Concept explainers
1.
Pass the journal entries as on July 1.
1.
Explanation of Solution
Debit: A debit, is an accounting term that refers to the left side of an account. The term debit is be denoted by (Dr). The recording amount on the left side of the account is known as debiting.
Credit: A credit, is an accounting term that refers to the right side of an account. The term credit is denoted as (Cr). The recording amount on the right side of the account is known as crediting.
Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all the increase in the assets, the expenses and the dividends, all the decrease in liabilities, revenues and the stockholders’ equities.
- Credit, all the increase in the liabilities, the revenues, and the stockholders’ equities, and all decreases in the assets, and the expenses.
Pass the journal entries for the given transactions:
General Journal | Page - 1 | |||
Date | Description | Post Ref. | Debit | Credit |
2019 | ||||
July 1 | Prepaid Rent | $14,400 | ||
Cash | $14,400 | |||
(To record the rent paid in advance with check 101) | ||||
July 1 | Cash | $32,928 | ||
Prepaid Interest | $672 | |||
Notes Payable | $33,600 | |||
(To record the interest paid in advance) |
Table (1)
General Journal | Page - 1 | |||
Date | Description | Post Ref. | Debit | Credit |
2019 | ||||
July 1 | Cash | $81,600 | ||
Unearned Accounting Fee | $81,600 | |||
(To record the fees received in advance) | ||||
July 1 | Office Equipment | $20,400 | ||
Notes Payable | $20,400 | |||
(To record equipment purchased on account) | ||||
July 1 | Prepaid Insurance | $1,716 | ||
Cash | $1,716 | |||
(To record insurance paid in advance using the check 102) | ||||
July 3 | Office Furniture | $23,200 | ||
Cash | $13,400 | |||
Accounts payable | $9,800 | |||
(To record furniture purchased on account after making a part payment using the check 103) | ||||
July 5 | Supplies | $1,970 | ||
Cash | $1,970 | |||
(To record the purchase of supplies using the check 104) |
Table (2)
2.
Pass the
2.
Explanation of Solution
Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and
Pass the adjusting entries for the given transactions:
General Journal | Page - 2 | |||
Date | Description | Post Ref. | Debit | Credit |
2019 | ||||
July 31 | Rent expense | $2,400 | ||
Prepaid Rent | $2,400 | |||
(To record the prepaid rent) | ||||
July 31 | Interest expense | $168 | ||
Prepaid Interest | $168 | |||
(To record the prepaid interest) | ||||
July 31 | Unearned Accounting Fees | $6,800 | ||
Accounting Fees | $6,800 | |||
(To record the Accounting fees earned) | ||||
July 31 | Interest expense | $153 | ||
Interest Payable | $153 | |||
(To record the interest payable) | ||||
July 31 | $380 | |||
$380 | ||||
(To record the depreciation on equipment) | ||||
July 31 | Insurance expense | $143 | ||
Prepaid Insurance | $143 | |||
(To record the prepaid insurance) |
Table (3)
General Journal | Page - 2 | |||
Date | Description | Post Ref. | Debit | Credit |
2019 | ||||
July 31 | Depreciation Expense - Office Furniture | $300 | ||
Accumulated Depreciation - Office Furniture | $300 | |||
(To record the depreciation on furniture) | ||||
July 31 | Supplies Expense | $1,090 | ||
Supplies | $1,090 | |||
(To record the supplies) |
Table (4)
The Unearned Accounting Fees Account shows a balance of $74,800 at the end of the month.
Working note:
Calculate the Unearned Accounting Fees:
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