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Lavender Company started its business on April 1, 2019. The following are the transactions that happened during the month of April. Prepare the journal entries in the journal on Page 1. A. The owners invested $7,500 from their personal account to the business account. B. Paid rent $600 with check #101. C. Initiated a petty cash fund $250 check #102. D. Received $350 cash for services rendered. E. Purchased office supplies for $125 with check #103. F. Purchased computer equipment $1,500, paid $500 with check #104, and will pay the remainder in 30 days. G. Received $750 cash for services rendered. H. Paid wages $375, check #105. I. Petty cash reimbursement Office Supplies $50, Maintenance Expense $80, Miscellaneous Expense $60. Cash on hand $8. Check #106. J. Increased Petty Cash by $70, 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 5PB
Textbook Problem
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Lavender Company started its business on April 1, 2019. The following are the transactions that happened during the month of April. Prepare the journal entries in the journal on Page 1.

A. The owners invested $7,500 from their personal account to the business account.

B. Paid rent $600 with check #101.

C. Initiated a petty cash fund $250 check #102.

D. Received $350 cash for services rendered.

E. Purchased office supplies for $125 with check #103.

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

G. Received $750 cash for services rendered.

H. Paid wages $375, check #105.

I. Petty cash reimbursement Office Supplies $50, Maintenance Expense $80, Miscellaneous Expense $60.

Cash on hand $8. Check #106.

J. Increased Petty Cash by $70, 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 ($) Credit($)
April Cash 7,500
Capital 7,500
(To record capital contribution.)

Table (1)

  • Cash is an asset and it is increased by $7,500. Therefore, cash is debited with $7,500.
  • Capital is equity and it is increased by $7,500. Therefore, Capital is credited with $7,500.

Record rent expense:

Journal Page 1
Date Account Debit ($) Credit($)
April Rent Expense 600
Cash 600
(To record rent expense-check-101.)

Table (2)

  • Rent Expense is an expense and it is increased by $600. Therefore, Rent Expense is debited with $600.
  • Cash is an asset and it is decreased by $600. Therefore, cash is credited with $600.

Record transfer to petty cash fund:

Journal Page 1
Date Account Debit ($) Credit($)
April Petty Cash 250
Cash 250
(To record transfer to petty cash fund-check-102.)

Table (3)

  • Petty Cash is an asset and it is increased by $250. Therefore, Petty Cash is debited with $250.
  • Cash is an asset and it is decreased by $250. Therefore, cash is credited with $250.

Record service revenue:

Journal Page 1
Date Account Debit ($) Credit($)
April Cash 350
Service Revenue 350
(To record service revenue.)

Table (4)

  • Cash is an asset and it is increased by $350. Therefore, cash is debited with $350.
  • Service revenue is income and it is increased by $350. Therefore, Service Revenue is credited with $350.

Record purchase of office supplies:

Journal Page 1
Date Account Debit ($) Credit($)
April Office Supplies 125
Cash 125
(To record purchase of office supplies-check-103.)

Table (5)

  • Office Supplies is an asset and it is increased by $125. Therefore, Office Supplies is debited with $125.
  • Cash is an asset and it is decreased by $125. Therefore, cash is credited with $125.

F. Record purchase of computer equiment:

Journal Page 1
Date Account Debit ($) Credit($)
April Computer Equipment 1,500
Cash 500
Accounts Payable 1,000
(To record purchase of computer equipment-check-104.)

Table (6)

  • Computer Equipment is an asset and it is increased by $1,500. Therefore, Computer Equipment is debited with $1,500.
  • Cash is an asset and it is decreased by $500. Therefore, cash is credited with $500.
  • Accounts Payable is a liability and it is increased by $1,000...

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Chapter 8 Solutions

Principles of Accounting Volume 1
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