(2) and (3)
Journal:
Journal is the book of original entry. Journal consists of the day today financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.
Rules of debit and credit:
“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.
Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.
T-account:
An account is referred to as a T-account, because the alignment of the components of the account resembles the capital letter ‘T’. An account consists of the three main components which are as follows:
- The title of the account
- The left or debit side
- The right or credit side
Unadjusted
The unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts before making
To journalize: The transactions of July in a two column journal beginning on page 1.
(2) and (3)
Explanation of Solution
Journalize the transactions of July in a two column journal beginning on page 1.
Journal Page 1 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
2016 | Cash | 11 | 5,000 | ||
July | 1 | Common stock | 31 | 5,000 | |
(To record the exchange of common stock ) | |||||
1 | Office rent expense | 51 | 1,750 | ||
Cash | 11 | 1,750 | |||
(To record the payment of rent for the month of July) | |||||
1 | Prepaid insurance | 15 | 2,700 | ||
Cash | 11 | 2,700 | |||
(To record the payment of insurance premium) | |||||
2 | Cash | 11 | 1,000 | ||
|
12 | 1,000 | |||
(To record the receipt of cash from customers) | |||||
3 | Cash | 11 | 7,200 | ||
Unearned revenue | 23 | 7,200 | |||
(To record the cash received for the service yet to be provide) | |||||
3 | Accounts payable | 21 | 250 | ||
Cash | 11 | 250 | |||
(To record the payment made to creditors on account) | |||||
4 | Miscellaneous expense | 59 | 900 | ||
Cash | 11 | 900 | |||
(To record the payment made for Miscellaneous expense) | |||||
5 | Office equipment | 17 | 7,500 | ||
Accounts payable | 21 | 7,500 | |||
(To record the purchase of equipment on account) | |||||
8 | Advertising expense | 55 | 200 | ||
Cash | 11 | 200 | |||
(To record the payment of advertising expense) | |||||
11 | Cash | 11 | 1,000 | ||
Fees earned | 41 | 1,000 | |||
(To record the receipt of cash) | |||||
13 | Equipment rent expense | 52 | 700 | ||
Cash | 11 | 700 | |||
(To record the payment made to equipment) | |||||
14 | Wages expense | 50 | 1,200 | ||
Cash | 11 | 1,200 | |||
(To record the payment of wages) |
Table (1)
Journal Page 2 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
2016 | 16 | Cash | 11 | 2,000 | |
July | Fees earned | 41 | 2,000 | ||
(To record the receipt of cash) | |||||
18 | Supplies | 14 | 850 | ||
Accounts payable | 21 | 850 | |||
(To record the purchase of supplies) | |||||
21 | Music expense | 54 | 620 | ||
Cash | 11 | 620 | |||
(To record the payment incurred for music) | |||||
22 | Advertising expense | 55 | 800 | ||
Cash | 11 | 800 | |||
(To record the payment of advertising expense) | |||||
23 | Cash | 11 | 750 | ||
Accounts receivable | 12 | 1,750 | |||
Fees earned | 41 | 2,500 | |||
(To record the receipt of cash for the service performed party for cash and party on account) | |||||
27 | Utilities expense | 53 | 915 | ||
Cash | 11 | 915 | |||
(To record the payment of electricity) | |||||
28 | Wages expense | 50 | 1,200 | ||
Cash | 11 | 1,200 | |||
(To record the payment made for salary and commission expense) | |||||
29 | Miscellaneous expense | 59 | 540 | ||
Cash | 11 | 540 | |||
(To record the revenue earned and billed) | |||||
30 | Cash | 11 | 500 | ||
Accounts receivable | 12 | 1,000 | |||
Fees earned | 41 | 1,500 | |||
(To record the purchase of land party for cash and party on signing a note) | |||||
31 | Cash | 11 | 3,000 | ||
Fees earned | 41 | 3,000 | |||
(To record the receipt of cash) | |||||
31 | Music expense | 54 | 1,400 | ||
Cash | 11 | 620 | |||
(To record the payment incurred for music) | |||||
31 | Dividends | 33 | 1,250 | ||
Cash | 11 | 1,250 | |||
(To record the withdrawal of cash for personal use) |
Table (2)
(1) and (3)
To record: The balance of each accounts in the appropriate balance column of a four-column account and post them to the ledger.
(1) and (3)
Explanation of Solution
Account: Cash Account no. 11 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 3,920 | |||
1 | 1 | 5,000 | 8,920 | ||||
1 | 1 | 1,750 | 7,170 | ||||
1 | 1 | 2,700 | 4,470 | ||||
2 | 1 | 1,000 | 5,470 | ||||
3 | 1 | 7,200 | 12,670 | ||||
3 | 1 | 250 | 12,420 | ||||
4 | 1 | 900 | 11,520 | ||||
8 | 1 | 200 | 11,320 | ||||
11 | 1 | 1,000 | 12,320 | ||||
13 | 1 | 700 | 11,620 | ||||
14 | 1 | 1,200 | 10,420 | ||||
16 | 2 | 2,000 | 12,420 | ||||
21 | 2 | 620 | 11,800 | ||||
22 | 2 | 800 | 11,000 | ||||
23 | 2 | 750 | 11,750 | ||||
27 | 2 | 915 | 10,835 | ||||
28 | 2 | 1,200 | 9,635 | ||||
29 | 2 | 540 | 9,095 | ||||
30 | 2 | 500 | 9,595 | ||||
31 | 2 | 3,000 | 12,595 | ||||
31 | 2 | 1,400 | 11,195 | ||||
31 | 2 | 1,250 | 9,945 |
Table (3)
Account: Accounts Receivable Account no. 12 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 1,000 | |||
2 | 1 | 1,000 | – | – | |||
23 | 2 | 1,750 | 1,750 | ||||
30 | 2 | 1,000 | 2,750 |
Table (4)
Account: Supplies Account no. 14 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 170 | |||
18 | 2 | 850 | 1,020 |
Table (5)
Account: Prepaid Insurance Account no. 15 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 | 1 | 2,700 | 2,700 |
Table (6)
Account: Office equipment Account no. 17 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 5 | 1 | 7,500 | 7,500 |
Table (7)
Account: Accounts Payable Account no. 21 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 250 | |||
3 | 1 | 250 | – | – | |||
5 | 1 | 7,500 | 7,500 | ||||
18 | 2 | 850 | 8,350 |
Table (8)
Account: Unearned Revenue Account no. 23 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 3 | 1 | 7,200 | 7,200 |
Table (9)
Account: Common stock Account no. 31 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 4000 | |||
1 | 1 | 5,000 | 9,000 |
Table (10)
Account: Dividends Account no. 33 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 500 | |||
31 | 2 | 1,250 | 1,750 |
Table (11)
Account: Fees earned Account no. 41 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 6,200 | |||
11 | 1 | 1,000 | 7,200 | ||||
16 | 2 | 2,000 | 9,200 | ||||
23 | 2 | 2,500 | 11,700 | ||||
30 | 2 | 1,500 | 13,200 | ||||
31 | 2 | 3,000 | 16,200 |
Table (12)
Account: Wages expense Account no. 50 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 400 | |||
14 | 1 | 1,200 | 1,600 | ||||
28 | 2 | 1,200 | 2,800 |
Table (13)
Account: Office rent expense Account no. 51 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 800 | |||
1 | 1 | 1,750 | 2,550 |
Table (14)
Account: Equipment rent expense Account no. 52 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 675 | |||
13 | 1 | 700 | 1,375 |
Table (15)
Account: Utility expense Account no. 53 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 300 | |||
27 | 2 | 915 | 1,215 |
Table (16)
Account: Music expense Account no. 54 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 1,590 | |||
21 | 2 | 620 | 2,210 | ||||
31 | 2 | 1,400 | 3,610 |
Table (17)
Account: Advertising expense Account no. 55 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 500 | |||
8 | 1 | 200 | 700 | ||||
22 | 2 | 800 | 1,500 |
Table (18)
Account: Supplies expense Account no. 56 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 180 |
Table (19)
Account: Miscellaneous expense Account no. 59 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
July | 1 |
|
✓ | 415 | |||
4 | 1 | 900 | 1,315 | ||||
29 | 2 | 540 | 1,855 |
Table (20)
(4)
To prepare: An unadjusted trial balance of Company PS Music at July 31, 2016.
(4)
Explanation of Solution
Prepare an unadjusted trial balance of Company PS Music at July 31, 2016 as follows:
PS Music Unadjusted Trial Balance July 31, 2016 |
|||
Particulars | Account No. |
Debit $ | Credit $ |
Cash | 11 | 9,945 | |
Accounts receivable | 12 | 2,750 | |
Supplies | 14 | 1,020 | |
Prepaid insurance | 15 | 2,700 | |
Office Equipment | 17 | 7,500 | |
Accounts payable | 21 | 8,350 | |
Unearned revenue | 23 | 7,200 | |
Common Stock | 31 | 9,000 | |
Dividends | 33 | 1,750 | |
Fees earned | 41 | 16,200 | |
Wages expense | 50 | 2,800 | |
Office Rent expense | 51 | 2,550 | |
Equipment Rent expense | 52 | 1,375 | |
Utilities expense | 53 | 1,215 | |
Music expense | 54 | 3,610 | |
Advertising expense | 55 | 1,500 | |
Supplies expense | 56 | 180 | |
Miscellaneous expense | 59 | 1,855 | |
Total | 40,750 | 40,750 |
Table (21)
The debit column and credit column of the unadjusted trial balance are agreed, both having balance of $40,750.
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Chapter 2 Solutions
FINANCIAL+MANG.-W/ACCESS PRACTICE SET
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