FINANCIAL ACCOUNTING FUNDAMENTALS
7th Edition
ISBN: 9781260827767
Author: Wild
Publisher: McGraw Hil
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Chapter 2, Problem 8GLP
1.
To determine
Introduction: A journal is used to record financial transactions. It shows the debits and credits of each transaction. The process of recording transactions is called journalizing. After journalizing, the transactions are posted into ledgers.
The
1.
Expert Solution
Explanation of Solution
- Journal entries to record the transactions in the month of September
| S.no | Account title and Explanation | PR | Debit | Credit |
| Oct, 1 | Cash | 101 | $45,000 | |
| Computer equipment | 167 | $20,000 | ||
| Office equipment | 163 | $8,000 | ||
| Common stock | 307 | $73,000 | ||
| Record investments for common stock | ||||
| 2 | Prepaid rent | 131 | $3,300 | |
| Cash | 101 | $3,300 | ||
| Record payment of cash for prepaid rent | ||||
| 3 | Computer supplies | 126 | $1,420 | |
| Accounts payable | 201 | $1,420 | ||
| Record purchase of computer supplies on credit | ||||
| 5 | Prepaid insurance | 128 | $2,220 | |
| Cash | 101 | $2,220 | ||
| Record payment of cash for insurance | ||||
| 6 | 106 | $4,800 | ||
| Computer service revenue | 403 | $4,800 | ||
| Record earnings of revenue for service provided | ||||
| 8 | Accounts payable | 201 | $1,420 | |
| Cash | 101 | $1,800 | ||
| Record payment of cash for accounts payable | ||||
| 10 | No entry required | |||
| 12 | Accounts receivable | 106 | $1,400 | |
| Computer service revenue | 403 | $1,400 | ||
| Record revenue on service performed | ||||
| 15 | Cash | 101 | $4,800 | |
| Accounts receivable | 106 | $4,800 | ||
| Record receipt of cash on receivable | ||||
| 17 | Repair expense- computer | 684 | $805 | |
| Cash | 101 | $805 | ||
| Record payment of cash for repairs | ||||
| 20 | Advertising expense | 655 | $1,728 | |
| Cash | 101 | $1,728 | ||
| Record payment of cash for advertisement expense | ||||
| 22 | Cash | 101 | $1,400 | |
| Accounts receivable | 106 | $1,400 | ||
| Record receipt of cash on receivable | ||||
| 28 | Accounts receivable | 106 | $5,208 | |
| Computer service revenue | 403 | $5,208 | ||
| Record revenue on service performed | ||||
| 31 | Wages expense | 623 | $875 | |
| Cash | 101 | $875 | ||
| 31 | Dividends | 319 | $3,600 | |
| Cash | 101 | $3,600 | ||
| Record payment of cash dividends | ||||
| Nov, 1 | Mileage expense | 676 | $320 | |
| Cash | 101 | $320 | ||
| Record reimbursement of mileage expense | ||||
| 2 | Cash | 101 | $4,633 | |
| Computer service revenue | 403 | $4,633 | ||
| Record receipt of cash on account of service performed | ||||
| 5 | Computer supplies | 126 | $1,125 | |
| Cash | 101 | $1,125 | ||
| Record payment of cash on purchase of computer supplies | ||||
| 8 | Accounts receivable | 106 | $5,668 | |
| Computers service revenue | 403 | $5,668 | ||
| Record revenue earned | ||||
| 13 | No entry required | |||
| 18 | Cash | 101 | $2,208 | |
| Accounts receivable | 106 | $2,208 | ||
| Record receipt of cash on accounts receivable | ||||
| 22 | Miscellaneous expenses | 677 | $250 | |
| Cash | 101 | $250 | ||
| Record payment of cash for miscellaneous expenses | ||||
| 24 | Accounts receivable | 106 | 3,950 | |
| Computer service revenue | 403 | $3,950 | ||
| Record revenue earned | ||||
| 25 | No entry required | |||
| 28 | Mileage expense | 676 | $384 | |
| Cash | 101 | $384 | ||
| Record payment of cash for mileage expense | ||||
| 30 | Wages expense | 623 | $1,750 | |
| Cash | 101 | $1,750 | ||
| Record payment of cash for wages | ||||
| 30 | Dividends | 319 | $2,000 | |
| Cash | 101 | $2,000 | ||
| Record payment of cash dividends |
2.
To determine
Introduction: A journal is used to record financial transactions. It shows the debits and credits of each transaction. The process of recording transactions is called journalizing. After journalizing, the transactions are posted into ledgers.
The given ledger accounts
2.
Expert Solution
Answer to Problem 8GLP
Cash $22,945
Accounts receivable $29,000
Accounts payable $1,333
Explanation of Solution
Cash Account no 101
| Date | PR | Account title | Debit | Credit | Balance |
| Oct, 1 | Common stock | $45,000 | $45,000 | ||
| 2 | Prepaid rent | $3,300 | $41,700 | ||
| 5 | Prepaid insurance | $2,220 | $39,480 | ||
| 8 | Computer supplies | $1,420 | $38,060 | ||
| 15 | Accounts receivable | $4,800 | $42,860 | ||
| 17 | Repair expense-computer | $805 | $42,55 | ||
| 20 | Advertisements expense | $1,728 | $40,327 | ||
| 22 | Accounts receivable | $1,400 | $41,727 | ||
| 31 | Wages expense | $875 | $40,852 | ||
| Nov, 1 | Mileage expense | $320 | $36,932 | ||
| 2 | Computer service revenue | $4,633 | $41,565 | ||
| 5 | Office supplies | $1,125 | $40,440 | ||
| 18 | Accounts receivable | $2,208 | $42,648 | ||
| 22 | Miscellaneous expense | $250 | $42,398 | ||
| 28 | Mileage expense | $384 | $42,014 | ||
| 30 | Wages expense | $1,750 | $40,264 | ||
| 30 | Dividends | $2,000 | $38,264 |
Accounts receivable Account no 106
| Date | PR | Account title | Debit | Credit | Balance |
| Oct, 6 | Computer service revenue | $4,800 | $4,800 | ||
| 12 | Computer service revenue | $1,400 | $6,200 | ||
| 15 | Cash | $4,800 | $1,400 | ||
| 22 | Cash | $1,400 | 0 | ||
| 28 | Computer service revenue | $5,208 | $5,208 | ||
| Nov 8 | Computer service revenue | $5,228 | $10,876 | ||
| 18 | Cash | $2,208 | $8,668 | ||
| 24 | Computer service revenue | $3,950 | $12,618 |
Office supplies Account no 126
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 3 | Accounts payable | $1,420 | $1,420 | ||
| Nov 5 | Cash | $1,125 | $2,545 |
Prepaid insurance Account no 128
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 5 | Cash | $2,220 | $2,220 |
Prepaid rent Account no 131
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 2 | Cash | $3,300 | $3,300 |
Office equipment Account no 163
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 1 | Common stock | $8,000 | $8,000 |
Computer equipment Account no 167
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 1 | Common stock | $20,000 | $20,000 |
Office equipment Account no 163
| Date | PR | Account title | Debit | Credit | Balance |
| a. | HV Capital | $25,000 | $25,000 | ||
| e. | Accounts payable | $5,600 | $30,600 | ||
| j. | Cash | $20,300 | $50,900 |
Accounts Payable Account no 201
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 3 | Computer supplies | $1,420 | $1,420 | ||
| 8 | Cash | $1,420 | 0 |
DividendsAccount no 319
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 31 | Cash | $3,600 | $3,600 | ||
| Nov 30 | Cash | $2,000 | $5,600 |
Common stock Account no 307
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 1 | $73,000 | $73,000 |
Computer service revenue Account no 403
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 6 | Accounts receivable | $4,800 | $4,800 | ||
| 12 | Accounts receivable | $1,400 | $6,200 | ||
| 28 | Accounts receivable | $5,208 | $11,408 | ||
| Nov 2 | Cash | $4,633 | $16,041 | ||
| 8 | Accounts receivable | $5,668 | $21,709 | ||
| 24 | Accounts receivable | $3,950 | $25,659 |
Wages expense Account no 623
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 31 | Cash | $875 | $875 | ||
| Nov 30 | Cash | $1,750 | $2,625 |
Advertising expense Account no 655
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 20 | Cash | $1,728 | $1,728 |
Mileage expenses Account no 676
| Date | PR | Account title | Debit | Credit | Balance |
| Nov 1 | Cash | $320 | $320 | ||
| 28 | Cash | $384 | $704 |
Miscellaneous expense Account no 677
| Date | PR | Account title | Debit | Credit | Balance |
| Nov 22 | Cash | $250 | $1,728 |
Repairs expense-computer Account no 684
| Date | PR | Account title | Debit | Credit | Balance |
| Oct 17 | Cash | $805 | $805 |
3.
To determine
Introduction: A journal is used to record financial transactions. It shows the debits and credits of each transaction. The process of recording transactions is called journalizing. After journalizing, the transactions are posted into ledgers.
The
3.
Expert Solution
Answer to Problem 8GLP
Trial balance total $98,659.
Explanation of Solution
Trial balance
| Account title | Debit | Credit |
| Cash | $38,264 | |
| Accounts receivable | $12,618 | |
| Computer supplies | $2,545 | |
| Prepaid insurance | $2,220 | |
| Prepaid rent | $3,300 | |
| Office equipment | $8,000 | |
| Computer equipment | $20,000 | |
| Accounts payable | 0 | |
| Common stock | $73,000 | |
| Dividends | $5,600 | |
| Computer service revenue | $25,659 | |
| Wages | $2,625 | |
| Advertising expenses | $1,728 | |
| Miscellaneous expense | $250 | |
| Repairs expense- computer | $805 | |
| Mileage expense | $704 | |
| Total | $98,659 | $98,659 |
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Chapter 2 Solutions
FINANCIAL ACCOUNTING FUNDAMENTALS
Ch. 2 - Amalia Company received its utility bill for the...Ch. 2 - On May 1, Mattingly Lawn Service collected $2,500...Ch. 2 - Liang Shue contributed $250,000 cash and land...Ch. 2 - A trial balance prepared at year-end shows total...Ch. 2 - Bonaventure Company has total assets of...Ch. 2 - Provide the names of two (a) asset accounts, (b)...Ch. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Prob. 5DQ
Ch. 2 - Prob. 6DQCh. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQCh. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Prob. 13DQCh. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - Prob. 16DQCh. 2 - Prob. 17DQCh. 2 - Prob. 18DQCh. 2 - Prob. 1QSCh. 2 - Prob. 2QSCh. 2 - Prob. 3QSCh. 2 - Prob. 4QSCh. 2 - Prob. 5QSCh. 2 - Prob. 6QSCh. 2 - Prob. 7QSCh. 2 - Prob. 8QSCh. 2 - Prob. 9QSCh. 2 - Prob. 10QSCh. 2 - Prob. 11QSCh. 2 - Prob. 12QSCh. 2 - Prob. 13QSCh. 2 - Prob. 14QSCh. 2 - Prob. 15QSCh. 2 - Prob. 1ECh. 2 - Prob. 2ECh. 2 - Prob. 3ECh. 2 - Prob. 4ECh. 2 - Prob. 5ECh. 2 - Analyzing account entries and balances A1 Use the...Ch. 2 - Prob. 7ECh. 2 - Prob. 8ECh. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - Prob. 12ECh. 2 - Prob. 13ECh. 2 - Prob. 14ECh. 2 - Prob. 15ECh. 2 - Prob. 16ECh. 2 - Prob. 17ECh. 2 - Prob. 18ECh. 2 - Prob. 19ECh. 2 - Identifying effects of posting errors on the trial...Ch. 2 - Prob. 21ECh. 2 - Prob. 22ECh. 2 - Prob. 23ECh. 2 - Prob. 1PSACh. 2 - Prob. 2PSACh. 2 - Prob. 3PSACh. 2 - Prob. 4PSACh. 2 - Prob. 5PSACh. 2 - Prob. 6PSACh. 2 - Prob. 7PSACh. 2 - Prob. 1PSBCh. 2 - Prob. 2PSBCh. 2 - Prob. 3PSBCh. 2 - Prob. 4PSBCh. 2 - Prob. 5PSBCh. 2 - Prob. 6PSBCh. 2 - Prob. 7PSBCh. 2 - Prob. 2SPCh. 2 - Prob. 1GLPCh. 2 - Prob. 2GLPCh. 2 - Prob. 3GLPCh. 2 - Prob. 4GLPCh. 2 - Prob. 5GLPCh. 2 - Using transactions from the following assignments,...Ch. 2 - Prob. 7GLPCh. 2 - Prob. 8GLPCh. 2 - Prob. 1AACh. 2 - Prob. 2AACh. 2 - Prob. 3AACh. 2 - Prob. 1BTNCh. 2 - Prob. 2BTNCh. 2 - Prob. 3BTNCh. 2 - Prob. 4BTNCh. 2 - Prob. 5BTNCh. 2 - Prob. 6BTNCh. 2 - Prob. 7BTN
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- Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2019. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 4,500. 5. Received cash from clients on account, 2,450. 9. Paid cash for a newspaper advertisement, 225. 13. Paid Office Station Co. for part of the debt incurred on April 5, 640. 15. Provided services on account for the period May 115, 9,180. 16. Paid part-time receptionist for two weeks' salary including the amount owed on April 30, 750. 17. Received cash from cash clients for fees earned during the period May 116, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Provided services on account for the period May 1620, 4,820. 25. 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Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forwardCornerstone Exercise 1-18 Balance Sheet An analysis of the transactions of Cavernous Homes Inc. yields the following totals at December 31, 2019: cash, $3,200; accounts receivable, $4,500; notes payable, $5,000; supplies, $8,100; common stock, $7,000; and retained earnings, 9,800. Required: Prepare a balance sheet for Cavernous Homes Inc. at December 31 , 2019.arrow_forwardProblem 2-62B Comprehensive Problem Mulberry Services sells electronic data processing services to firms too Email to own their own computing equipment. Mulberry had the following amounts and amount balances as of January 1, 2019: During 2019, the following transactions occurred (the events described below are aggregations of many individual events): During 2019, Mulberry sold $690,000 of computing services, all on credit. Mulberry collected $570,000 from the credit sales in Transaction a and an additional $129,000 from the accounts receivable outstanding at the beginning of the year. Mulberry paid the interest payable of $8,000. A Wages of $379,000 were paid in cash. Repairs and maintenance of $9,000 were incurred and paid. The prepaid rent at the beginning of the year was used in 2019. In addition, $28,000 of computer rental costs were incurred and paid. There is no prepaid rent or rent payable at year-end. Mulberry purchased computer paper for $13,000 cash in late December. None of the paper was used by year-end. Advertising expense of $26,000 was incurred and paid. Income tax of $10,300 was incurred and paid in 2019. Interest of $5,000 was paid on the long-term loan. (Continued) Required: 1. Establish a ledger for the accounts listed above and enter the beginning balances. Use a chart of accounts to order the ledger accounts. 2. Analyze each transaction, Journalize as appropriate. (Note: Ignore the date because these events are aggregations of individual events.) 3. Post your journal entries to T-accounts, Add additional T-accounts when needed. 4. Use the ending balances in the T-accounts to prepare a trial balancearrow_forward
- Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2018. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 4,500. 5. Received cash from clients on account, 2,450. 9. Paid cash for a newspaper advertisement, 225. 13. Paid Office Station Co. for part of the debt incurred on April 5, 640. 15. Recorded services provided on account for the period May 115, 9,180. 16. Paid part-time receptionist for two weeks salary including the amount owed on April 30, 750. 17. Recorded cash from cash clients for fees earned during the period May 1-16, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Recorded services provided on account for the period May 16-20,4,820. 25. Recorded cash from cash clients for fees earned for the period May 17- 23, 7,900. 27. Received cash from clients on account, 9,520. 28. Paid part-time receptionist for two weeks salary, 750. 30. Paid telephone bill for May, 260. 31. Paid electricity bill for May, 810. 31. Recorded cash from cash clients for fees earned for the period May 26-31, 3,300. 31. Recorded services provided on account for the remainder of May, 2,650. 31. Paid dividends, 10,500. Instructions 1. The cl1art of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2018, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2018, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (A) Insurance expired during May is 275. (B) Supplies on hand on May 31 are 715. (C) Depreciation of office equipment for May is 330. (D) Accrued receptionist salary on May 31 is 325. (E) Rent expired during May is 1,600. (F) Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of d1e journal. (Income Summary is account #34 in d1e chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forwardElite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2019, follows: The following business transactions were completed by Elite Realty during April 2019: 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, 4,300. 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.Withdrew cash for personal use, 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, 2019, 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, 2019. 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_forwardTransactions and Financial statements James Nesbitt established Up-Date Computer Services on August 1, 20Y4. The effect of each transaction and the balances after each transaction for August are shown below in the integrated financial statement framework. Instructions Prepare a balance sheet as of August 31, 20Y4.arrow_forward
- Review the following transactions and prepare any necessary journal entries for Bernard Law Offices. A. On June 1, Bernard Law Offices receives an advance cash payment of $4,500 from a client for three months of legal services. B. On July 31, Bernard recognizes legal services provided.arrow_forwardExercise 2-53 Preparing a Trial Balance Preparation The fo1lowing accounts and account balances are available for Badger Auto Parts at December 31, 2019: Required: Prepare a trial balance. Assume that all accounts have normal balances.arrow_forwardTypes of Events For each of the following events, identify whether it is an external event that would be recorded as a transaction (E), an internal event that would be recorded as a transaction (I), or not recorded (NR). ________________ 1. A vendor for a companys supplies is paid an amount owed on account. ________________ 2. A customer pays its open account. ________________ 3. A new chief executive officer is hired. ________________ 4. The biweekly payroll is paid. ________________ 5. Depreciation on equipment is recognized. ________________ 6. A new advertising agency is hired to develop a series of newspaper ads for the company. ________________ 7. The advertising bill for the first month is paid. ________________ 8. The accountant determines the federal income taxes owed based on the income for the period.arrow_forward
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