BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Following is the chart of accounts of Sanchez Realty Company:

images

Sanchez completed the following transactions during April (the first month of business):

imagesimages

Required

  1. 1. Journalize the transactions for April in the general journal.
  2. 2. Post the entries to the general ledger accounts. (Skip this step if you are using CLGL.)
  3. 3. Prepare a trial balance as of April 30, 20–.
  4. 4. Prepare an income statement for the month ended April 30, 20–.
  5. 5. Prepare a statement of owner’s equity for the month ended April 30, 20–.
  6. 6. Prepare a balance sheet as of April 30, 20–.

*If you we using CLGL, use the year 2020 when preparing all reports.

1.

To determine

Prepare journal entries for the given transactions.

Explanation

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • ■ Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • ■ Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Prepare journal entries for the given transactions.

Transaction on April 1:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
April1Cash11120,000 
   TS, Capital311 20,000
  (Record cash invested in the business by TS)   

Table (1)

Description:

  • ■ Cash is an asset account. Since cash is invested in the business, asset account increased, and an increase in asset is debited.
  • ■ TS, Capital is an equity account. Since cash is contributed as capital by the owner, equity value increased, and an increase in equity is credited.

Transaction on April 5:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
April5Accounts Receivable1137,500 
   Professional Fees411 7,500
  (Record services performed on account)   

Table (2)

Description:

  • ■ Accounts Receivable is an asset account. The amount is increased because amount to be received increased, and an increase in asset is debited.
  • ■ Professional Fees is a revenue account. Since gains and revenues increase equity, and an increase in equity is credited, Professional Fees account is credited.

Transaction on April 7:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
April7Advertising Expense513250 
   Cash111 250
  (Record payment of advertising expense)   

Table (3)

Description:

  • ■ Advertising Expense is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • ■ Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on April 8:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
April8Supplies115420 
   Accounts Payable221 420
  (Record supplies bought on account)   

Table (4)

Description:

  • ■ Supplies is an asset account. Since store supplies are bought, asset account increased, and an increase in asset is debited.
  • ■ Accounts Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on April 9:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
April9Cash1112,530 
   Professional Fees411 2,530
  (Record services performed for cash)   

Table (5)

Description:

  • ■ Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
  • ■ Professional Fees is a revenue account. Since gains and revenues increase equity, and an increase in equity is credited, Professional Fees account is credited.

Transaction on April 15:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
April15Utilities Expense514280 
   Cash111 280
  (Record payment of utilities expense)   

Table (6)

Description:

  • ■ Utilities Expense is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • ■ Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on April 17:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
April17Office Furniture1241,800 
   Cash111 300
   Accounts Payable221 1,500
  (Record purchase of furniture for office)   

Table (7)

Description:

  • ■ Office Furniture is an asset account...

2.

To determine

Post the journalized transactions in the ledger accounts.

3.

To determine

Prepare the trial balance for Company SR as at April 30, 20--, based on the account balances derived in Part (2).

4.

To determine

Prepare an income statement of Company SR for the month ended April 30, 20--, based on the account balances derived in Part (2).

5.

To determine

Prepare a statement of owners’ equity of Company SR, based on the account balances derived in Part (2), and net income computed in Part (4).

6.

To determine

Prepare a balance sheet for Company SR, based on the account balances derived in Part (2), and capital of the owner from the statement of owners’ equity prepared in Part (5).

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is the database model?

Accounting Information Systems

MIRR Refer to Problem 11-1. What is the projects MIRR?

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)