Explanation Journal entry : Journal is the primary record of the business transaction in chronological (date wise) order. Journal entry contains two effects one is debit and other is credit, under double entry book keeping system. Procedure for debiting and crediting an account: Increase in assets account, increase in expenses account, and decrease in liabilities account should be debited. Decrease in assets account, increase in revenue account, and increase in liabilities account should be credited. All transactions affect the accounting equation that is displayed below. The accounting equation should always remain in balance at the time of recording a business transaction: Prepare the journal entries as shown below. a. Purchase of office equipment with cash $30,000: Date Particulars Debit ($) Credit ($) - Equipment $30,000 Cash $30,000 (To record the purchase of equipment) Table 1 Explanation: Purchase of equipment is debited, as it increases the asset account. Cash is credited, as it decreases the asset account. b. Purchase of supplies on credit: Date Particulars Debit ($) Credit ($) - Supplies $15,000 Account payable $15,000 (To record the purchase of supplies on credit) Table 2 Explanation: Purchase of suppliesis debited, as it increases the asset account. Account payableis credited, as it increases the liability account. c. Selling of goods for cash $40,000: Date Particulars Debit ($) Credit ($) - Cash $40,000 Sales revenue $40,000 (To record the cost of goods sold) Table 3 Explanation: Cash received from the selling of goodsis debited, as it increases the asset account. Sales revenueis credited, as it increases the revenue account. d. Purchase of raw material from supplier on account: Date Particulars Debit ($) Credit ($) - Raw material inventory $22,000 Accounts payable $22,000 (To record the purchase of raw material on account) Table 4 Explanation: Raw material inventory is debited, as it increases the asset account. Accounts payable is credited, as it increases the liability account. e. Sales of goods to customer: Date Particulars Debit ($) Credit ($) - Accounts receivable $65,000 Sales $65,000 (To record the purchase of raw material on account) Table 5 Explanation: Accounts receivable is debited, as it increases the asset account, once the cash is received from customers...

3rd Edition

ISBN: 9780136912644

Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella

Publisher: Pearson Education (US)

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Chapter 4, Problem 4.2E

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To prepare: Thejournal entries for the given transactions.

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Linzee Liners estimates that its manufacturing overhead will be $1,761,800 in Year 1. It further estimates that direct labor costs will amount to $766,000. During March, Linzee worked on four jobs with actual direct labor costs of $36,600 for Job 0301, $24,100 for Job 0302, $33,600 for Job 0303, and $17,600 for Job 0304. Actual manufacturing overhead costs for the year were $1,750,000. Actual direct labor costs for the year were $751,000. Manufacturing overhead is applied to jobs based on direct labor costs using predetermined rates. The amount of overhead applied in each of the inventory accounts at the end of Year 1 is as follows Work-in-process inventory Finished goods Inventory Cost of goods sold $ 34,546 $ 276,368 $ 1,416,386 Required: Prepare an entry to allocate the over-or underapplied overhead. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list

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Thejournal entries for the given transactions.

Solution Summary: The author explains that journal entries are the primary record of the business transaction in chronological (date wise) order.

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