Concept explainers
1.
Prepare the journal entries for the given transactions.
1.
Explanation of Solution
Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and equities.
- Credit, all increase in liabilities, revenues, and equities, all decrease in assets, and expenses.
Prepare the journal entries for the given transactions as follows:
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) | |
a. | Cash | 101 | 65,000 | ||
Office Equipment | 163 | 5,750 | |||
Computer Equipment | 164 | 3,000 | |||
Common Stock | 307 | 100,750 | |||
(To record owner invested cash and equipment for stock) | |||||
b. | Land | 172 | 22,000 | ||
Cash | 101 | 5,000 | |||
Notes Payable | 250 | 17,000 | |||
(To record purchase of land in cash and on note payable) | |||||
c. | Building | 170 | 34,500 | ||
Cash | 101 | 34,500 | |||
(To record building purchased in cash) | |||||
d. | Prepaid Insurance | 108 | 5,000 | ||
Cash | 101 | 5,000 | |||
(To record 24-month insurance policy purchased in cash) | |||||
e. | Cash | 101 | 4,600 | ||
Fees Earned | 402 | 4,600 | |||
(To record fees earned from customer) | |||||
f. | Computer Equipment | 164 | 4,500 | ||
Cash | 101 | 800 | |||
Notes Payable | 250 | 3,700 | |||
(To record purchase of computer equipment in cash and on note payable) | |||||
g. | 106 | 4,250 | |||
Fees Earned | 402 | . | 4,250 | ||
(To record service performed on account) | |||||
h. | Office Equipment | 163 | 950 | ||
Accounts Payable | 201 | 950 | |||
(To record equipment purchased on credit) | |||||
i. | Accounts Receivable | 106 | 10,200 | ||
Fees Earned | 402 | 10,200 | |||
(To record service performed on account) | |||||
j. | Computer Rental Expense | 602 | 580 | ||
Accounts Payable | 201 | 580 | |||
(To record computer rental expense on account) | |||||
k. | Cash | 101 | 5,100 | ||
Accounts Receivable | 106 | 5,100 | |||
(To record cash received from credit customer) | |||||
l. | Wages Expense | 601 | 1,800 | ||
Cash | 101 | 1,800 | |||
(To record wages expense paid in cash) | |||||
m. | Accounts Payable | 201 | 950 | ||
Cash | 101 | 950 | |||
(To cash paid to supplier) | |||||
n. | Repairs Expense | 604 | 608 | ||
Cash | 101 | 608 | |||
(To record repair expense paid in cash) | |||||
o. | Dividends | 319 | 6,230 | ||
Cash | 101 | 6,230 | |||
(To record dividend paid to investors) | |||||
p. | Wages Expense | 601 | 1,800 | ||
Cash | 101 | 1,800 | |||
(To record assistant’s wages paid in cash) | |||||
q. | Advertising Expense | 603 | 750 | ||
Cash | 101 | 750 | |||
(To record advertising expense paid in cash) |
Table (1)
2.
Post the journal entries to the general ledger accounts.
2.
Explanation of Solution
Posting transactions:
The process of transferring the journalized transactions into the accounts of the ledger is known as posting the transactions.
Post the journal entries to the general ledger accounts as follows:
Cash No. 101 | ||||
Date | PR |
Debit ($) | Credit ($) | Balance ($) |
(a) | 65,000 | 65,000 | ||
(b) | 5,000 | 60,000 | ||
(c) | 34,500 | 25,500 | ||
(d) | 5,000 | 20,500 | ||
(e) | 4,600 | 25,100 | ||
(f) | 800 | 24,300 | ||
(k) | 5,100 | 29,400 | ||
(l) | 1,800 | 27,600 | ||
(m) | 950 | 26,650 | ||
(n) | 608 | 26,042 | ||
(o) | 6,230 | 19,812 | ||
(p) | 1,800 | 18,012 | ||
(q) | 750 | 17,262 |
Accounts Receivable No. 106 | ||||
Date | PR |
Debit ($) | Credit ($) | Balance ($) |
(g) | 4,250 | 4,250 | ||
(i) | 10,200 | 14,450 | ||
(k) | 5,100 | 9,350 |
Prepaid Insurance No. 108 | ||||
Date | PR |
Debit ($) | Credit ($) | Balance ($) |
(d) | 5,000 | 5,000 |
Office Equipment No. 163 | ||||
Date | PR |
Debit ($) | Credit ($) | Balance ($) |
(a) | 5,750 | 5,750 | ||
(h) | 950 | 6,700 |
Computer Equipment No. 164 | ||||
Date | PR |
Debit ($) | Credit ($) | Balance ($) |
(a) | 30,000 | 30,000 | ||
(f) | 4,500 | 34,500 |
Building No. 170 | ||||
Date | PR |
Debit ($) | Credit ($) | Balance ($) |
(c) | 34,500 | 34,500 |
Land No. 172 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(b) | 22,000 | 22,000 |
Accounts Payable No. 201 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(h) | 950 | 950 | ||
(j) | 580 | 1,530 | ||
(m) | 950 | 580 |
Notes Payable No. 250 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(b) | 17,000 | 17,000 | ||
(f) | 3,700 | 20,700 |
Common Stock No. 307 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(a) | 100,750 | 100,750 |
Dividends No. 319 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(o) | 6,230 | 6,230 |
Fees Earned No. 402 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(e) | 4,600 | 4,600 | ||
(g) | 4,250 | 8,850 | ||
(i) | 10,200 | 19,050 |
Wages Expense No. 601 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(l) | 1,800 | 1,800 | ||
(p) | 1,800 | 3,600 |
Computer Rental Expense No. 602 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(j) | 580 | 580 |
Advertising Expense No. 603 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(q) | 750 | 750 |
Repairs Expense No. 604 | ||||
Date | PR | Debit ($) | Credit ($) | Balance ($) |
(n) | 608 | 608 |
3.
Prepare a
3.
Explanation of Solution
Trial balance:
Trial balance is a summary of all the ledger accounts balances presented in a tabular form with two column, debit and credit. It checks the mathematical accuracy of the
Prepare a trial balance as of the end of April as follows:
Company S | ||
Trial Balance | ||
April 30 | ||
Particulars | Debit ($) | Credit ($) |
Cash | 17,262 | |
Accounts receivable | 9,350 | |
Prepaid insurance | 5,000 | |
Office equipment | 6,700 | |
Computer equipment | 34,500 | |
Building | 34,500 | |
Land | 22,000 | |
Accounts payable | 580 | |
Notes payable | 20,700 | |
Common stock | 100,750 | |
Dividends | 6,230 | |
Fees earned | 19,050 | |
Wages expense | 3,600 | |
Computer rental expense | 580 | |
Advertising expense | 750 | |
Repairs expense | 608 | |
Totals | 141,080 | 141,080 |
Table (2)
Therefore, the total of debit, and credit columns of a trial balance is $141,080 and agree.
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