash salary to an assistant.
- The company received $2,200 cash in partial payment on the receivable created in transaction k.
- The company paid $1,000 cash in dividends.
Required
- Prepare general
journal entries to record these transactions (use account titles listed in part 2). - Open the following ledger accounts−their account numbers are in parentheses (use the balance column format:) Cash (101); Accounts Receivable (106); Office Equipment (163); Automobiles (164); Building (170); Land (172); Account Payable (201); Notes Payable (250); Common Stock (307); Dividends (319); Fees Earned (402); Salaries Expense (601); and Utilities Expense (602).
Post the journal entries from part 1 to the ledger accounts and enter the balance after each posting. - Prepare a
trial balance as of the end of June.
1.
Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.
To prepare: The general journal entries for the following transaction.
Explanation of Solution
Journal entries of KT for the month of April are shown below.
Date | Particular | PR | Dr. ($) | Cr. ($) |
a. | Cash | 101 | 35,000 | |
Computer equipment | 163 | 11,000 | ||
To Common stock | 307 | 46,000 | ||
(Owner’s investment) | ||||
b. | Land | 172 | 7,500 | |
Building | 170 | 40,000 | ||
Cash | 101 | 15,000 | ||
Note payable | 250 | 32,500 | ||
(To record land and building purchase) | ||||
c. | Office supplies | 108 | 500 | |
Accounts payable | 201 | 500 | ||
(To record office supplies purchase) | ||||
d. | Automobile | 164 | 8,000 | |
Common stock | 307 | 8,000 | ||
(To record automobile invested by owner) | ||||
e. | Office equipment | 163 | 1,200 | |
Account payable | 201 | 1,200 | ||
(to record office equipment purchase) | ||||
f. | Salaries Expense | 601 | 1000 | |
Cash | 101 | 1000 | ||
(To record salaries paid) | ||||
g. | Cash | 101 | 3200 | |
Fees earned | 402 | 3200 | ||
(To record fees earned) | ||||
h. | Utilities Expense | 602 | 540 | |
Cash | 101 | 540 | ||
(to record utilities expense) | ||||
i. | Account payable | 201 | 500 | |
Cash | 101 | 500 | ||
(To record cash paid to accounts payable) | ||||
j. | Office equipment | 163 | 3400 | |
Cash | 101 | 3400 | ||
(to record office equipment purchase) | ||||
k. | Account receivable | 106 | 4200 | |
Fees Earned | 402 | 4200 | ||
(to record fees earned) | ||||
l. | Salaries Expense | 601 | 1000 | |
Cash | 101 | 1000 | ||
(to record salaries paid) | ||||
m. | Cash | 101 | 2200 | |
Accounts Receivable | 106 | 2200 | ||
(to record cash received from account receivable) | ||||
n. | Dividends | 319 | 1100 | |
Cash | 101 | 1100 | ||
(to record dividend paid) | ||||
2.
Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.
To prepare: T account for the following transactions.
Answer to Problem 4PSB
Balance of T account for cash $17,860, account receivable$2000, automobile $8000, office equipment$2000, Building $40,000, office supplies $500, note payable $32,500, Account payable $1200, utilities $540, Common stock $54,000, dividend $1100, fees earned 7400, salaries expense$ 2000, Land $7500
Explanation of Solution
Cash Account No.101 | ||||
Date | PR | Debit($) | Credit($) | Balance($) |
a. | 35,000 | |||
b. | 15,000 | |||
f. | 1000 | |||
g. | 3200 | |||
h. | 540 | |||
i. | 500 | |||
j. | 3400 | |||
l. | 1000 | |||
m. | 2200 | |||
M | 1100 | 17860 |
Automobile | Account no. 124 | |||
Date | PR | Debit | Credit | Balance |
d. | 8000 | 8000 | ||
Account receivable | Account no.106 | |||
Date | PR | Debit | Credit | Balance |
k. | 4200 | 2200 | 2000 | |
Office equipment | Account no. 163 | |||
Date | PR | Debit | Credit | Balance |
a. | 11,000 | |||
e. | 1200 | |||
j. | 3400 | 15,600 |
Building | Account no. 170 | |||
Date | PR | Debit | Credit | Balance |
b. | 40000 | 40,000 | ||
Office supplies | Account no. 124 | |||
Date | PR | Debit | Credit | Balance |
b. | 500 | 500 | ||
Account payable | Account no. 201 | |||
Date | PR | Debit | Credit | Balance |
c. | 500 | |||
i. | 500 | |||
e. | 1200 | 1200 |
Note payable | Account no. 170 | |||
Date | PR | Debit | Credit | Balance |
b. | 32,500 | 32,500 | ||
Common Stock | Account no. 307 | |||
Date | PR | Debit | Credit | Balance |
a. | 46,000 | 46,000 | ||
d. | 8000 | 54,000 |
Utilities | Account no. 307 | |||
Date | PR | Debit | Credit | Balance |
h. | 540 | 540 | ||
Service Expense | Account no. 601 | |||
Date | PR | Debit | Credit | Balance |
f. | 1000 | |||
l. | 1000 | 1000 | ||
Dividend | Account no. 319 | |||
Date | PR | Debit | Credit | Balance |
n. | 1100 | 1100 |
Fees Earned | Account no. 402 | |||
Date | PR | Debit | Credit | Balance |
g. | 3200 | 3200 | ||
k. | 4200 | 7400 |
Land | Account no. 172 | |||
Date | PR | Debit | Credit | Balance |
b. | 7500 | 7500 |
3.
Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.
To prepare: Trail balance.
Answer to Problem 4PSB
Total of trail balance is $95100.
Explanation of Solution
NTrail balance | ||
Particular | Dr. ($) | Cr. ($) |
Cash | 17,860 | |
Account receivable | 2000 | |
Office supplies | 500 | |
Automobile | 8000 | |
Office equipment | 15,600 | |
Building | 40,000 | |
Land | 7500 | |
Account payable | 1200 | |
Notes payable | 32,500 | |
Common stock | 54,000 | |
Fees earned | 7400 | |
Dividends | 1100 | |
Salaries Expense | 2000 | |
Utilities expense | 540 | |
Total | 95,100 | 95,100 |
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Chapter 2 Solutions
FINANCIAL ACCT.:INFO...(LL)
- Jada Company had the following transactions during the year: Purchased a machine for $500,000 using a long-term note to finance it Paid $500 for ordinary repair Purchased a patent for $45,000 cash Paid $200,000 cash for addition to an existing building Paid $60,000 for monthly salaries Paid $250 for routine maintenance on equipment Paid $10,000 for major repairs Depreciation expense recorded for the year is $25,000 If all transactions were recorded properly, what is the amount of increase to the Property, Plant, and Equipment section of Jadas balance sheet resulting from this years transactions? What amount did Jada report on the income statement for expenses for the year?arrow_forwardDiscuss how each of the following transactions for Watson, International, will affect assets, liabilities, and stockholders equity, and prove the companys accounts will still be in balance. A. An investor invests an additional $25,000 into a company receiving stock in exchange. B. Services are performed for customers for a total of $4,500. Sixty percent was paid in cash, and the remaining customers asked to be billed. C. An electric bill was received for $35. Payment is due in thirty days. D. Part-time workers earned $750 and were paid. E. The electric bill in C is paid.arrow_forwardAnalyzing Transactions. Using the analytical framework, indicate the effect of the following related transactions of a firm. a. January 1: Issued 10,000 shares of common stock for 50,000. b. January 1: Acquired a building costing 35,000, paying 5,000 in cash and borrowing the remainder from a bank. c. During the year: Acquired inventory costing 40,000 on account from various suppliers. d. During the year: Sold inventory costing 30,000 for 65,000 on account. e. During the year: Paid employees 15,000 as compensation for services rendered during the year. f. During the year: Collected 45,000 from customers related to sales on account. g. During the year: Paid merchandise suppliers 28,000 related to purchases on account. h. December 31: Recognized depreciation on the building of 7,000 for financial reporting. Depreciation expense for income tax purposes was 10,000. i. December 31: Recognized compensation for services rendered during the last week in December but not paid by year-end of 4,000. j. December 31: Recognized and paid interest on the bank loan in Part b of 2,400 for the year. k. Recognized income taxes on the net effect of the preceding transactions at an income tax rate of 40%. Assume that the firm pays cash immediately for any taxes currently due to the government.arrow_forward
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