Concept explainers
Journalizing transactions, posting
Timothy Monroe opened a law office on January 1, 2017. During the first month of operations, the business completed the following transactions:
Jan. 1 | Monroe contributed $62,000 cash to the business, Timothy Monroe, Attorney. The business issued common stock to Monroe. |
3 | Purchased office supplies, $500, and furniture, $2,000, on account. |
4 | Performed legal services for a client and received $1,600 cash. |
7 | Purchased a building with a market value of $70,000, and land with a market value of $29,000. The business paid $35,000 cash and signed a note payable to the bank for the remaining amount. |
11 | Prepared legal documents for a client on account, $300. |
15 | Paid assistant’s semimonthly salary, $1,180. |
16 | Paid for the office supplies purchased on January 3 on account. |
18 | Received $2,000 cash for helping a client sell real estate. |
19 | Defended a client in court and billed the client for $1,400. |
25 | Received a bill for utilities, $550. The bill will be paid next month. |
29 | Received cash on account, $700. |
30 | Paid $840 cash for a 12-month insurance policy starting on February 1. |
30 | Paid assistant’s semimonthly salary, $1,180. |
31 | Paid monthly rent expense, $1,300. |
31 | Paid cash dividends of $2,900. |
Requirements
1. Record each transaction in the journal, using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Building; Land; Accounts Payable; Utilities Payable; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanation s are not required.
2. Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Furniture, 141; Building, 151; Land, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.
3. Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal references, and posting references. Assume the journal entries were recorded on page 1 of the journal.
4. Prepare the trial balance of Timothy Monroe, Attorney, at January 3 1, 2017.
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Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
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