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Domingo Company started its business on January 1, 2019. The following transactions occurred during the month of May. Prepare the journal entries in the journal on Page 1. A. The owners invested $10,000 from their personal account to the business account. B. Paid rent $500 with check #101. C. Initiated a petty cash fund $500 with check #102. D. Received $1,000 cash for services rendered. E. Purchased office supplies for $158 with check #103. F. Purchased computer equipment $2,500, paid $1,350 with check #104, and will pay the remainder in 30 days. G. Received $800 cash for services rendered. H. Paid wages $600, check #105. I. Petty cash reimbursement: office supplies $256, maintenance expense $108, postage expense $77, miscellaneous expense $55. Cash on hand $11. Check #106. J. Increased petty cash by $30, check #107.

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 8, Problem 3PA
Textbook Problem
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Domingo Company started its business on January 1, 2019. The following transactions occurred during the month of May. Prepare the journal entries in the journal on Page 1.

A. The owners invested $10,000 from their personal account to the business account.

B. Paid rent $500 with check #101.

C. Initiated a petty cash fund $500 with check #102.

D. Received $1,000 cash for services rendered.

E. Purchased office supplies for $158 with check #103.

F. Purchased computer equipment $2,500, paid $1,350 with check #104, and will pay the remainder in 30 days.

G. Received $800 cash for services rendered.

H. Paid wages $600, check #105.

I. Petty cash reimbursement: office supplies $256, maintenance expense $108, postage expense $77, miscellaneous expense $55. Cash on hand $11. Check #106.

J. Increased petty cash by $30, check #107.

To determine

To prepare:

Journal entries for the given transactions.

Introduction:

Journal entries record business transactions. These transactions have double effect on accounts such that total of all assets equate with liabilities and equities.

Explanation of Solution

Record capital contribution:

Journal Page 1
Date Account Debit ($) Credit($)
May Cash 10,000
Capital 10,000
(To record capital contribution.)

Table (1)

  • Cash is an asset and it is increased by $10,000. Therefore, cash is debited with $10,000.
  • Capital is equity and it is increased by $10,000. Therefore, Capital is credited with $10,000.

Record rent expense:

Journal Page 1
Date Account Debit ($) Credit($)
May Rent Expense 500
Cash 500
(To record rent expense-check-101.)

Table (2)

  • Rent Expense is an expense and it is increased by $500. Therefore, Rent Expense is debited with $500.
  • Cash is an asset and it is decreased by $500. Therefore, cash is credited with $500.

Record transfer to petty cash fund:

Journal Page 1
Date Account Debit ($) Credit($)
May Petty Cash 500
Cash 500
(To record transfer to petty cash fund-check-102.)

Table (3)

  • Petty Cash is an asset and it is increased by $500. Therefore, Petty Cash is debited with $500.
  • Cash is an asset and it is decreased by $500. Therefore, cash is credited with $500.

Record capital contribution:

Journal Page 1
Date Account Debit ($) Credit($)
May Cash 1,000
Service Revenue 1,000
(To record service revenue.)

Table (4)

  • Cash is an asset and it is increased by $1,000. Therefore, cash is debited with $1,000.
  • Service revenue is income and it is increased by $1,000. Therefore, Service Revenue is credited with $1,000.

Record purchase of office supplies:

Journal Page 1
Date Account Debit ($) Credit($)
May Office Supplies 158
Cash 158
(To record purchase of office supplies-check-103.)

Table (5)

  • Office Supplies is an asset and it is increased by $158. Therefore, Office Supplies is debited with $158.
  • Cash is an asset and it is decreased by $158. Therefore, cash is credited with $158.

F. Record purchase of computer equiment:

Journal Page 1
Date Account Debit ($) Credit($)
May Computer Equipment 2,500
Cash 1,350
Accounts Payable 1,150
(To record purchase of computer equipment-check-104.)

Table (6)

  • Computer Equipment is an asset and it is increased by $2,500. Therefore, Computer Equipment is debited with $2,500.
  • Cash is an asset and it is decreased by $1,350. Therefore, cash is credited with $1,350.
  • Accounts Payable is a liability and it is increased by $1,150. Therefore, Accounts Payable is credited with $1,150...

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Chapter 8 Solutions

Principles of Accounting Volume 1
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