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Cornerstones of Financial Accounti...

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Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 2-52 Accounting Cycle

Rosenthal Decorating Inc. is a commercial painting and decorating contractor that began operations in January 2019. The following transactions occurred during the year:

  1. On January 15, Rosenthal sold shares Of its common stock to William Hensley for $10,000
  2. On January 24, Rosenthal purchased S720 of painting supplies from Westwood Builders' Supply Company on account.
  3. On February 20, Rosenthal paid S720 cash to Westwood Builders' Supply Company for the

painting supplies purchased on January 24.

  1. On April 25, Rosenthal billed Bultman Condominiums $12,500 for painting and decorating services performed in April.
  2. On May 12, Rosenthal received $12,500 from Bultman Condominiums for the painting and decorating work billed in April.
  3. On June 5, Rosenthal sent Arlington Builders a $9,500 bill for a painting job completed on that day.
  4. On June 24, Rosenthal paid wages for work performed during the preceding week in the amount of $6,700.

Required:

  1. Prepare a journal entry for each of the transactions.
  2. Post the transactions to T-accounts.
  3. Prepare a trial balance at June 30, 2019.

To determine

Journal Entries:

Journal entries are medium of recording business transactions. A business enterprise must record all the business transaction to evaluate net income or loss and analyze the financial performance of a company during a specified accounting period.

Requirement 1

Journalize each of the transactions.

Explanation
    DateExplanationIncreaseDecrease
    January
    15Cash$10,000
    Common Stock10,000
    24Supplies 720
    Accounts Payable720
    February
    20Accounts Payable$720
    Cash720
    April
    2...
To determine

Introduction:

T-accounts as its name derived from shape of the account, is representation of business transaction in their respective account. It helps in organizing and analyzing the transaction according to their similar nature of account.

Requirement 2

Post the transactions to T-accounts.

To determine

Introduction:

A financial statement which integrates all the balance of ledger accounts is termed as a trial balance. The total balance of debit and credit in trial balance should be equal at end of an accounting period.

Requirement 3

To Prepare:

Prepare a trial balance as June 30, 2019.

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