Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Chapter 3, Problem 3.14ME
Preparing Accrual Basis
Junktrader is an online company that specializes in matching buyers and sellers of used items. Buyers and sellers can purchase a membership with Junktrader, which provides them advance notice of potentially attractive offers. Prepare journal entries for the following transactions, which occurred during a recent month, and determine Junktrader’s preliminary net income.
- a. Junktrader provided online advertising services for another company for $200 on account.
- b. On the last day of the month, Junktrader paid $50 cash to run an ad promoting the company’s services. The ad ran that day in the local newspaper.
- c. Received $200 cash in membership fees for the month from new members.
- d. Received an electricity bill for $85 for usage this month. The bill will be paid next month.
- e. Billed a customer $180 for helping sell some junk. Junktrader expects to receive the customer’s payment by the end of next month.
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Use the appropriate journal to record the preceding transactions in a sales journal (omit the Invoice No. column), a cash receipts journal (omit Sales Discounts Forfeited column), a purchases journal, a cash payments journal (omit the Check No. column), and a general journal.
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Chapter 3 Solutions
Fundamentals of Financial Accounting
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