Nuncio Consulting complete the following transactions during June.
- Armand Nuncio, the owner, invested $35,000 cash along with office equipment valued at $11,000 in the new company in exchange for common stock.
- The company purchased land valued at $7,500 and a building valued at $40,000. The purchase is paid with $15,000 cash and a long−term note payable for $32,500.
- The company purchased $500 of office supplies on credit.
- Nuncio invested his personal automobile in the company in exchange for more common stock. The automobile has a value of $8,000 and is to be used exclusively in the business.
- The company purchased $1,200 of additional office equipment on credit.
- The company paid $1,000 cash salary to an assistant.
- The company provided services to a client and collected $3,200 cash.
- The company paid $540 cash for this month’s utilities.
- The company paid $500 cash to settle the payable created in transaction c.
- The company purchased $3,400 of new office equipment by paying $3,400 cash.
- The company completed $4,200 of services for a client, who must pay within 30 days.
- The company paid $1,000 cash salary to an assistant.
- The company received $2,200 cash in partial payment on the receivable created in transaction k.
- The company paid $1,000 cash in dividends.
Required
- Prepare general
journal entries to record these transactions (use account titles listed in part 2). - Open the following ledger accounts−their account numbers are in parentheses (use the balance column format:) Cash (101);
Accounts Receivable (106); Office Equipment (163); Automobiles (164); Building (170); Land (172); Account Payable (201); Notes Payable (250); Common Stock (307); Dividends (319); Fees Earned (402); Salaries Expense (601); and Utilities Expense (602).Post the journal entries from part 1 to the ledger accounts and enter the balance after each posting. - Prepare a
trial balance as of the end of June.
1.
Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.
To prepare: The general journal entries for the following transaction.
Explanation of Solution
Journal entries of KT for the month of April are shown below.
Date | Particular | PR | Dr. ($) | Cr. ($) |
a. | Cash | 101 | 35,000 | |
Computer equipment | 163 | 11,000 | ||
To Common stock | 307 | 46,000 | ||
(Owner’s investment) | ||||
b. | Land | 172 | 7,500 | |
Building | 170 | 40,000 | ||
Cash | 101 | 15,000 | ||
Note payable | 250 | 32,500 | ||
(To record land and building purchase) | ||||
c. | Office supplies | 108 | 500 | |
Accounts payable | 201 | 500 | ||
(To record office supplies purchase) | ||||
d. | Automobile | 164 | 8,000 | |
Common stock | 307 | 8,000 | ||
(To record automobile invested by owner) | ||||
e. | Office equipment | 163 | 1,200 | |
Account payable | 201 | 1,200 | ||
(to record office equipment purchase) | ||||
f. | Salaries Expense | 601 | 1000 | |
Cash | 101 | 1000 | ||
(To record salaries paid) | ||||
g. | Cash | 101 | 3200 | |
Fees earned | 402 | 3200 | ||
(To record fees earned) | ||||
h. | Utilities Expense | 602 | 540 | |
Cash | 101 | 540 | ||
(to record utilities expense) | ||||
i. | Account payable | 201 | 500 | |
Cash | 101 | 500 | ||
(To record cash paid to accounts payable) | ||||
j. | Office equipment | 163 | 3400 | |
Cash | 101 | 3400 | ||
(to record office equipment purchase) | ||||
k. | Account receivable | 106 | 4200 | |
Fees Earned | 402 | 4200 | ||
(to record fees earned) | ||||
l. | Salaries Expense | 601 | 1000 | |
Cash | 101 | 1000 | ||
(to record salaries paid) | ||||
m. | Cash | 101 | 2200 | |
Accounts Receivable | 106 | 2200 | ||
(to record cash received from account receivable) | ||||
n. | Dividends | 319 | 1100 | |
Cash | 101 | 1100 | ||
(to record dividend paid) | ||||
2.
Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.
To prepare: T account for the following transactions.
Answer to Problem 4PSB
Balance of T account for cash $17,860, account receivable$2000, automobile $8000, office equipment$2000, Building $40,000, office supplies $500, note payable $32,500, Account payable $1200, utilities $540, Common stock $54,000, dividend $1100, fees earned 7400, salaries expense$ 2000, Land $7500
Explanation of Solution
Cash Account No.101 | ||||
Date | PR | Debit($) | Credit($) | Balance($) |
a. | 35,000 | |||
b. | 15,000 | |||
f. | 1000 | |||
g. | 3200 | |||
h. | 540 | |||
i. | 500 | |||
j. | 3400 | |||
l. | 1000 | |||
m. | 2200 | |||
M | 1100 | 17860 |
Automobile | Account no. 124 | |||
Date | PR | Debit | Credit | Balance |
d. | 8000 | 8000 | ||
Account receivable | Account no.106 | |||
Date | PR | Debit | Credit | Balance |
k. | 4200 | 2200 | 2000 | |
Office equipment | Account no. 163 | |||
Date | PR | Debit | Credit | Balance |
a. | 11,000 | |||
e. | 1200 | |||
j. | 3400 | 15,600 |
Building | Account no. 170 | |||
Date | PR | Debit | Credit | Balance |
b. | 40000 | 40,000 | ||
Office supplies | Account no. 124 | |||
Date | PR | Debit | Credit | Balance |
b. | 500 | 500 | ||
Account payable | Account no. 201 | |||
Date | PR | Debit | Credit | Balance |
c. | 500 | |||
i. | 500 | |||
e. | 1200 | 1200 |
Note payable | Account no. 170 | |||
Date | PR | Debit | Credit | Balance |
b. | 32,500 | 32,500 | ||
Common Stock | Account no. 307 | |||
Date | PR | Debit | Credit | Balance |
a. | 46,000 | 46,000 | ||
d. | 8000 | 54,000 |
Utilities | Account no. 307 | |||
Date | PR | Debit | Credit | Balance |
h. | 540 | 540 | ||
Service Expense | Account no. 601 | |||
Date | PR | Debit | Credit | Balance |
f. | 1000 | |||
l. | 1000 | 1000 | ||
Dividend | Account no. 319 | |||
Date | PR | Debit | Credit | Balance |
n. | 1100 | 1100 |
Fees Earned | Account no. 402 | |||
Date | PR | Debit | Credit | Balance |
g. | 3200 | 3200 | ||
k. | 4200 | 7400 |
Land | Account no. 172 | |||
Date | PR | Debit | Credit | Balance |
b. | 7500 | 7500 |
3.
Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.
To prepare: Trail balance.
Answer to Problem 4PSB
Total of trail balance is $95100.
Explanation of Solution
NTrail balance | ||
Particular | Dr. ($) | Cr. ($) |
Cash | 17,860 | |
Account receivable | 2000 | |
Office supplies | 500 | |
Automobile | 8000 | |
Office equipment | 15,600 | |
Building | 40,000 | |
Land | 7500 | |
Account payable | 1200 | |
Notes payable | 32,500 | |
Common stock | 54,000 | |
Fees earned | 7400 | |
Dividends | 1100 | |
Salaries Expense | 2000 | |
Utilities expense | 540 | |
Total | 95,100 | 95,100 |
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Chapter 2 Solutions
Financial Accounting: Information for Decisions
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