FINANCIAL ACCOUNTING ACCT 2301 >IC<
FINANCIAL ACCOUNTING ACCT 2301 >IC<
5th Edition
ISBN: 9781259690457
Author: Wild
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Chapter 2, Problem 2BP

1.

To determine

Prepare the journal entries for the given transactions.

1.

Expert Solution
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Explanation of Solution

Journal entry:

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:

DateAccount Title and ExplanationPost Ref. Debit
($)
 Credit
($)
a.Cash10165,000
Office Equipment1635,750
Computer Equipment1643,000
Common Stock307100,750
(To record owner invested cash and equipment for stock)
b.Land17222,000
Cash1015,000
Notes Payable25017,000
(To record purchase of  land in cash and on note payable)
c.Building17034,500
Cash10134,500
(To record building purchased in cash)
d.Prepaid Insurance1085,000
Cash1015,000
(To record 24-month insurance policy purchased in cash)
e.Cash1014,600
Fees Earned4024,600
(To record  fees earned from customer)
f.Computer Equipment1644,500
Cash101800
Notes Payable2503,700
(To record purchase of computer equipment in cash and on note payable)
g.Accounts Receivable1064,250
Fees Earned402.4,250
(To record service performed on account)
h.Office Equipment163950
Accounts Payable201950
(To record equipment purchased on credit)
i.Accounts Receivable10610,200
Fees Earned40210,200
(To record service performed on account)
j.Computer Rental Expense602580
Accounts Payable201580
(To record computer rental expense on account)
k.Cash1015,100
Accounts Receivable1065,100
(To record cash received from credit customer)
l.Wages Expense6011,800
Cash1011,800
(To record wages expense paid in cash)
m.Accounts Payable201950
Cash101950
(To cash paid to supplier)
n.Repairs Expense604608
Cash101608
(To record repair expense paid in cash)
o.Dividends3196,230
Cash1016,230
(To record dividend paid to investors)
p.Wages Expense6011,800
Cash1011,800
(To record  assistant’s wages paid in cash)
q.Advertising Expense603750
Cash101750
(To record advertising expense paid in cash)

Table (1)

2.

To determine

Post the journal entries to the general ledger accounts.

2.

Expert Solution
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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
DatePR

Debit

($)

Credit
($)
Balance
 ($)
(a)65,00065,000
(b)5,00060,000
(c)34,50025,500
(d)5,00020,500
(e)4,60025,100
(f)80024,300
(k)5,10029,400
(l)1,80027,600
(m)95026,650
(n)60826,042
(o)6,23019,812
(p)1,80018,012
(q)75017,262
Accounts Receivable No. 106
DatePR

Debit

($)

Credit
($)
Balance
 ($)
(g)4,2504,250
(i)10,20014,450
(k)5,1009,350
Prepaid Insurance No. 108
DatePR

Debit

($)

Credit
($)
Balance
 ($)
(d)5,0005,000
Office Equipment No. 163
DatePR

Debit

($)

Credit
($)
Balance
 ($)
(a)5,7505,750
(h)9506,700
Computer Equipment No. 164
DatePR

Debit

($)

Credit
($)
Balance
 ($)
(a)30,00030,000
(f)4,50034,500
Building No. 170
DatePR

Debit

($)

Credit
($)
Balance
 ($)
(c)34,50034,500
Land No. 172
DatePRDebit
($)
Credit
($)
Balance
 ($)
(b)22,00022,000
Accounts Payable No. 201
DatePRDebit
($)
Credit
($)
Balance
 ($)
(h)950950
(j)5801,530
(m)950580
Notes Payable No. 250
DatePRDebit
($)
Credit
($)
Balance
 ($)
(b)17,00017,000
(f)3,70020,700
Common Stock No. 307
DatePRDebit
($)
Credit
($)
Balance
 ($)
(a)100,750100,750
Dividends No. 319
DatePRDebit
($)
Credit
($)
Balance
 ($)
(o)6,2306,230
Fees Earned No. 402
DatePRDebit
($)
Credit
($)
Balance
 ($)
(e)4,6004,600
(g)4,2508,850
(i)10,20019,050
Wages Expense No. 601
DatePRDebit
($)
Credit
($)
Balance
 ($)
(l)1,8001,800
(p)1,8003,600
Computer  Rental Expense No. 602
DatePRDebit
($)
Credit
($)
Balance
 ($)
(j)580580
Advertising Expense No. 603
DatePRDebit
($)
Credit
($)
Balance
 ($)
(q)750750
Repairs Expense No. 604
DatePRDebit
($)
Credit
($)
Balance
 ($)
(n)608608

3.

To determine

Prepare a trial balance as of the end of April.

3.

Expert Solution
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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 ledger postings and helps preparing the final accounts.

Prepare a trial balance as of the end of April as follows:

Company S
Trial Balance
April 30
ParticularsDebit ($)Credit ($)
Cash17,262
Accounts receivable9,350
Prepaid insurance5,000
Office equipment6,700
Computer equipment34,500
Building34,500
Land22,000
Accounts payable580
Notes payable20,700
Common stock100,750
Dividends6,230
Fees earned19,050
Wages expense3,600
Computer rental expense580
Advertising expense750
Repairs expense608
Totals141,080141,080

Table (2)

Therefore, the total of debit, and credit columns of a trial balance is $141,080 and agree.

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