(a)
T-account:
T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure items are recorded.
This account is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.’ An account consists of the three main components which are as follows:
- (a) The title of the account
- (b) The left or debit side
- (c) The right or credit side
To prepare: The T-accounts to enter the opening balances of TT Incorporation as on March 31, 2017.
(a)
Explanation of Solution
Prepare the T-account to enter the opening balances of TT Incorporation as follows:
Cash | |||
Mar, 1 | $16,000 | ||
Bal. | $16,000 |
Land | |||
Mar, 1 | $38,000 | ||
Bal. | $38,000 |
Building | |||
Mar, 1 | $22,000 | ||
Bal. | $22,000 |
Equipment | |||
Mar, 1 | $16,000 | ||
Bal. | $16,000 |
Accounts payable | |||
Mar, 1 | $12,000 | ||
Bal. | $12,000 |
Common stock | |||
Mar, 1 | $80,000 | ||
Bal. | $80,000 |
(b)
Journal:
Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
To journalize: the transaction as given in the book of TT Incorporation.
(b)
Answer to Problem 3.8AP
Prepare
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 2, 2017 | Rent expenses | 10,000 | |
Accounts payable | 8,000 | ||
Cash | 2,000 | ||
(To record rent expenses incurred on account and in cash) |
Table-1
Mar 3, 2017 – TT Corporation has ordered for the first three Star Trek Movies, No entry because no financial transaction has occurred.
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 9, 2017 | Cash | 9,900 | |
Service revenue | 9,900 | ||
(To record the service performed in cash) |
Table-2
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 10, 2017 | Accounts payable | 2,900 | |
Cash | 2,900 | ||
(To record the cash paid to creditors) |
Table-3
Mar 11, 2017 – TT Incorporation contracted with RL to operate the concession stand, No entry because no financial transaction has occurred.
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 12, 2017 | Advertising expenses | 500 | |
Cash | 500 | ||
(To record the payment of advertising expenses) |
Table-4
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 20, 2017 | Cash | 8,300 | |
Service revenue | 8,300 | ||
(To record the service performed in cash) |
Table-5
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 20, 2017 | Rent expenses | 5,000 | |
Cash | 5,000 | ||
(To record the payment of rental fees) |
Table-6
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 31, 2017 | Salaries and wages expenses | 3,800 | |
Cash | 3,800 | ||
(To record the payment of salaries to employees) |
Table-7
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 31, 2017 |
| 750 | |
Cash | 750 | ||
Sales revenue | 1,500 | ||
(To record the sales made on account and in cash ) |
Table-8
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Mar 31, 2017 | Cash | 20,000 | |
Accounts receivable | 20,000 | ||
(To record the cash received from the customer ) |
Table-9
Explanation of Solution
Mar 2, 2017
- Rent expense is a component of stockholders equity, and decreased it hence, debit rent expenses for $10,000.
- Accounts payable is liability and increased, hence credit account payable for $8,000.
- Cash is an asset and has decreased, hence credit cash for $2,000.
Mar 9, 2017
- Cash is an asset and has increased, hence debit cash for $9,900.
- Service revenue is a component of
stockholders’ equity , and has increased it, hence credit service revenue for $9,900.
Mar 10, 2017
- Accounts Payable is a liability and has decreased, hence debit accounts payable for $2,900.
- Cash is an asset and has decreased, hence credit cash for $2,900.
Mar 12, 2017
- Advertising expense is a component of stockholders’ equity, and decreased it, hence debit advertising expenses for $500.
- Cash is an asset and has decreased, hence credit cash for $500.
Mar 20, 2017
- Cash is an asset and has increased, hence debit cash for $8,300.
- Service revenue is a component of stockholders’ equity, and has increased it hence, credit service revenue for $8,300.
Mar 20, 2017
- Rent is a component of stockholders’ equity, and decreased it, hence debit rent expenses for $5,000.
- Cash is an asset and has decreased, hence credit cash for $5,000.
Mar 31, 2017
- Salaries and wages expense is a component of stockholders’ equity, and decreased it, hence debit rent expenses for $3,800.
- Cash is an asset and has decreased, hence credit cash for $3,800.
Mar 31, 2017
- Account receivable is an asset and has increased, hence debit account receivable for $700.
- Cash is an asset and has increased, hence debit cash for $750.
- Service revenue is a component of stockholders’ equity, and has increased it hence, credit service revenue for $1,500.
Mar 31, 2017
- Cash is an asset, and has increased, hence debit cash for $20,000.
- Accounts receivable is an asset, and has decreased, hence credit accounts receivable for $20,000.
(c)
To post: the transaction to the ledger accounts of TT Incorporation as on March 31, 2017.
(c)
Explanation of Solution
Accounts payable | |||
Mar, 3 | $10,900 |
Mar, 1 Mar, 2 |
$12,000 $ 8,000 |
Total | $10,900 | Total | $20,000 |
Bal. | $9,100 |
Rent expenses | |||
Mar, 2 | $10,000 | ||
Mar, 20 | $ 5,000 | ||
Bal. | $15,000 |
Service revenue | |||
Mar, 9 Mar, 20 Mar, 31 |
$ 9,900 $ 8,300 $20,000 | ||
Bal. | $38,200 |
Sales revenue | |||
Mar, 31 | $1,500 | ||
Bal. | $1,500 |
Accounts receivable | |||
Mar, 31 | $750 | ||
Bal. | $750 |
Salaries and wages expenses | |||
Mar, 31 | $3,800 | ||
Bal. | $3,800 |
Advertising expenses | |||
Mar, 12 | $500 | ||
Bal. | $500 |
Cash | |||
Mar, 1 Bal. | $16,000 | Mar, 2 | $ 2,000 |
Mar, 9 | $ 9,900 | Mar, 10 | $10,900 |
Mar, 20 | $ 8,300 | Mar, 12 | $ 500 |
Mar, 31 Mar, 31 |
$ 750 $20,000 |
Mar, 20 Mar, 31 |
$ 5,000 $ 3,800 |
Total | $54,950 | Total | $22,200 |
Bal. | $32,750 |
(d)
Trial balance is the list of accounts, and their debit and credit balances at a given time. It is usually prepared at end of the accounting period. Debit balances are listed in left column and credit balances are listed in right column. The totals of debit and credit column should be equal. Trial balance is useful in the preparation of the financial statements.
To prepare: a trial balance of TT Incorporation as on Mach 31, 2017.
(d)
Explanation of Solution
Prepare the trial balance of TT Incorporation as on March 31, 2017 as follows:
TT Incorporation | ||
Trial balance | ||
March 31, 2017 | ||
Particulars | Debit $ | Credit $ |
Cash | 32,750 | |
Accounts receivable | 750 | |
Land | 38,000 | |
Buildings | 22,000 | |
Equipment | 16,000 | |
Accounts payable | 9,100 | |
Common stock | 80,000 | |
Service revenue | 38,200 | |
Sales revenue | 1,500 | |
Salaries and wages expenses | 3,800 | |
Rent expenses | 15,000 | |
Advertising expenses | 500 | |
128,800 | 128,800 |
Table-10
Thus, the total of debit, and credit columns of a trial balance is $128,800 and agree.
Want to see more full solutions like this?
Chapter 3 Solutions
FINANCIAL ACCT.:TOOLS...(LL)-W/ACCESS
- Please see below. I have included pictures to show which parts I got wrong on this specific problem. During 2017, its first year of operations as a delivery service, Bramble Corp. entered into the following transactions. 1. Issued shares of common stock to investors in exchange for $145,000 in cash. 2. Borrowed $48,000 by issuing bonds. 3. Purchased delivery trucks for $54,000 cash. 4. Received $16,000 from customers for services performed. 5. Purchased supplies for $4,300 on account. 6. Paid rent of $4,800. 7. Performed services on account for $11,600. 8. Paid salaries of $27,200. 9. Paid a dividend of $10,000 to shareholders. Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders’ Equity in the far right column. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the…arrow_forwardGoodwin Bike’s began operations in April 2022 and had the following transactions. Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock. Paid $84,000 cash for 6 months’ rent. Purchased $300,000 of bicycle inventory on credit. Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000. Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000. Paid $90,000 cash for an advertising campaign in connection with Tour de France. The campaign will run over the next two of months. Paid $24,000 in cash for supplies to have on hand for bike repairs. Collected $60,000 from accounts receivable. Paid for bikes purchased on credit in Transaction c Paid cash dividends of $3,000. Received $6,000 cash from a customer as a deposit for a custom bicycle to be built. Required: Record each transaction a) through k) in the financial statements’ effects template – A. At the end of April, the following information is available:…arrow_forwardXYZ Holdings is a company that purchases widgets from Company ABC. This is their first year of operations. The accounts for the financial year ending 30 June 2021 are as follows: Sales 100,000 Accounts receivable 80,000 Drawings 20,000 Building 20,000 Bank loan, due 30 June 2030 100,000 Cost of sales 50,000 Accumulated depreciation - Building 10,000 Cash 60,000 Wages 15,000 Opening retained profit 0 Electricity 500 Capital 50,000 Property, plant and equipment 20,000 Depreciation 12,000 Accounts payable 30,000 Accumulated depreciation - Property, plant and equipment 2,000 Accrued expenses 500 Interest expense 5,000 Insurance expense 10,000 Closing retained profit ??? Required: Prepare an income statement in the Excel template in the 'Income Statement' tab on the LMS, upload your worksheet. Ignore GST and taxes.arrow_forward
- XYZ Holdings is a company that purchases widgets from Company ABC. This is their first year of operations. The accounts for the financial year ending 30 June 2021 are as follows: Sales 100,000 Accounts receivable 80,000 Drawings 20,000 Building 20,000 Bank loan, due 30 June 2030 100,000 Cost of sales 50,000 Accumulated depreciation - Building 10,000 Cash 60,000 Wages 15,000 Opening retained profit 0 Electricity 500 Capital 50,000 Property, plant and equipment 20,000 Depreciation 12,000 Accounts payable 30,000 Accumulated depreciation - Property, plant and equipment 2,000 Accrued expenses 500 Interest expense 5,000 Insurance expense 10,000 Closing retained profit ??? Required: Prepare a balance sheet in the Excel template in the 'Balance Sheet' tab on the LMS, upload your worksheet. Ignore GST and taxes.arrow_forwardPeter Parker Company, whose accounting year ends on December 31, provides delivery services for packages to be taken between the city and the airport.On January 1, 2015, the company acquired a delivery van from MJ Trucks. The company paid cash of P1,020,000 to MJ, which included registration fees of P20,000. Insurance costs for the first year amounted to P24,000. The truck is expected to have a useful life of five years. At the end of its useful life, the asset is expected to be sold for P480,000, with cots relating to the sale amounting to P8,000.On January 1, 2016, Peter Parker’s management decided to add another vehicle, a flat-top, to the fleet. The vehicle was acquired from a liquidation auction at a cash price of P600,000. The vehicle needed some repairs for the elimination of rust (cost: P46,000) and the replacement of all tires (cost: P12,400). The company believed it would use the flat-top for another two years and then sell it. Expected selling price was P300,000, with…arrow_forwardDuring the period January to December 2020 the company completed the following transactions: Kay’s Delivery Service began operations by receiving $180,000 cash and a truck valued at $250,000. The business gave Kay capital to acquire these assets. Paid $19,000 cash for supplies. Prepaid insurance, $28,000. Performed delivery services for a customer and received $5,500 cash. Completed a large delivery job, billed the customer $35,500, and received a promise to collect the $35,500 within three (3) months. Paid employees salary, $65,700. Received $15,000 cash for performing delivery services. Collected $12,000 in advance for delivery service to be performed later. Collected $35,500 cash from a customer on account. Purchased fuel for the truck, paying $29,800 with a company credit card. (Credit Accounts payable) Performed delivery services on account, $4,500. Paid office rent, $85,000 for the year. Paid $20,800 on account relating to fuel purchased. Owner withdrew cash of $15,300.…arrow_forward
- During the period January to December 2020 the company completed the following transactions: Kay’s Delivery Service began operations by receiving $180,000 cash and a truck valued at $250,000. The business gave Kay capital to acquire these assets. Paid $19,000 cash for supplies. Prepaid insurance, $28,000. Performed delivery services for a customer and received $5,500 cash. Completed a large delivery job, billed the customer $35,500, and received a promise to collect the $35,500 within three (3) months. Paid employees salary, $65,700. Received $15,000 cash for performing delivery services. Collected $12,000 in advance for delivery service to be performed later. Collected $35,500 cash from a customer on account. Purchased fuel for the truck, paying $29,800 with a company credit card. (Credit Accounts payable) Performed delivery services on account, $4,500. Paid office rent, $85,000 for the year. Paid $20,800 on account relating to fuel purchased. Owner withdrew cash of $15,300.…arrow_forwardDuring the period January to December 2020 the company completed the following transactions: Kay’s Delivery Service began operations by receiving $180,000 cash and a truck valued at $250,000. The business gave Kay capital to acquire these assets. Paid $19,000 cash for supplies. Prepaid insurance, $28,000. Performed delivery services for a customer and received $5,500 cash. Completed a large delivery job, billed the customer $35,500, and received a promise to collect the $35,500 within three (3) months. Paid employees salary, $65,700. Received $15,000 cash for performing delivery services. Collected $12,000 in advance for delivery service to be performed later. Collected $35,500 cash from a customer on account. Purchased fuel for the truck, paying $29,800 with a company credit card. (Credit Accounts payable) Performed delivery services on account, $4,500. Paid office rent, $85,000 for the year. Paid $20,800 on account relating to fuel purchased. Owner withdrew cash of $15,300.…arrow_forwardDuring the period January to December 2020 the company completed the following transactions: Kay’s Delivery Service began operations by receiving $180,000 cash and a truck valued at $250,000. The business gave Kay capital to acquire these assets. Paid $19,000 cash for supplies. Prepaid insurance, $28,000. Performed delivery services for a customer and received $5,500 cash. Completed a large delivery job, billed the customer $35,500, and received a promise to collect the $35,500 within three (3) months. Paid employees salary, $65,700. Received $15,000 cash for performing delivery services. Collected $12,000 in advance for delivery service to be performed later. Collected $35,500 cash from a customer on account. Purchased fuel for the truck, paying $29,800 with a company credit card. (Credit Accounts payable) Performed delivery services on account, $4,500. Paid office rent, $85,000 for the year. Paid $20,800 on account relating to fuel purchased. Owner withdrew cash of $15,300.…arrow_forward
- On June 1, 2017, Waterway Industries was started with an initial investment in the company of $22,270 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2017, and the revenues and expenses for the month of June, its first month of operations: Cash $ 5,500 Notes payable $13,800 Accounts receivable 4,490 Accounts payable 990 Service revenue 8,400 Supplies expense 1,060 Supplies 2,340 Maintenance and repairs expense 660 Advertising expense 400 Utilities expense 240 Equipment 26,900 Salaries and wages expense 2,300 Common stock 22,270 In June, the company issued no additional stock but paid dividends of $1,570. I need help turning this into a monthly income statement.arrow_forwardQuality Service Inc. has the following accounts balances in their charts of accounts balances as at June 1, 2020: Cash $138,000; Accounts receivable $0; Land $ 30,000; Building $0; Supplies $0; Accounts payable $0; Notes payable $0; Quality-capital $70,000; Service revenue $98,000; Utilities, salary expense $0. The company also presented the following transactions for the month: June 1. Purchased supplies for $1000 on account June 4. Purchased a building for, $62,100 cash June 6. Performed service for a client on account, $12,000 June 10. Borrowed $7,000 cash, signing a note payable June 13. Paid the liability from June 1 June 17. Sold for $15,000 land that had cost this same amount June 21. Received $8000 cash from June 10 transaction June 30. Paid utilities expense of $600 and salary expense $2,500 Requirements: State the effect each transaction from June 1st -30th will have on the…arrow_forwardQuality Service Inc.has the following accounts balances in their charts of accounts balances as at June 1, 2020: Cash $138,000; Accounts receivable $0; Land $ 30,000; Building $0;Supplies $0; Accounts payable $0; Notes payable $0; Quality-capital $70,000; Service revenue $98,000; Utilities, salary expense $0. The company also presented the following transactions for the month: June 1. Purchased supplies for $1000 on account June 4. Purchased a building for, $62,100 cash June 6. Performed service for a client on account, $12,000 June 10. Borrowed $7,000 cash, signing a note payable June 13. Paid the liability from June 1 June 17. Sold for $15,000 landthat had cost this same amount June 21. Received $8000 cash from June 6 transaction June 30. Paid utilities expense of $600 and salary expense $2,500 Requirements: State the effect each transaction from June 1st -30th will have on the accounting…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education