Concept explainers
(1)
General journal refers to the entry for each transaction in the books of accounts using the debit and credit method. In the double entry system, each transaction is recorded twice, one account is debited, whereas, the other is credited.
To prepare the journal entries.
Explanation of Solution
Journal Entries:
Date | Particular | PR | Debit ($) | Credit ($) |
A | Cash Office equipment computer equipment Common stock (To receive the investment by exchange the common stock) |
101 163 164 307 |
65000 5750 30000 |
100750 |
B | Land Cash Note payable (To record the land purchase by cash and issue notes payable) |
172 101 250 |
22000 | 5000 17000 |
C | Building Cash (To record the purchase building) |
170 101 |
34500 | 34500 |
D | Prepaid insurance Cash (To record the prepaid insurance in advance) |
108 101 |
5000 | 5000 |
E | Cash Account Receivable (To record the cash from the account receivable |
101 106 |
4600 | 4600 |
F | Computer equipment Cash Notes payable (To record the purchase the drafting equipment) |
164 101 250 |
4500 | 800 3700 |
G | Accounts receivable Fees earned (To record the accounts receivable) |
106 402 |
4250 | 4250 |
H | Office equipment Account payable |
163 201 |
950 | 950 |
I | Accounts receivable Fees earned (The company sale service in the credit basis) |
106 402 |
10200 | 10200 |
J | Computer rent expense Accounts payable (To the rent expense) |
602 201 |
580 | 580 |
K | Cash Accounts receivable (To record the money received from the old customer) |
101 106 |
5100 | 5100 |
I | Wages Cash (To record the wages payment) |
601 101 |
1800 | 1800 |
m. | Accounts payable Cash (To record the cash paid to accounts payable) |
201 101 |
950 | 950 |
N | Computer Repair expense Cash (To record the repair expense) |
604 101 |
608 | 608 |
O | Dividend Cash (To record the dividend payment) |
319 101 |
6230 | 6230 |
P | Wages Cash (To record the wages payment) |
601 101 |
1800 | 1800 |
Q | Advertising expense cash (To record the Advertising payment) |
603 101 |
750 | 750 |
All transaction should be recorded as per the explanation.
In the
(2)
Ledger is a book of financial statement. All types of journal entries are classified in these books. Ledger shows the accumulated transaction of a related item.
To prepare: The ledger accounts.
Explanation of Solution
The ledger account
Cash Accounts no. 101
Date | PR | Debit | Credit | Balance |
A | 307 | 65000 | 65000 | |
B | 172 | 5000 | 60000 | |
C | 170 | 34500 | 25500 | |
D | 108 | 5000 | 20500 | |
E | 106 | 4600 | 25100 | |
F | 164 | 800 | 24300 | |
K | 106 | 5100 | 29400 | |
I | 601 | 1800 | 27600 | |
M | 201 | 950 | 26650 | |
N | 604 | 608 | 26042 | |
O | 319 | 6230 | 19812 | |
P | 601 | 1800 | 18012 | |
Q | 603 | 750 | 17262 |
Office Equipment Accounts no. 163
Date | PR | Debit | Credit | Balance |
A | 307 | 5750 | 5750 | |
H | 201 | 950 | 6700 | |
Computer Equipment Accounts no. 164
Date | PR | Debit | Credit | Balance |
A | 307 | 5750 | 5750 | |
F | 101 250 |
800 3700 |
10250 |
Common stock Accounts no. 307
Date | PR | Debit | Credit | Balance |
A | 101 | 65000 | ||
A | 163 | 5750 | ||
A | 164 | 30,000 | 100750 |
Land Accounts no. 172
Date | PR | Debit | Credit | Balance |
B | 101 | 5000 | ||
B | 250 | 17000 | 22000 |
Notes payable Accounts no. 250
Date | PR | Debit | Credit | Balance |
B | 172 | 17000 | 17000 | |
F | 164 | 3700 | 20700 |
Building Accounts no. 170
Date | PR | Debit | Credit | Balance |
B | 101 | 34500 | 34500 |
Prepaid insurance Accounts no. 108
Date | PR | Debit | Credit | Balance |
D | 101 | 5000 | 5000 |
Account Receivable Accounts no. 106
Date | PR | Debit | Credit | Balance |
E | 101 | 4600 | -4600 | |
G | 402 | 4250 | -350 | |
I | 402 | 10200 | 9850 | |
K | 101 | 5100 | 4750 | |
Accounts payable Accounts no.201
Date | PR | Debit | Credit | Balance |
H | 163 | 950 | 950 | |
J | 602 | 580 | 1530 | |
M | 101 | 950 | 580 |
Fees earned Accounts no. 402
Date | PR | Debit | Credit | Balance |
G | 106 | 4250 | 4250 | |
I | 106 | 10200 | 14450 |
Computer rent expense Accounts no. 602
Date | PR | Debit | Credit | Balance |
J | 201 | 580 | 580 | |
Wages Accounts no. 601
Date | PR | Debit | Credit | Balance |
I | 101 | 1800 | 1800 | |
P | 101 | 1800 | 3600 |
Computer Repair Expense
Accounts no. 604
Date | PR | Debit | Credit | Balance |
N | 101 | 608 | 608 | |
Dividend
Accounts no. 319
Date | PR | Debit | Credit | Balance |
O | 101 | 6230 | 6230 |
Advertising expense Accounts no. 603
Date | PR | Debit | Credit | Balance |
Q | 101 | 750 | 750 |
In the ledger book, each transaction should be recorded separately.
A separate column should be prepared.
(3)
A
Trial balance statements show the end balance of each ledger. They have two columns; one is debited and the other is credited.
To prepare: The Trial balance.
Explanation of Solution
Trial balance:
Particular | Number | Debit | Credit |
Cash | 101 | 17262 | |
Office equipment | 163 | 56700 | |
Computer equipment | 164 | 10250 | |
Common stock | 307 | 100750 | |
Land | 172 | 22000 | |
Notes payable | 250 | 20700 | |
Building | 170 | 34500 | |
Prepaid insurance | 108 | 5000 | |
Account Receivable | 106 | 4750 | |
Account payable | 201 | 580 | |
Fees earned | 402 | 14450 | |
Computer rent expense | 602 | 580 | |
Wages | 601 | 3600 | |
Computer Repair expense | 604 | 608 | |
Dividend | 319 | 6230 | |
Advertising expense | 603 | 750 | |
Total | 136480 | 136480 |
There are three types of trail balance:
- Unadjusted trail balance
- Adjusted trail balance
- Closing trial balance.
The abovementioned trial balance is the unadjusted trial balance, because no transaction has been adjusted in it.
This is a simple trial balance which shows the list of accounts with amount.
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Chapter D Solutions
MANAGERIAL ACCOUNTING W/CONNECT
- During 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_forwardB. Kelso established Computer Wizards during November of this year. The accountant prepared the following chart of accounts: The following transactions occurred during the month: a. Kelso deposited 45,000 in a bank account in the name of the business. b. Paid the rent for the current month, 1,800, Ck. No. 2001. c. Bought office desks and filing cabinets for cash, 790, Ck. No. 2002. d. Bought a computer and printer from Cyber Center for use in the business, 2,700, paying 1,700 in cash and placing the balance on account, Ck. No. 2003. e. Bought a neon sign on account from Signage Co., 1,350. f. Kelso invested her personal computer software with a fair market value of 600 in the business. g. Received a bill from Country News for newspaper advertising, 365. h. Sold services for cash, 1,245. i. Received and paid the electric bill, 345, Ck. No. 2004. j. Paid on account to Country News, a creditor, 285, Ck. No. 2005. k. Sold services for cash, 1,450. l. Paid wages to an employee, 925, Ck. No. 2006. m. Received and paid the bill for the city business license, 75, Ck. No. 2007. n. Kelso withdrew cash for personal use, 850, Ck. No. 2008. o. Kelso withdrew cash for personal use, 850, Ck. No. 2008. 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 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, with a three-line heading, dated November 30, 20--.arrow_forwardA 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_forward
- 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_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
- P. Schwartz, Attorney at Law, opened his office on October 1. The account headings are presented below. Transactions completed during the month follow. a. Schwartz deposited 25,000 in a bank account in the name of the business. b. Bought office equipment on account from QuipCo, 9,670. c. Schwartz invested his personal law library, which cost 2,800. d. Paid the office rent for the month, 1,700, Ck. No. 2000. e. Bought office supplies for cash, 418, Ck. No. 2001. f. Bought insurance for two years, 944, Ck. No. 2002. g. Sold legal services for cash, 8,518. h. Paid the salary of the part-time receptionist, 1,820, Ck. No. 2003. i. Received and paid the telephone bill, 388, Ck. No. 2004. j. Received and paid the bill for utilities, 368, Ck. No. 2005. k. Sold legal services for cash, 9,260. l. Paid on account to QuipCo, 2,670, Ck. No. 2006. m. Schwartz withdrew cash for personal use, 2,500, Ck. No. 2007. 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_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 (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_forwardOn June 1 of this year, J. Larkin, Optometrist, established the Larkin Eye Clinic. The clinics account names are presented below. Transactions completed during the month follow. a. Larkin deposited 25,000 in a bank account in the name of the business. b. Paid the office rent for the month, 950, Ck. No. 1001. c. Bought supplies for cash, 357, Ck. No. 1002. d. Bought office equipment on account from NYC Office Equipment Store, 8,956. e. Bought a computer from Wardens Office Outfitters, 1,636, paying 750 in cash and placing the balance on account, Ck. No. 1003. f. f. Sold professional services for cash, 3,482. g. Paid on account to Wardens Office Outfitters, 886, Ck. No. 1004. h. Received and paid the bill for utilities, 382, Ck. No. 1005. i. Paid the salary of the assistant, 1,050, Ck. No. 1006. j. Sold professional services for cash, 3,295. k. Larkin withdrew cash for personal use, 1,250, Ck. No. 1007. 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: 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_forwardS. Davis, a graphic artist, opened a studio for her professional practice on August 1. The account headings are presented below. Transactions completed during the month follow. a. Davis deposited 20,000 in a bank account in the name of the business. b. Bought office equipment on account from Starkey Equipment Company, 4,120. c. Davis invested her personal photographic equipment, 5,370, in the business. d. Paid the rent for the month, 1,500, Ck. No. 1000. e. Bought supplies for cash, 215, Ck. No. 1001. f. Bought insurance for two years, 1,840, Ck. No. 1002. g. Sold graphic services for cash, 3,616. h. Paid the salary of the part-time assistant, 982, Ck. No. 1003. i. Received and paid the bill for telephone service, 134, Ck. No. 1004. j. Paid cash for minor repairs to graphics equipment, 185, Ck. No. 1005. k. Sold graphic services for cash, 3,693. l. Paid on account to Starkey Equipment Company, 650, Ck. No. 1006. m. Davis withdrew cash for personal use, 1,800, Ck. No. 1007. 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_forward
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