(a)
Journal:
Journal is the systematic method of recording the business transactions in a chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system of accounting.
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 Company KWW for the month of July.
(a)
Explanation of Solution
The
Date | Account Title | Post ref. | Debit ($) | Credit ($) |
July 1 | Cash | 12,000 | ||
Common Stock | 12,000 | |||
(To record the issue of common stock) | ||||
July 1 | Equipment | 8,000 | ||
Accounts Payable | 6,000 | |||
Cash | 2,000 | |||
(To record the purchase of equipment making part payment and balance on credit) | ||||
July 3 | Supplies | 900 | ||
Accounts Payable | 900 | |||
(To record cleaning supplies purchased on account) | ||||
July 5 | Prepaid Insurance | 1,800 | ||
Cash | 1,800 | |||
(To record the payment of insurance premium) | ||||
July 12 |
| 3,700 | ||
Service Revenue | 3,700 | |||
(To record the services performed to customers on credit) | ||||
July 18 | Accounts Payable | 1,500 | ||
Cash | 1,500 | |||
(To record payment of cash owed on truck and cleaning supplies) | ||||
July 20 | Salaries and Wages Expense | 2,000 | ||
Cash | 2,000 | |||
(To record payment of salaries) | ||||
July 21 | Cash | 1,600 | ||
Accounts Receivable | 1,600 | |||
(To record cash received from customer for service provided on July 12th for credit) | ||||
July 25 | Accounts Receivable | 2,500 | ||
Service Revenue | 2,500 | |||
(To record services performed to customers on credit) | ||||
July 31 | Maintenance and Repairs Expense | 290 | ||
Cash | 290 | |||
(To record payment made for maintenance of truck) | ||||
July 31 | Dividends | 600 | ||
Cash | 600 | |||
(To record distribution of dividend) |
Table (1)
(b)
T-account:
T-account refers to an individual account, which records the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure.
This account is referred to as the T-account, because of the alignment, of the components of the account resembles the capital letter ‘T’. This 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 post: The journal transactions to T-account of Company KWW for the month of July.
(b)
Explanation of Solution
Post the transactions to T-account of Company KWW as follows:
Cash | ||||||||||||||||||||||
1-Jul | $12,000 | 7/1 | $2,000 | |||||||||||||||||||
21-Jul | $1,600 | 7/5 | $1,800 | |||||||||||||||||||
7/18 | $1,500 | |||||||||||||||||||||
7/20 | $2,000 | |||||||||||||||||||||
7/31 | $290 | |||||||||||||||||||||
7/31 | $600 | |||||||||||||||||||||
31-Jul | Bal. | $5,410 | ||||||||||||||||||||
Accounts Receivable | ||||||||||||||||||||||
12-Jul | $3,700 | 7/21 | $1,600 | |||||||||||||||||||
25-Jul | $2,500 | |||||||||||||||||||||
31-Jul | $1,700 | |||||||||||||||||||||
31-Jul | Bal. | $6,300 | ||||||||||||||||||||
Supplies | ||||||||||||||||||||||
3-Jul | $900 | 7/31 | $580 | |||||||||||||||||||
31-Jul | Bal. | $320 | ||||||||||||||||||||
Prepaid Insurance | ||||||||||||||||||||||
5-Jul | $1,800 | 7/31 | $150 | |||||||||||||||||||
31-Jul | Bal. | $1,650 | ||||||||||||||||||||
Equipment | ||||||||||||||||||||||
1-Jul | $8,000 | |||||||||||||||||||||
31-Jul | Bal. | $8,000 | ||||||||||||||||||||
Accounts Payable | ||||||||||||||||||||||
18-Jul | $1,500 | 7/1 | $6,000 | |||||||||||||||||||
7/3 | $900 | |||||||||||||||||||||
7/31 | Bal. | $5,400 | ||||||||||||||||||||
Common Stock | ||||||||||||||||||||||
7/1 | $12,000 | |||||||||||||||||||||
7/31 | Bal. | $12,000 | ||||||||||||||||||||
Maintenance and Repairs Expense | ||||||||||||||||||||||
31-Jul | $290 | 7/31 | $290 | |||||||||||||||||||
31-Jul | Bal. | 0 | ||||||||||||||||||||
Salaries and Wages Expense | ||||||||||||||||||||||
20-Jul | $2,000 | 7/31 | $2,400 | |||||||||||||||||||
31-Jul | $400 | |||||||||||||||||||||
31-Jul | Bal. | 0 | ||||||||||||||||||||
(c)
To prepare: The
(c)
Explanation of Solution
Trial balance of Company KWW on July 31, 2017, before adjustment is as follows:
Company KWW | ||
Trial Balance before Adjustments | ||
July 31, 2017 | ||
Particulars | Debit $ | Credit $ |
Cash | 5410 | |
Accounts Receivable | 4,600 | |
Supplies | 900 | |
Prepaid Insurance | 1,800 | |
Equipment | 8,000 | |
Accounts Payable | 5,400 | |
Common Stock | 12,000 | |
Dividends | 600 | |
Service Revenue | 6,200 | |
Maintenance and Repairs Expense | 290 | |
Salaries and Wages Expense | 2,000 | |
23,600 | 23,600 |
Table (2)
Thus, the total of debit, and credit columns of a trial balance is $23,600 and agreed.
(d)
Adjusting entries are the journal entries which are recorded at the end of the accounting period to correct or adjust the revenue and expense accounts, to concede with the accrual principle of accounting.
To journalize: The adjusting transactions as given in the books of Company KWW.
(d)
Explanation of Solution
The adjusting journal entries in the book of Company KWW at the end of the July month are as follows:
1. An adjusting entry for Accounts receivable:
In this case, Company KWW performed the service to customer in advance before the service. So, the necessary adjusting entry that the Company KWW should record for the unearned service revenue at end of the July month is as follows:
Date | Account Titles and Description | Debit ($) | Credit ($) |
July 31, 2017 | Accounts Receivable | 1700 | |
Service Revenue | 1700 | ||
(To record the unbilled services at end of the month) |
Table (3)
Description:
- Accounts Receivable is a liability, and it decreases the value of liability by $1700, hence debit the unearned accounts receivable for $1700.
- Service revenue increases the value of
stockholders’ equity by $1700; hence credit the service revenue for $1700.
2. An adjusting entry for
In this case, Company KWW recognized the depreciation expense on equipment at end of the July month. So, the necessary adjusting entry that the Company KWW should make to record the depreciation expense at end of the month is as follows:
Date | Account Titles and Description | Debit ($) | Credit ($) |
July 31, 2017 | Depreciation expense | 180 | |
| 180 | ||
(To record the depreciation expenses allocated at end of the month) |
Table (4)
Description:
- Depreciation expense decreases the value of stockholders’ equity by $180; hence debit the depreciation expense for $180.
- Accumulated depreciation is a contra asset account, and it decreases the value of asset by $180 hence, credit the accumulated depreciation for $180.
3. An adjusting entry for insurance expense:
In this case, Company KWW recognized the insurance expenses at the end of the July month. So, the necessary adjusting entry that the Company KWW should record to recognize the insurance expense is as follows:
Date | Account Titles and Description | Debit ($) | Credit ($) |
July 31, 2017 | Insurance expense | 150 | |
Prepaid insurance (1) | 150 | ||
(To record the insurance expenses expired at the end of July month) |
Table (5)
Description:
- Insurance expense decreases the value of stockholders’ equity by $150 hence debit the insurance expense for $150.
- Prepaid insurance is an asset, and it decreases the value of asset by $150, hence credit the prepaid insurance for $150.
Working Note:
Calculate the insurance expense.
4. An adjusting entry for Supplies expenses:
In this case, Company KWW recognized the supplies expenses at the end of the July month. So, the necessary adjusting entry that the Company KWW should record to recognize the supplies expense is as follows:
Date | Account Titles and Description | Debit ($) | Credit ($) |
July 31, 2017 | Supplies Expense | 580 | |
Supplies (2) | 580 | ||
(To record the supplies expenses incurred at the end of the July) |
Table (6)
Description:
- Supplies expense decreases the value of stockholders’ equity by $580; hence debit the supplies expenses for $580.
- Supplies are an asset, and it decreases the value of asset by $580, hence credit the supplies for $580.
Working note:
Calculate the value of supplies expense at end of the July month
5. An adjusting entry for salaries and wages payable:
In this case, Company KWW incurred the salaries and wages expense but cash is not yet paid. So, the necessary adjusting entry that the Company KWW should record to recognize the accrued expense is as follows:
Date | Account Title and Description |
Debit ($) |
Credit ($) |
July 31, 2017 | Salaries and wages expense | 400 | |
Salaries and wages payable | 400 | ||
(To record the salaries and wages expense incurred at the end of the month) |
Table (7)
Description:
- Salaries and wages expense decreases the value of stockholders’ equity by $400 hence, debit the salaries and wages expense for $400.
- Salaries and wages payable is a liability, and it increases the value of liability by $400, hence credit the salaries and wages payable for $400.
(e)
To post: The adjusting entries to T-account of Company KWW for the month of July.
(e)
Explanation of Solution
Accounts Receivable | |||||
12-Jul | $3,700 | 7/21 | $1,600 | ||
25-Jul | $2,500 | ||||
31-Jul | $1,700 | ||||
31-Jul | Bal. | $6,300 |
Accumulated Depreciation— Equipment | |||||
7/31 | 180 | ||||
7/31 | Bal. | $180 |
Prepaid Insurance | |||||
5-Jul | $1,800 | 7/31 | $150 | ||
31-Jul | Bal. | $1,650 |
Supplies Expense | ||||||
31-Jul | $580 | 7/31 | $580 | |||
31-Jul | Bal. | 0 | ||||
Salaries and Wages Payable | |||||
7/31 | 400 | ||||
7/31 | Bal. | $400 |
(f)
Adjusted trial balance:
Adjusted trial balance is a summary of all the ledger accounts, and it contains the balances of all the accounts after the adjustment entries are journalized, and posted.
To prepare: The trial balance of Company KWW on July 31, 2017 after adjustment.
(f)
Explanation of Solution
Trial balance of Company KWW on July 31, 2017, after adjustment is as follows:
Company KWW | ||
Trial Balance after Adjustments | ||
July 31, 2017 | ||
Particulars | Debit $ | Credit $ |
Cash | 5,410 | |
Accounts Receivable | 6,300 | |
Supplies | 320 | |
Prepaid Insurance | 1,650 | |
Equipment | 8,000 | |
Accumulated Depreciation - Equipment | 180 | |
Accounts Payable | 5,400 | |
Salaries and Wages Payable | 400 | |
Common Stock | 12,000 | |
Dividends | 600 | |
Service Revenue | 7,900 | |
Maintenance and Repairs Expense | 290 | |
Supplies Expense | 580 | |
Depreciation Expense | 180 | |
Insurance Expense | 150 | |
Salaries and Wages Expense | 2,400 | |
25,880 | 25,880 |
Table (8)
Thus, the total of debit, and credit columns of a trial balance is $25,880 and agreed.
(g)
To prepare: The income statement, statement of retained earnings, and classified balance sheet of Company KWW.
(g)
Explanation of Solution
The income statement of Company KWW for the month ended July 31, 2017 is as follows:
Company KWW | ||
Income Statement | ||
July 31, 2017 | ||
Particulars | Amount ($) | Amount ($) |
Revenues | ||
Service revenue | 7,900 | |
Expenses | ||
Salaries and wages expense | 2,400 | |
Supplies expense | 580 | |
Maintenance and repairs expense | 290 | |
Depreciation expense | 180 | |
Insurance expense | 150 | |
Total expenses | 3,600 | |
Net income | 4,300 |
Table (9)
The Net Income for the month ended July31, 2017 is $4,300.
The retained earnings statement of Company KWW for the month ended July 31, 2017 is as follows:
Company KWW | |
Retained Earnings Statement | |
July 31, 2017 | |
Particulars | Amount ($) |
Retained earnings, July 1, 2017 | |
Add: Net income | 4,300 |
4,300 | |
Less: Dividends | 600 |
Retained earnings, July 31, 2017 | 3,700 |
Table (10)
Hence, retained earnings for the month ended July 31, 2017 is $3,700.
The classified balance sheet at July 31, 2017 is as follows:
Company KWW | ||
Classified Balance Sheet | ||
July 31, 2017 | ||
Particulars | Amount ($) | Amount ($) |
Assets | ||
Current Assets | ||
Cash | 5,410 | |
Accounts receivable | 6,300 | |
Supplies | 320 | |
Prepaid insurance | 1,650 | |
Total current assets | 13,680 | |
Property, plant, and equipment | ||
Equipment | 8,000 | |
Less: Accumulated depreciation | 180 | 7,820 |
Total assets | 21,500 | |
Liabilities and Stockholders’ Equity | ||
Current Liabilities | ||
Accounts payable | 5,400 | |
Salaries and wages payable | 400 | |
Total current liabilities | 5,800 | |
Stockholders’ equity | ||
Common stock | 12,000 | |
Retained earnings | 3,700 | |
Total stockholders’ equity | 15,700 | |
Total liabilities and stockholders’ equity | 21,500 |
Table (11)
Thus the total assets of Company KWW for the month ended July 31, 2017 is $21500 which is equal to the liabilities for the same period.
(h)
Closing entries:
Closing entries are those journal entries, which are passed to transfer the final balances of temporary accounts, (all revenues account, all expenses account and dividend) to the income summary account. Closing entries produce a zero balance in each temporary account.
To prepare: The closing journal entries of Company KWW, and post it to T-accounts.
(h)
Explanation of Solution
The closing entries of Company KWW at July31, 2017 are as follows:
Date | Account Title | Post ref. | Debit ($) | Credit ($) |
July 31 | Service Revenue | 7,900 | ||
Income Summary | 7900 | |||
(To close the revenue account) | ||||
July 31 | Income Summary | 3,600 | ||
Salaries and Wages Expense | 2400 | |||
Supplies Expense Depreciation Expense | 580 | |||
Maintenance and Repairs Expense | 290 | |||
Depreciation Expense | 180 | |||
Insurance Expense | 150 | |||
(To close all the expenses account) | ||||
July 31 | Income Summary | 4,300 | ||
Retained Earnings | 4300 | |||
(To close the income summary account) | ||||
July 31 | Retained Earnings | 600 | ||
Dividends | 600 | |||
(To close the dividend account) |
Table (12)
Description:
Closing entry for revenue account:
In this closing entry, the service revenue account is closed by transferring the amount of service revenue to the income summary account in order to bring the revenue accounts balance to zero. Hence, debit the service revenue account for $7,900, and credit the income summary account for $7,900.
Closing entry for expenses account:
In this closing entry, all the expense are closed by transferring the amount of all expenses to the income summary account in order to bring all the expense accounts balance to zero. Hence, debit the income summary account for $3,600, and credit all the expenses account for $3,600.
Closing entry for income summary account:
In this closing entry, the income summary account is closed by transferring the amount of balance of $4,300
Closing entry for dividend account:
In this closing entry, the entire dividend declared by the company is transferred to the retained earnings. Hence, debit the retained earnings account for $600, and credit the dividends account for $600.
Post the closing transactions to T-accounts of Company KWW on July31, 2017 as follows:
Service Revenue | ||||||||||||||||||||
31-Jul | $7,900 | 7/12 | $3,700 | |||||||||||||||||
7/25 | $2,500 | |||||||||||||||||||
7/31 | $1,700 | |||||||||||||||||||
7/31 | Bal. | 0 | ||||||||||||||||||
Income Summary | ||||||||||||||||||||
31-Jul | $3,600 | 7/31 | $7,900 | |||||||||||||||||
31-Jul | $4,300 | |||||||||||||||||||
7/31 | Bal. | 0 | ||||||||||||||||||
Retained Earnings | ||||||||||||||||||||
31-Jul | $600 | 7/31 | 4,300 | |||||||||||||||||
7/31 | Bal. | $3,700 | ||||||||||||||||||
Dividends | ||||||||||||||||||||
31-Jul | $600 | 7/31 | $600 | |||||||||||||||||
31-Jul | Bal. | 0 | ||||||||||||||||||
(i)
Post closing trial balance:
The post closing trial balance is a summary of all ledger accounts, and it shows the debit and the credit balances after the closing entries are journalized and posted. The post-closing trial balance contains only permanent (balance sheet) accounts, and the debit and the credit balances of permanent accounts should agree.
To prepare: The post-closing trial balance of Company KWW on July31, 2017
(i)
Explanation of Solution
The post-closing trial balance of Company KWW on July31, 2017 is as follows:
Company KWW | ||
Post Closing Trial balance | ||
July 31, 2017 | ||
Particulars | Debit $ | Credit $ |
Cash | 5410 | |
Accounts Receivable | 4,600 | |
Supplies | 900 | |
Prepaid Insurance | 1,800 | |
Equipment | 8,000 | |
Accumulated Depreciation - Equipment | 180 | |
Accounts Payable | 5,400 | |
Salaries and Wages Payable | 400 | |
Common Stock | 12,000 | |
Retained Earnings | 3,700 | |
21,680 | 21,680 |
Table (13)
Thus, the total of debit, and credit columns of a trial balance is $21,680 and agreed.
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Chapter 4 Solutions
FINANCIAL ACCOUNTING: TOOLS WP ACCESS
- On March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501. e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012. g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307. i. Received and paid the heating bill, 248, Ck. No. 504. j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128. k. Sold catering services for cash for the remainder of the month, 2,649. l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506. 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_forwardDuring 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_forward
- 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_forwardOn July 1, K. Resser opened Ressers Business Services. Ressers accountant listed the following chart of accounts: The following transactions were completed during July: a. Resser deposited 25,000 in a bank account in the name of the business. b. Bought tables and chairs for cash, 725, Ck. No. 1200. c. Paid the rent for the current month, 1,750, Ck. No. 1201. d. Bought computers and copy machines from Ferber Equipment, 15,700, paying 4,000 in cash and placing the balance on account, Ck. No. 1202. e. Bought supplies on account from Wigginss Distributors, 535. f. Sold services for cash, 1,742. g. Bought insurance for one year, 1,375, Ck. No. 1203. h. Paid on account to Ferber Equipment, 700, Ck. No. 1204. i. Received and paid the electric bill, 438, Ck. No. 1205. j. Paid on account to Wigginss Distributors, 315, Ck. No. 1206. k. Sold services to customers for cash for the second half of the month, 820. l. Received and paid the bill for the business license, 75, Ck. No. 1207. m. Paid wages to an employee, 1,200, Ck. No. 1208. n. Resser withdrew cash for personal use, 700, Ck. No. 1209. Required 1. Record the owners name in the Capital and Drawing T accounts. 2. Correctly place the plus and minus signs for each T account and label the debit and credit sides of the accounts. 3. Record the transactions in the T accounts. Write the letter of each entry to identify the transaction. 4. Foot the T accounts and show the balances. 5. Prepare a trial balance as of July 31, 20--. 6. Prepare an income statement for July 31, 20--. 7. Prepare a statement of owners equity for July 31, 20--. 8. Prepare a balance sheet as of July 31, 20--. LO 1, 2, 3, 4, 5, 6arrow_forwardIn March, T. Carter established Carter Delivery Service. The account headings are presented below. Transactions completed during the month of March follow. a. Carter deposited 25,000 in a bank account in the name of the business. b. Bought a used truck from Degroot Motors for 15,140, paying 5,140 in cash and placing the remainder on account. c. Bought equipment on account from Flemming Company, 3,450. d. Paid the rent for the month, 1,000, Ck. No. 3001. e. Sold services for cash for the first half of the month, 6,927. f. Bought supplies for cash, 301, Ck. No. 3002. g. Bought insurance for the truck for the year, 1,200, Ck. No. 3003. h. Received and paid the bill for utilities, 349, Ck. No. 3004. i. Received a bill for gas and oil for the truck, 218. j. Sold services on account, 3,603. k. Sold services for cash for the remainder of the month, 4,612. l. Paid wages to the employees, 3,958, Ck. Nos. 30053007. m. Carter withdrew cash for personal use, 1,250, Ck. No. 3008. 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_forward
- A business has the following transactions: The business is started by receiving cash from an investor in exchange for common stock $20,000 The business purchases supplies on account $500 The business purchases furniture on account $2,000 The business renders services to various clients on account totaling $9,000 The business pays salaries $2,000 The business pays this months rent $3,000 The business pays for the supplies purchased on account. The business collects from one of its clients for services rendered earlier in the month $1,500. What is total income for the month?arrow_forwardOn March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501 (Rent Expense). e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012 (Catering Income). g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307 (Catering Income). i. Received and paid the heating bill, 248, Ck. No. 504 (Utilities Expense). j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128 (Gas and Oil Expense). k. Sold catering services for cash for the remainder of the month, 2,649 (Catering Income). l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506 (Salary Expense). Required 1. In the equation, write the owners name above the terms Capital and Drawing. 2. Record the transactions and the balance after each transaction. Identify the account affected when the transaction involves revenues or expenses. 3. Write the account totals from the left side of the equals sign and add them. Write the account totals from the right side of the equals sign and add them. If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forwardIn October, A. Nguyen established an apartment rental service. The account headings are presented below. Transactions completed during the month of October follow. a. Nguyen deposited 25,000 in a bank account in the name of the business. b. Paid the rent for the month, 1,200, Ck. No. 2015. c. Bought supplies on account, 225. d. Bought a truck for 18,000, paying 1,000 in cash and placing the remainder on account e. Bought Insurance for the truck for the yean 1,400, Ck. No. 2016. f. Sold services on account 5,000. g. Bought office equipment on account from Henry Office Supply, 2,300. h. Sold services for cash for the first half of the month, 6,050. i. Received and paid the bill for utilities, 150, Ck. No. 2017. j. Received a bill for gas and oil for the truck. 80. k. Paid wages to the employees, 1,400, Ck Nos. 20182020. l. Sold services for cash for the remainder of the month, 4,200. m. Nguyen withdrew cash for personal use, 2,000, Ck. No. 2021. 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, reanalyze each transaction.arrow_forward
- In March, T. Carter established Carter Delivery Service. The account headings are presented below. Transactions completed during the month of March follow. a. Carter deposited 25,000 in a bank account in the name of the business. b. Bought a used truck from Degroot Motors for 15,140, paying 5,140 in cash and placing the remainder on account. c. Bought equipment on account from Flemming Company, 3,450. d. Paid the rent for the month, 1,000, Ck. No. 3001 (Rent Expense). e. Sold services for cash for the first half of the month, 6,927 (Service Income). f. Bought supplies for cash, 301, Ck. No. 3002. g. Bought insurance for the truck for the year, 1,200, Ck. No. 3003. h. Received and paid the bill for utilities, 349, Ck. No. 3004 (Utilities Expense). i. Received a bill for gas and oil for the truck, 218 (Gas and Oil Expense). j. Sold services on account, 3,603 (Service Income). k. Sold services for cash for the remainder of the month, 4,612 (Service Income). l. Paid wages to the employees, 3,958, Ck. Nos. 30053007 (Wages Expense). m. Carter withdrew cash for personal use, 1,250, Ck. No. 3008. Required 1. In the equation, write the owners name above the terms Capital and Drawing. 2. Record the transactions and the balance after each transaction. Identify the account affected when the transaction involves revenues or expenses. 3. Write the account totals from the left side of the equals sign and add them. Write the account totals from the right side of the equals sign and add them. If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forwardA business has the following transactions: A. The business is started by receiving cash from an investor in exchange for common stock $10,000. B. Rent of $1,250 is paid for the first month. C. Office supplies are purchased for $375. D. Services worth $3,450 are performed. Cash is received for half. E. Customers pay $1,250 for services to be performed next month. F. $6,000 is paid for a one year insurance policy. G. We receive 25% of the money owed by customers in D. H. A customer has placed an order for $475 of services to be done this coming week. How much total revenue does the company have?arrow_forwardOn October 1, 2019, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business: Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business, 18,000. 4.Paid rent for period of October 4 to end of month, 3,000. 10.Purchased a used truck for 23,750, paying 3,750 cash and giving a note payable for the remainder. 13.Purchased equipment on account, 10,500. 14.Purchased supplies for cash, 2,100. 15.Paid annual premiums on property and casualty insurance, 3,600. 15.Received cash for job completed, 8,950. Enter the following transactions on Page 2 of the two-column journal: 21.Paid creditor a portion of the amount owed for equipment purchased on October 13, 2,000. 24.Recorded jobs completed on account and sent invoices to customers, 14,150. 26.Received an invoice for truck expenses, to be paid in November, 700. 27.Paid utilities expense, 2,240. 27.Paid miscellaneous expenses, 1,100. Oct. 29. Received cash from customers on account, 7,600. 30.Paid wages of employees, 4,800. 31.Withdrew cash for personal use, 3,500. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 2019. 4. Determine the excess of revenues over expenses for October. 5. Can you think of any reason why the amount determined in (4) might not be the net income for October?arrow_forward
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