Journal:
Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.
Rules of debit and credit:
“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.
Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.
The accounting equation implies the relationship between the assets, liabilities, and the
To journalize: the transaction of B Incorporation for the month of March.
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FINANCIAL ACCOUNTING>IC<
- In July of this year, M. Wallace established a business called Wallace Realty. The account headings are presented below. Transactions completed during the month follow. a. Wallace deposited 24,000 in a bank account in the name of the business. b. Paid the office rent for the current month, 650, Ck. No. 1000. c. Bought office supplies for cash, 375, Ck. No. 1001. d. Bought office equipment on account from Dellos Computers, 6,300. e. Received a bill from the City Crier for advertising, 455. f. Sold services for cash, 3,944. g. Paid on account to Dellos Computers, 1,500, Ck. No. 1002. h. Received and paid the bill for utilities, 340, Ck. No. 1003. i. Paid on account to the City Crier, 455, Ck. No. 1004. j. Paid truck expenses, 435, Ck. No. 1005. k. Wallace withdrew cash for personal use, 1,500, Ck. No. 1006. Required 1. Record the transactions and the balance after each transaction. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forwardDuring February of this year, H. Rose established Rose Shoe Hospital. The following asset, liability, and owners equity accounts are included in the chart of accounts: The following transactions occurred during the month of February: a. Rose deposited 25,000 cash in a bank account in the name of the business. b. Bought shop equipment for cash, 1,525, Ck. No. 1000. c. Bought advertising on account from Milland Company, 325. d. Bought store shelving on account from Inger Hardware, 750. e. Bought office equipment from Sharas Office Supply, 625, paying 225 in cash and placing the balance on account, Ck. No. 1001. f. Paid on account to Inger Hardware, 750, Ck. No. 1002. g. Rose invested his personal leather working tools with a fair market value of 800 in the business h. Sold services for the month of February for cash, 250. PART 1: The Accounting Cycle for a Service Business: Analyzing Business Transactions Required 1. Write the account classifications (Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit. 2. Write the account names on the T accounts under the classifications, place the plus and minus signs for each T account, and label the debit and credit sides of the T accounts. 3. Record the amounts in the proper positions in the T accounts. Write the letter next to each entry to identify the transaction. 4. Foot and balance the accounts.arrow_forwardFor each of the following situations write the principle, assumption, or concept that justifies or explains what occurred. A. A landscaper received a customers order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year. B. A company divides its income statements into four quarters for the year. C. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000. D. Brandys Flower Shop is forecasting its balance sheet for the next five years. E. When preparing financials for a company, the owner makes sure that the expense transactions are kept separate from expenses of the other company that he owns. F. A company records the expenses incurred to generate the revenues reported.arrow_forward
- During December of this year, G. Elden established Ginnys Gym. The following asset, liability, and owners equity accounts are included in the chart of accounts: During December, the following transactions occurred: a. Elden deposited 35,000 in a bank account in the name of the business. b. Bought exercise equipment for cash, 8,150, Ck. No. 1001. c. Bought advertising on account from Hazel Company, 105. d. Bought a display rack on account from Cyber Core, 790. e. Bought office equipment on account from Office Aids, 185. f. Elden invested her exercise equipment with a fair market value of 1,200 in the business. g. Made a payment to Cyber Core, 200, Ck. No. 1002. h. Sold services for the month of December for cash, 800. Required 1. Write the account classifications (Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit. 2. Write the account names on the T accounts under the classifications, place the plus and minus signs for each T account, and label the debit and credit sides of the T accounts 3. Record the amounts in the proper positions in the T accounts. Write the letter next to each entry to identify the transaction. 4. Foot and balance the accounts.arrow_forwardOn September 1, 20X6, Michael Moe incorporated Moe's Mowing, Inc., a company that provides mowing and landscaping services. During the month of September, the business incurred the following transactions: a. To begin operations, Michael deposited$10, 000 cash in the business'sbank account. The business received the cash and issued shares to Michael.b. The business purchased equipment for$3, 500 on account.c. The business purchased office supplies for$800 cash.d. The business provided$2, 600 of landscaping works to a customer onaccount.e. The business paid$500 cash toward the equipment previously purchasedon account in transaction b.f. The business received$2, 000 in cash for services provided to a newcustomer.g. The business paid $200 cash to repair equipment.h. The business paid$900 cash for September's salary expense.i. The business received a utilities bill amounting to$150; it has not paid this bill.j. The business received$2,100 cash from a customer on account.k. The business paid…arrow_forwardBinbutti Engineering, a sole proprietorship, completed the following transactions during July 2023, the third month of operations: July 1 Bob Binbutti, the owner, invested $300,000 cash, office equipment with a value of $12,000, and $90,000 of drafting equipment in the business. July 2 Purchased land for an office. The land was worth $108,000, which was paid with $10,800 cash and a long-term note payable for $97,200. July 3 Purchased a portable building with $150,000 cash and moved it onto the land. July 5 Paid $12,000 cash for the premiums on two one-year insurance policies. July 7 Completed and delivered a set of plans for a client and collected $1,400 cash. July 9 Purchased additional drafting equipment for $45,000. Paid $21,000 cash and signed a long-term note payable for the $24,000 balance. July 10 Completed $4,000 of engineering services for a client. This amount is to be paid within 30 days. July 12 Purchased $4,500 of additional office equipment on credit. July 15 Completed…arrow_forward
- Grid Iron Prep Incorporated (GIPI) is a service business incorporated in January of the current year to provide personal training for athletes aspiring to play college football. The following transactions occurred during the month ended January 31. GIPI issued stock in exchange for $220,000 cash on 1/01. GIPI purchased a gymnasium building and gym equipment on 1/02 for $60,000, 80% of which related to the gymnasium and 20% to the equipment. GIPI paid $400 cash on 1/03 to have the gym equipment refurbished before it could be used. GIPI provided $9,000 in training on 1/04 and expected collection in February. GIPI collected $39,000 cash in training fees on 1/10, of which $35,000 related to January and $4,000 related to February. GIPI paid $21,000 of wages and $10,500 in utilities on 1/30. GIPI will depreciate the gymnasium building using the straight-line method over 10 years with a residual value of $3,500. Gym equipment will be depreciated using the double-declining-balance method,…arrow_forwardGrid Iron Prep Incorporated (GIPI) is a service business incorporated in January of the current year to provide personal training for athletes aspiring to play college football. The following transactions occurred during the month ended January 31. GIPI issued stock in exchange for $260,000 cash on 1/01. GIPI purchased a gymnasium building and gym equipment on 1/02 for $56,000, 80% of which related to the gymnasium and 20% to the equipment. GIPI paid $300 cash on 1/03 to have the gym equipment refurbished before it could be used. GIPI provided $6,000 in training on 1/04 and expected collection in February. GIPI collected $41,000 cash in training fees on 1/10, of which $38,000 related to January and $3,000 related to February. GIPI paid $25,000 of wages and $7,200 in utilities on 1/30. GIPI will depreciate the gymnasium building using the straight-line method over 10 years with a residual value of $5,500. Gym equipment will be depreciated using the double-declining-balance method, with…arrow_forwardGrid Iron Prep Incorporated (GIPI) is a service business incorporated in January of the current year to provide personal training for athletes aspiring to play college football. The following transactions occurred during the month ended January 31. GIPI issued stock in exchange for $260,000 cash on 1/01. GIPI purchased a gymnasium building and gym equipment on 1/02 for $56,000, 80% of which related to the gymnasium and 20% to the equipment. GIPI paid $300 cash on 1/03 to have the gym equipment refurbished before it could be used. GIPI provided $6,000 in training on 1/04 and expected collection in February. GIPI collected $41,000 cash in training fees on 1/10, of which $38,000 related to January and $3,000 related to February. GIPI paid $25,000 of wages and $7,200 in utilities on 1/30. GIPI will depreciate the gymnasium building using the straight-line method over 10 years with a residual value of $5,500. Gym equipment will be depreciated using the double-declining-balance method, with…arrow_forward
- Sydney Stables Inc. was established on April 1, 2020. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new accountant. The below transactions for April 2020 are provided: a )Received contributions from five investors of $60,000 in cash ($12,000 each), a barn valued at $ 100,000, and land valued at $90,000. Each investor received 3,000 shares. B)Built a small barn for $62,000 The company paid half the amount in cash on April 1 2020, and sianed a three-year note payable for the balance. C)Provided animal care services to customers, ail on credit, for $35,260. D)Rented stables to customers who cared for their.own animals. and received cash payment of $ 13,200. E)Received from a customer $2,400 te board her horse in April May, and June (record as deferred revenue), F)Purchased hay and feed supplies on account for $3,180 to be used in the summer. G) Paid $1,240 in cash for water milities expense incured in…arrow_forwardsydney Stables Inc. was established on April 1, 2020. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new accountant. The below transactions for April 2020 are provided: a )Received contributions from five investors of $60,000 in cash ($12,000 each), a barn valued at $ 100,000, and land valued at $90,000. Each investor received 3,000 shares. B)Built a small barn for $62,000 The company paid half the amount in cash on April 1 2020, and sianed a three-year note payable for the balance. C)Provided animal care services to customers, ail on credit, for $35,260. D)Rented stables to customers who cared for their.own animals. and received cash payment of $ 13,200. E)Received from a customer $2,400 te board her horse in April May, and June (record as deferred revenue), F)Purchased hay and feed supplies on account for $3,180 to be used in the summer. G) Paid $1,240 in cash for water milities expense incured in…arrow_forwardBlue Spruce’s Miniature Golf and Driving Range Inc. was opened on March 1 by Bob Dean. These selected events and transactions occurred during March. Mar. 1 Stockholders invested $67,000 cash in the business in exchange for common stock of the corporation. 3 Purchased Snead’s Golf Land for $42,500 cash. The price consists of land $25,000, building $9,080, and equipment $8,420. (Record this in a single entry.) 5 Advertised the opening of the driving range and miniature golf course, paying advertising expenses of $1,700 cash. 6 Paid cash $2,750 for a 1-year insurance policy. 10 Purchased golf clubs and other equipment for $5,950 from Tahoe Company, payable in 30 days. 18 Received golf fees of $1,450 in cash from customers for golf services performed. 19 Sold 135 coupon books for $10 each in cash. Each book contains 10 coupons that enable the holder to play one round of miniature golf or to hit one bucket of golf balls. (Hint: The revenue should not be…arrow_forward
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