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 3BP

1.

To determine

Prepare journal entries to record the given transaction.

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 stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

Prepare journal entries to record the given transaction of Company Z as follows:

Journal
DateAccount Title and ExplanationPostDebitCredit
Ref.($)($)
November  1Cash10130,000
Office Equipment16315,000
Common Stock30745,000
(To record the amount invested on equipment in exchange of stock.)
November  2Prepaid Rent1314,500
Cash1014,500
(To record the rent paid in advance)
November  4Office Equipment1632,500
Office Supplies124600
Accounts Payable2013,100
(To record the Purchase of equipment & supplies on credit.)
November  8Cash1013,400
Services Revenue4033,400
(To record receipt of cash for the service performed)
November  12Accounts Receivable10610,200
Services Revenue40310,200
(To record the service performed on account)
November  13Accounts Payable2013,100
Cash1013,100
(To record the payment made for the balance due on account)
November  19Prepaid Insurance1281,800
Cash1011,800
(To record Payment of premium for insurance)
November  22Cash1015,200
Accounts Receivable1065,200
(To record the cash received on account)
November  24Accounts Receivable1061,750
Services Revenue4031,750
(To record the service performed on account.)
November  28Dividends3195,300
Cash1015,300
(To record the payment of cash  dividends)
November  29Office Supplies124249
Accounts Payable201249
(To record the purchase of supplies on account)
November  30Utilities Expense690831
Cash101831
(To record the utility bill incurred)

Table (1)

2.

To determine

Post the journal entries from Part 1 to their respective 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.

CashAccount. No. 101
DatePR    Debit    CreditBalance
November  1G130,000 30,000
2G1    4,50025,500
8G13,40028,900
13G1 3,10025,800
19G1 1,80024,000
22G15,20029,200
28G1 5,30023,900
30G1 83123,069
Accounts ReceivableAccount. No. 106
DatePR    Debit    CreditBalance
November  12G110,20010,200
22G15,2005,000
24G11,7506,750
Office SuppliesAccount. No. 124
DatePR    Debit    CreditBalance
November  4G1600600
29G1249849
Prepaid InsuranceAccount. No. 128
DatePR    Debit    CreditBalance
November  19G11,800 1,800
Prepaid RentAccount. No. 131
DatePR    Debit    CreditBalance
November  2G14,500 4,500
Office EquipmentAccount. No. 163
DatePR    Debit    CreditBalance
November  1G115,000 15,000
4G12,500 17,500
Accounts payableAccount. No. 201
DatePR    Debit    CreditBalance
November 4G1 3,1003,100
13G13,100 0
29G1 249249
Common stockAccount. No. 307
DatePR    Debit    CreditBalance
November  1G1 45,00045,000
DividendsAccount. No. 319
DatePR    Debit    CreditBalance
November  28G15,300 5,300
Service revenueAccount. No. 403
DatePR    Debit    CreditBalance
November  8G1 3,4003,400
12G1 10,20013,600
24G1 1,75015,350
Utilities expensesAccount. No. 690
DatePR    Debit    CreditBalance
November  30G1831831

Table (2)

3.

To determine

Prepare a trial balance of Company Z as of November 30.

3.

Expert Solution
Check Mark

Explanation of Solution

Trial balance:

Trial balance is a summary of all the asset, liability, and equity accounts and their balances.

Company Z
Trial Balance
November  31
ParticularsDebit ($) Credit ($)
Cash$23,069
Accounts receivable6,750
Office supplies849
Prepaid insurance1,800
Prepaid rent4,500
Office equipment17,500
Accounts payable$249
Common stock45,000
Dividends5,300
Services revenue15,350
Utilities expense831
Totals$60,599$60,599

Table (3)

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