Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
2nd Edition
ISBN: 9780134833118
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 4.3P
Sons’ Law Offices opened on January 1, 2018 During the first year of business, the company had the following transactions
- January 2: The owners invested $250,000 (the par value of the stock) into the business and acquired 25,000 shares of common stock in return.
- January 15: Herman and Sons’ bought an office building in the amount of $80,000. The company took out a long-term note from the bank to finance the purchase.
- February 12: Herman and Sons’ billed clients for $60,000 of services performed.
- March 1: Herman and Sons’ took out a two-year insurance policy, which it paid cash for in the amount of $22,000.
- March 10: Herman collected $20,000 from clients toward the outstanding accounts receivable balance.
- May 13: Herman received cash payments totaling $210,000 for legal services—$40,000 was for services previously billed to customers on February 12 and the remainder was for services provided in May not yet recorded.
- June 10: Herman purchased office supplies in the amount of $35,000, all on credit.
- July 15: Herman paid wages of $16,000 in cash to office staff workers.
- August 8: Herman paid off the $35,000 balance owed to a supplier for the purchase made on June 10.
- September 3: Herman and Sons’ purchased $25,000 of office supplies in cash.
- September 20: The company paid $11,000 cash for utilities.
- October 1: Herman and Sons’ paid wages in the amount of $24,000 to office workers.
- December 1: Herman and Sons’ received cash payments from clients in the amount of $320,000 for services to be performed in the upcoming months.
- December 31: Herman declared and paid a $10,000 dividend.
The chart of accounts used by Herman and Son’s Law Office is as follows:
Chart of Accounts | ||
Group | Account # | Account Title |
100: Assets | 101 | Cash |
102 | Accounts Receivable | |
103 | Office Supplies | |
104 | Prepaid Insurance | |
110 | Building | |
112 | Accumulated |
Chart of Accounts | ||
Group | Account # | Account Title |
200: Liabilities | 201 | Accounts Payable |
202 | Unearned Service Revenue | |
203 | Wages Payable | |
210 | Interest Payable | |
220 | Notes Payable | |
300: Stockholders’ Equity | 301 | Common Stock |
310 | ||
320 | Dividends | |
400: Revenues | 401 | Service Revenue |
500: Expenses | 501 | Wage Expense |
502 | Utilities Expense | |
503 | Selling Expense | |
504 | Administrative Expense | |
505 | Insurance Expense | |
506 | Supplies Expense | |
510 | Depreciation Expense—Building | |
520 | Interest Expense | |
600: Other | 601 | Income Summary |
Required
- a. Journalize the transactions for the year. Omit explanations.
- b. Post the journal entries to the general ledger.
- c. Prepare an unadjusted trial balance as of December 31.
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Chapter 4 Solutions
Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
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