Concept explainers
1.
Journalize the given transaction and identify the number of postings made in the Cash account.
1.
Explanation of Solution
Debit: A debit, is an accounting term that refers to the left side of an account. The term debit is be denoted by (Dr). The recording amount on the left side of the account is known as debiting.
Credit: A credit, is an accounting term that refers to the right side of an account. The term credit is denoted as (Cr). The recording amount on the right side of the account is known as crediting.
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all the increase in the assets, the expenses and the dividends, all the decrease in liabilities, revenues and the stockholders’ equities.
- Credit, all the increase in the liabilities, the revenues, and the stockholders’ equities, and all decreases in the assets, and the expenses.
Pass the journal entries for the given transactions:
General Journal | Page - 1 | |||
Date | Description | Post | Debit | Credit |
2019 | ||||
June 1 | Cash | 101 | $40,000 | |
JD Capital | 301 | $40,000 | ||
(To record the receipt of capital) | ||||
June 2 | Rent expense | 514 | $2,000 | |
Cash | 101 | $2,000 | ||
(To record the payment of rent, Check 201) |
Table (1)
General Journal | Page - 2 | |||
Date | Description | Post | Debit | Credit |
2019 | ||||
June 3 | Office Furniture | 141 | $12,000 | |
Cash | 101 | $2,000 | ||
Accounts payable | 202 | $10,000 | ||
(To record the purchase of office furniture on cash, Check 202, and on account Invoice 5103) | ||||
June 4 | Supplies | 121 | $1,700 | |
Cash | 101 | $1,700 | ||
(To record the purchase of supplies for cash, Check 203) | ||||
June 6 | Cash | 101 | $7,000 | |
Fees income | 401 | $7,000 | ||
(To record the receipt of fees) | ||||
June 7 | Advertising expense | 511 | $3,000 | |
Cash | 101 | $3,000 | ||
(To record the payment of advertising expense, Check 204) | ||||
June 8 | Recording Equipment | 151 | $15,000 | |
Cash | 101 | $5,000 | ||
Accounts payable | 202 | $10,000 | ||
(To record the purchase of Equipment on cash, Check 205; and on account Invoice 2122) | ||||
June 10 | 111 | $5,500 | ||
Fees income | 401 | $5,500 | ||
(To record the service provided on account) | ||||
June 11 | Accounts payable | 202 | $3,000 | |
Cash | 101 | $3,000 | ||
(To record the payment for office supplies, Invoice 5103 by Check 206) |
Table (2)
General Journal | Page - 3 | |||
Date | Description | Post | Debit | Credit |
2019 | ||||
June 12 | Cash | 101 | $10,000 | |
Fees income | 401 | $10,000 | ||
(To record the receipt of fees) | ||||
June 15 | Salaries expense | 517 | $6,200 | |
Cash | 101 | $6,200 | ||
(To record the payment of salaries, Checks 207) | ||||
June 18 | Cash | 101 | $4,000 | |
Accounts receivable | 111 | $4,000 | ||
(To record the receipt of cash from the credit clients) | ||||
June 20 | Accounts payable | 202 | $6,000 | |
Cash | 101 | $6,000 | ||
(To record the payment for office supplies, Invoice 2122 by Check 208) | ||||
June 25 | Telephone expense | 520 | $375 | |
Cash | 101 | $375 | ||
(To record the payment of telephone bill, Check 209) | ||||
June 27 | Utilities expense | 523 | $980 | |
Cash | 101 | $980 | ||
(To record the payment of utility bill, Check 210) | ||||
June 27 | JD, Drawing | 302 | $5,000 | |
Cash | 101 | $5,000 | ||
(To record the drawings made by the owner, Check 211) | ||||
June 30 | Salaries expense | 517 | $6,200 | |
Cash | 101 | $6,200 | ||
(To record the payment of salaries, Checks 212) |
Table (3)
The number of postings made in the Cash Account is 16.
2.
2.
Explanation of Solution
General ledger: General ledger is a record of all accounts of assets, liabilities, and
Post the journal entries in the General Ledger:
GENERAL LEDGER | ||||||
ACCOUNT: Cash | Account No.: | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 1 | J1 | $ 40,000 | $ 40,000 | |||
June 2 | J1 | $ 2,000 | $ 38,000 | |||
June 3 | J2 | $ 2,000 | $ 36,000 | |||
June 4 | J2 | $ 1,700 | $ 34,300 | |||
June 6 | J2 | $ 7,000 | $ 41,300 | |||
June 7 | J2 | $ 3,000 | $ 38,300 | |||
June 8 | J2 | $ 5,000 | $ 33,300 | |||
June 11 | J2 | $ 3,000 | $ 30,300 | |||
June 12 | J3 | $ 10,000 | $ 40,300 | |||
June 15 | J3 | $ 6,200 | $ 34,100 | |||
June 18 | J3 | $ 4,000 | $ 38,100 | |||
June 20 | J3 | $ 6,000 | $ 32,100 | |||
June 25 | J3 | $ 375 | $ 31,725 | |||
June 27 | J3 | $ 980 | $ 30,745 | |||
June 28 | J3 | $ 5,000 | $ 25,745 | |||
June 30 | J3 | $ 6,200 | $ 19,545 |
Table (4)
GENERAL LEDGER | ||||||
ACCOUNT: Accounts receivable | Account No.: 111 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 10 | J2 | $ 5,500 | $ 5,500 | |||
June 18 | J3 | $ 4,000 | $ 1,500 | |||
ACCOUNT: Supplies | Account No.: 121 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 4 | J2 | $ 1,700 | $ 1,700 | |||
ACCOUNT: Office Furniture | Account No.: 141 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 3 | J2 | $ 12,000 | $ 12,000 | |||
ACCOUNT: Equipment | Account No.: 151 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 8 | J2 | $ 15,000 | $ 15,000 | |||
ACCOUNT: Accounts payable | Account No.: 202 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 3 | J2 | $ 10,000 | $ 10,000 | |||
June 8 | J2 | $ 10,000 | $ 20,000 | |||
June 11 | J2 | $ 3,000 | $ 17,000 | |||
June 20 | J3 | $ 6,000 | $ 11,000 | |||
ACCOUNT: JD Capital | Account No.: 301 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 1 | J1 | $ 40,000 | $ 40,000 |
Table (5)
GENERAL LEDGER | ||||||
ACCOUNT: JD Drawings | Account No.: 302 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 28 | J3 | $ 5,000 | $ 5,000 | |||
ACCOUNT: Fees Income | Account No.: 401 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 6 | J2 | $ 7,000 | $ 7,000 | |||
June 10 | J2 | $ 5,500 | $ 12,500 | |||
June 12 | J2 | $ 10,000 | $ 22,500 | |||
ACCOUNT: Advertising Expense | Account No.: 511 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 7 | J2 | $ 3,000 | $ 3,000 | |||
ACCOUNT: Rent Expense | Account No.: 514 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 1 | J1 | $ 2,000 | $ 2,000 | |||
ACCOUNT: Salaries Expense | Account No.: 517 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 15 | J3 | $ 6,200 | $ 6,200 | |||
June 30 | J3 | $ 6,200 | $ 6,200 | |||
ACCOUNT: Telephone Expense | Account No.: 520 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 25 | J3 | $ 375 | $ 375 |
Table (6)
GENERAL LEDGER | ||||||
ACCOUNT: Utilities Expense | Account No.: 523 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
June 25 | J3 | $ 980 | $ 980 |
Table (7)
3.
Draft the
3.
Explanation of Solution
Trial balance: Trial balance is a summary of all the asset, liability, and equity accounts and their balances.
Company LCA | ||
Trial Balance | ||
Month Ended June 30, 2019 | ||
Account Name | Debit | Credit |
Cash | $ 19,545 | |
Accounts Receivable | $ 1,500 | |
Supplies | $ 1,700 | |
Office Furniture | $ 12,000 | |
Recording Equipment | $ 15,000 | |
Accounts Payable | $ 11,000 | |
JD, Capital | $ 40,000 | |
JD, Drawing | $ 5,000 | |
Fees Income | $ 22,500 | |
Advertising Expenses | $ 3,000 | |
Rent Expense | $ 2,000 | |
Salaries Expense | $ 12,400 | |
Telephone Expense | $ 375 | |
Utilities Expense | $ 980 | |
Total | $ 73,500 | $ 73,500 |
Table (8)
4.
Prepare Income Statement for Company LCA.
4.
Explanation of Solution
Income statement:
Income statement is a financial statement that shows the net income or net loss by deducting the expenses from the revenues and vice versa.
Company LCA | ||
Income Statement | ||
Month Ended June 30, 2019 | ||
Particulars | Amount ($) | Amount ($) |
Revenues | ||
Fees Income | $ 22,500 | |
Expenses | ||
Advertising Expenses | $ 3,000 | |
Rent Expense | $ 2,000 | |
Salaries Expense | $ 12,400 | |
Telephone Expense | $ 375 | |
Utilities Expense | $ 980 | |
Total expenses | $ 18,755 | |
Net income | $ 3,745 |
Table (9)
5.
Prepare the Statement of Owner's equity for Company LCA.
5.
Explanation of Solution
Statement of owner's’ equity:
This statement reports the beginning owner’s equity and all the changes which led to ending owner's’ equity.
Company LCA | ||
Statement of Owner's Equity | ||
Month Ended June 30, 2019 | ||
Particulars | Amount ($) | Amount ($) |
JD Capital, June 1, 2019 | $ 40,000 | |
Net income for June | $ 3,745 | |
Deduct - Withdrawals | $ 5,000 | |
Decrease in Capital | ($ 1,255) | |
JD Capital, June 30, 2019 | $ 38,745 |
Table (10)
6.
Prepare the Balance sheet for Company LCA.
6.
Explanation of Solution
Balance Sheet:
Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business
Company LCA | |||
Balance sheet | |||
As on June 30, 2019 | |||
Particulars | Amount | Particulars | Amount |
Assets | Liabilities | ||
Cash | $ 19,545 | Accounts payable | $ 11,000 |
Accounts Receivable | $ 1,500 | Owner's equity | |
Supplies | $ 1,700 | JD Capital | $ 38,745 |
Office Furniture | $ 12,000 | ||
Recording Equipment | $ 15,000 | ||
Total assets | $ 49,745 | Total liabilities and owner's equity | $ 49,745 |
Table (11)
Want to see more full solutions like this?
Chapter 4 Solutions
COLLEGE ACCOUNTING-ACCESS
- 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: Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closingtrial balance as of April 30, 2019, 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, 2019, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a twocolumn 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 statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forwardSage Learning Centers was established on July 20, 2016, to provide educational services. The services provided during the remainder of the month are as follows: Instructions 1. Journalize the transactions for July, using a single-column revenue journal and a two-column general journal. Post to the following customer accounts in the accounts receivable ledger, and insert the balance immediately after recording each entry: D. Chase; J. Dunlop; F. Mintz; T. Quinn; K. Tisdale. 2. Post the revenue journal and the general journal to the following accounts in the general ledger, inserting the account balances only after the last postings: 3. a. What is the sum of the balances of the customer accounts in the subsidiary ledger at July 31? b. What is the balance of the accounts receivable controlling account at July 31? 4. Assume Sage Learning Centers began using a computerized accounting system to record the sales transactions on August 1. What are some of the benefits of the computerized system over the manual system?arrow_forwardLeanders Landscaping Service maintains the following chart of accounts: The following transactions were completed by Leander: Required 1. Journalize the transactions in the general journal. Prepare a brief explanation for each entry. 2. If you are using working papers, write the name of the owner on the Capital and Drawing accounts. 3. Post the journal entries to the general ledger accounts. (Skip this step if you are using CLGL.) 4. Prepare a trial balance dated April 30, 20. If you are using CLGL, use the year 2020 when recording transactions and preparing reports.arrow_forward
- This problem is designed to enable you to apply the knowledge you have acquired in the preceding chapters. In accounting, the ultimate test is being able to handle data in real life situations. This problem will give you valuable experience. CHART OF ACCOUNTS You are to record transactions in a two-column general journal. Assume that the fiscal period is one month. You will then be able to complete all of the steps in the accounting cycle. When you are analyzing the transactions, think them through by visualizing the T accounts or by writing them down on scratch paper. For unfamiliar types of transactions, specific instructions for recording them are included. However, reason them out for yourself as well. Check off each transaction as it is recorded. Required 1. Journalize the transactions. (Start on page 1 of the general journal if using Excel or Working Papers.) 2. Post the transactions to the ledger accounts. (Skip this step if using CLGL.) 3. Prepare a trial balance. (If using a work sheet, use the first two columns.) 4. Data for the adjustments are as follows: a. Insurance expired during the month, 1,000. b. Depreciation of pool structure for the month, 715. c. Depreciation of fan system for the month, 260. d. Depreciation of sailboats for the month, 900. e. Wages accrued at June 30, 810. Your instructor may want you to use a work sheet for these adjustments. 5. Journalize adjusting entries. 6. Post adjusting entries to the ledger accounts. (Skip this step if using CLGL.) 7. Prepare an adjusted trial balance 8. Prepare the income statement 9. Prepare the statement of owners equity. 10. Prepare the balance sheet. 11. Journalize closing entries. 12. Post closing entries to the ledger accounts. (Skip this step if using CLGL.) 13. Prepare a post-dosing trial balance. Check Figure Trial balance total, 281,858; net income, 7,143; post-dosing trial balance total, 263,341arrow_forwardPlease prepare journal entries for the following statements. You will also need to prepare the related T-accounts for each journal entry. Then you should prepare the trial balance, the adjusting entries, the financial statements and the closing entries. Additionally, for each account that you use in the journal entries, please indicate which component of the Accounting Equation this account belongs in (if this is unclear, please ask). 9/1/21 – Mary decides to open a new business. She has $20,000 to invest in the company, and she buys all 100 shares of stock. 9/1/21 – Mary borrows $90,000 from Suntrust Bank. This loan will be repaid in 3 years and will charge interest at 4% semi-annually. She will pay $3,600 per year. 9/1/21 – Mary hires an accountant and financial advisor to help manage her business and her money. She will pay her accountant an hourly rate of $90 per hour. 9/1/21 – Mary signs a contract to provide services to a local school district. She will provide services…arrow_forwardAs the bookkeeper of a new start-up company, you are responsible for keeping the chart of accounts up to date. At the end of each year, you analyze the accounts to verify that each account should be active for acumulation of costs, revenues, and expenses. In July, the accounts payable (A/P) clerk asked you to open an account named New Expenses. You know that an account name should be specific and well defined, and you're afraid the A/P clerk might charge some expenses to the account that are inappropriate. Respond to the following in a minimum of 175 words: *Why do you think the A/P clerk needs the New Expenses account? * Who needs to know this information and what action should you consider?arrow_forward
- You have recently been hired by Trinity College as an accounting assistant. Trinity College is a private institution. During your first month as an employee of Trinity College, the school’s accountant was fired. The owner of the school has asked for your help in preparing the next set of financial accounts to 31 October 2020. You eagerly begin to assist with the preparation of the next set of financial accounts to 31 October 2019. Firstly, you locate the account balances related to 30 September 2020:- Cash at bank $267,000; Furniture and fittings $24,000; Equipment $60,000; Capital $351,900; Accounts receivable – T. Steward - $6,900; Accounts payable - R. Maskell- $6,000. Secondly you identify the transactions that occurred during October 2020. On Oct 1 2020, The owner withdrew $6,000 from the business bank account for personal reasons. On Oct 1 2020, Trinity College paid $6,000 towards the amount owed to R. Maskell. On Oct 1 2020Trinity College paid business insurance for the next 12…arrow_forwardAs the bookkeeper of a new start-up company, you are responsible for keeping the chart of accounts up to date. At the end of each year, you analyze the accounts to verify that each account should be active for accumulation of costs, revenues, and expenses. In July, the accounts payable (A/P) clerk asked you to open an account named New Expenses. You know that an account name should be specific and well defined, and you're afraid the A/P clerk might charge some expenses to the account that are inappropriate. Why do you think the A/P clerk needs the New Expenses account? Who needs to know this information and what action should you consider?arrow_forwardCalculate the net income for the year and post it on the Discussion Board, as well as all supporting documentation to arrive at the net income.- Each group will also advise Tyler Stasney whether to continue operating Swift Classified Ads and post their advice on the Discussion Board, writing a minimum of two to three sentences on the Discussion Board.arrow_forward
- Make first a proper Chart of Accounts. Then make a proper Trial Balance from the following accounts and balances listed in alphabetical order for MN Company for August 31 of the current year. Put them in the correct order along with their debit and credit balances on your Trial Balance. Total the DR and CR column and make sure they balance. Make sure you have a heading. We will work on this in class. Upload here on D2L if you are not yet finished in class. Accounts Payable $2300, Accounts Receivable $1200, Accumulated Depreciation-Equipment $800, Advertising Expense $200, Cash $3400, Equipment $12,500, Furniture and Fixtures $6700, MN, Capital, $6500, MN, Drawing $500, Notes Payable $8000, Prepaid Insurance $1200, Professional Fees $10,000, Rent Expense $500, Supplies $100, Utilities Expense $300, Wages Expense $1000.arrow_forwardJoanne is part of the accounts payable team at a local furniture store, responsible for recording invoices received by the business and payments made by the business. The furniture store receives an invoice for internet usage for the amount of $450. The invoice states that payment is due in 30 days, therefore Joanne records the transaction accordingly and sets a calendar reminder to pay on the due date. Based on this information, the journal entry in the furniture store's accounting system would include:arrow_forwardIn November, Year 2, your accounting firm placed a one-time website advertisement with Today's CPA. This is your first ad with this vendor. You pay for the one-time advertising with your company's Citibank Visa credit card. Below is the transaction you completed for this purchase. If you run the report Transaction List by Vendor, for all dates, what dollar amount will appear under the vendor Today's CPA? Why? Teacher Feedback: was the expense form completed properly?arrow_forward
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning