Concept explainers
Denzel Brooks opened a web consulting business called Venture Consultants and completed the following transactions in March.
Mar. 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company in exchange lor common stock.
2 The company prepaid $6,000 cash for six months’ rent for an office. Hint: Debit Prepaid Rent for $6,000.
3 The company made credit purchases of office equipment for $3,000 and office supplies for $1,200. Payment is due within 10 days.
6 The company completed services for a client and immediately received $4,000 cash.
9 The company completed a $7,500 project for a client, who must pay within 30 days.
12 The company paid $4,200 cash to settle the account payable created on March 3.
19 The company paid $5,000 cash for the premium on a 12-month insurance policy. Hint: Debit Prepaid Insurance for $5,000.
22 The company received $3,500 cash as partial payment for the work completed on March 9.
25 The company completed work for another client for $3,820 on credit.
29 The company paid a $5,100 cash dividend.
30 The company purchased $600 of additional office supplies on credit.
31 The company paid $500 cash for this month’s utility bill.
Problem D-3A
Preparing and posting
C3 C4 A1 PI P2
Required
1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).
2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): Cash (101);
3. Prepare a trial balance as of the end of March.
Check (2] Ending balances: Cash, $136,700; Accounts Receivable, $7,820; Accounts Payable, $600
(3) Total debits, $187,920
Concept introduction:
General Entries:
General entries are the primary records of business transactions. As we know that every business transaction need to be recorded in the books of account, but this recording starts with recording in general journal and recording in general journal is done through journal entries.
Hence, we can say that in the general entries every transaction is recorded primarily by debiting one side and by crediting other side of the business transaction.
Requirement 1:
General journal entries to record transactions.
Answer to Problem 3PSA
General Journal | ||||
Date | Accounts Title & Explanation | PR | Debit | Credit |
March 1 | Cash | 101 | $150,000 | |
Office Equipment | 163 | $22,000 | ||
Common stock | 307 | $172,000 | ||
(For recording investment of cash and office equipment in the company in exchange of common stock) | ||||
March 2 | Prepaid Rent | 131 | $6,000 | |
Cash | 101 | $6,000 | ||
(For recording payment of rent for 12 months) | ||||
March 3 | Office Equipment | 163 | $3,000 | |
Office Supplies | 124 | $1,200 | ||
Accounts Payable | 201 | $4,200 | ||
(For recording credit purchase of office equipment and office supplies) | ||||
March 6 | Cash | 101 | $4,000 | |
Service Revenue | 403 | $4,000 | ||
(For recording service revenue) | ||||
March 9 | Accounts Receivable | 106 | $7,500 | |
Service Revenue | 403 | $7,500 | ||
(For recording completed services) | ||||
March 12 | Accounts Payable | 201 | $4,200 | |
Cash | 101 | $4,200 | ||
(For recording payment to accounts receivable) | ||||
March 19 | Prepaid Insurance | 128 | $5,000 | |
Cash | 101 | $5,000 | ||
(For recording prepaid insurance payment) | ||||
March 22 | Cash | 101 | $3,500 | |
Accounts Receivable | 106 | $3,500 | ||
(For recording receipt of cash from the accounts receivable) | ||||
March 25 | Accounts Receivable | 106 | $3,820 | |
Service Revenue | 403 | $3,820 | ||
(For recording completed services on credit) | ||||
March 29 | Dividends | 319 | $5,100 | |
Cash | 101 | $5,100 | ||
(For recording payment of cash dividends) | ||||
March 30 | Office Supplies | 124 | $600 | |
Accounts Payable | 201 | $600 | ||
(For recording office supplies on credit) | ||||
March 31 | Utilities Expense | 690 | $500 | |
Cash | 101 | $500 | ||
(For recording payment of utility bill) |
Explanation of Solution
General Journal | ||||
Date | Accounts Title & Explanation | PR | Debit | Credit |
March 1 | Cash | 101 | $150,000 | |
Office Equipment | 163 | $22,000 | ||
Common stock | 307 | $172,000 | ||
(For recording investment of cash and office equipment in the company in exchange of common stock) | ||||
March 2 | Prepaid Rent | 131 | $6,000 | |
Cash | 101 | $6,000 | ||
(For recording payment of rent for 12 months) | ||||
March 3 | Office Equipment | 163 | $3,000 | |
Office Supplies | 124 | $1,200 | ||
Accounts Payable | 201 | $4,200 | ||
(For recording credit purchase of office equipment and office supplies) | ||||
March 6 | Cash | 101 | $4,000 | |
Service Revenue | 403 | $4,000 | ||
(For recording service revenue) | ||||
March 9 | Accounts Receivable | 106 | $7,500 | |
Service Revenue | 403 | $7,500 | ||
(For recording completed services) | ||||
March 12 | Accounts Payable | 201 | $4,200 | |
Cash | 101 | $4,200 | ||
(For recording payment to accounts receivable) | ||||
March 19 | Prepaid Insurance | 128 | $5,000 | |
Cash | 101 | $5,000 | ||
(For recording prepaid insurance payment) | ||||
March 22 | Cash | 101 | $3,500 | |
Accounts Receivable | 106 | $3,500 | ||
(For recording receipt of cash from the accounts receivable) | ||||
March 25 | Accounts Receivable | 106 | $3,820 | |
Service Revenue | 403 | $3,820 | ||
(For recording completed services on credit) | ||||
March 29 | Dividends | 319 | $5,100 | |
Cash | 101 | $5,100 | ||
(For recording payment of cash dividends) | ||||
March 30 | Office Supplies | 124 | $600 | |
Accounts Payable | 201 | $600 | ||
(For recording office supplies on credit) | ||||
March 31 | Utilities Expense | 690 | $500 | |
Cash | 101 | $500 | ||
(For recording payment of utility bill) |
1. When investment is made in exchange of common stock, then cash account and office equipment account will be debited and common stock account will be credited because at the time of receipt, cash account and office equipment account need to be debited. Common stock is credited because it is a liability and liability need to be credited.
2. Prepaid rent is treated as asset that is why prepaid rent account is debited while cash account will be credited because cash is gone out from business.
3. Office equipment and office supplies both are assets that is why at the time of purchase these accounts will be debited while accounts payable account will be credited because it is a liability.
4. At the time of receipt, cash account will be debited because cash comes in to business while service revenue account will be credited because revenues need to be credited.
5. When services are performed on credit then accounts receivable account is debited and service revenue account is credited.
6. At the time of payment to accounts payable, accounts payable account will be debited because liability is decreased while cash account will be credited because cash is gone out the business.
7. When insurance premium is paid for next 12 months then prepaid insurance account will be debited because it is an asset account while cash account will be credited because cash is gone out from the business.
8. At the time of cash receipt from accounts receivable, cash account is debited because cash comes in to the business while accounts receivable account is credited because balance of account receivable is decreased.
9. When dividend is paid then dividend account will be debited because it is an expense while cash account will be crdited because cash is gone out from business.
10. When utility bill is paid then utilities expense account will be debited because it is an expense while cash account will be credited because cash is gone out from the business.
Concept introduction:
General Entries:
General entries are the primary records of business transactions. As we know that every business transaction need to be recorded in the books of account, but this recording starts with recording in general journal and recording in general journal is done through journal entries.
Hence, we can say that in the general entries every transaction is recorded primarily by debiting one side and by crediting other side of the business transaction.
Requirement 2:
Ledger accounts.
Answer to Problem 3PSA
Cash Account No. 101 | ||||
Date | PR | Debit | Credit | Balance |
March 1 | G1 | $150,000 | $150,000 | |
March 2 | G1 | $6,000 | $144,000 | |
March 6 | G1 | $4,000 | $148,000 | |
March 12 | G1 | $4,200 | $143,800 | |
March 19 | G1 | $5,000 | $138,800 | |
March 22 | G1 | $3,500 | $142,300 | |
March 29 | G1 | $5,100 | $137,200 | |
March 31 | G1 | $500 | $136,700 |
Accounts Receivable Account No. 106 | ||||
Date | PR | Debit | Credit | Balance |
March 9 | G1 | $7,500 | $7,500 | |
March 22 | G1 | $3,500 | $4,000 | |
March 25 | G1 | $3,820 | $7,820 |
Office Supplies Account No. 124 | ||||
Date | PR | Debit | Credit | Balance |
March 3 | G1 | $1,200 | $1,200 | |
March 30 | G1 | $600 | $1,800 |
Prepaid Insurance Account No. 128 | ||||
Date | PR | Debit | Credit | Balance |
March 19 | G1 | $5,000 | $5,000 |
Prepaid Rent Account No. 131 | ||||
Date | PR | Debit | Credit | Balance |
March 2 | G1 | $6,000 | $6,000 |
Office Equipment Account No. 163 | ||||
Date | PR | Debit | Credit | Balance |
March 1 | G1 | $22,000 | $22,000 | |
March 3 | G1 | $3,000 | $25,000 |
Accounts Payable Account No. 201 | ||||
Date | PR | Debit | Credit | Balance |
March 3 | G1 | $4,200 | $4,200 | |
March 12 | G1 | $4,200 | $0 | |
March 30 | G1 | $600 | $600 |
Common Stock Account No. 307 | ||||
Date | PR | Debit | Credit | Balance |
March 1 | G1 | $172,000 | $172,000 |
Dividends Account No. 319 | ||||
Date | PR | Debit | Credit | Balance |
March 29 | G1 | $5,100 | $5,100 |
Service Revenue Account No. 403 | ||||
Date | PR | Debit | Credit | Balance |
March 6 | G1 | $4,000 | $4,000 | |
March 9 | G1 | $7,500 | $11,500 | |
March 25 | G1 | $3,820 | $15,320 |
Utilities Expense Account No. 690 | ||||
Date | PR | Debit | Credit | Balance |
March 31 | G1 | $500 | $500 |
Explanation of Solution
Cash Account No. 101 | ||||
Date | PR | Debit | Credit | Balance |
March 1 | G1 | $150,000 | $150,000 | |
March 2 | G1 | $6,000 | $144,000 | |
March 6 | G1 | $4,000 | $148,000 | |
March 12 | G1 | $4,200 | $143,800 | |
March 19 | G1 | $5,000 | $138,800 | |
March 22 | G1 | $3,500 | $142,300 | |
March 29 | G1 | $5,100 | $137,200 | |
March 31 | G1 | $500 | $136,700 |
As we know that in case of cash account debit side increase the ending balance while credit side decrease the ending balance.
Accounts Receivable Account No. 106 | ||||
Date | PR | Debit | Credit | Balance |
March 9 | G1 | $7,500 | $7,500 | |
March 22 | G1 | $3,500 | $4,000 | |
March 25 | G1 | $3,820 | $7,820 |
As we know that in case of accounts receivable account debit side increase the ending balance while credit side decrease the ending balance of this account.
Office Supplies Account No. 124 | ||||
Date | PR | Debit | Credit | Balance |
March 3 | G1 | $1,200 | $1,200 | |
March 30 | G1 | $600 | $1,800 |
As we know that in case of office supplies account debit side increase the ending balance while credit side decrease the ending balance of this account.
Prepaid Insurance Account No. 128 | ||||
Date | PR | Debit | Credit | Balance |
March 19 | G1 | $5,000 | $5,000 |
As we know that in case of prepaid insurance account debit side increase the ending balance while credit side decrease the ending balance of this account.
Prepaid Rent Account No. 131 | ||||
Date | PR | Debit | Credit | Balance |
March 2 | G1 | $6,000 | $6,000 |
As we know that in case of prepaid rent account debit side increase the ending balance while credit side decrease the ending balance of this account.
Office Equipment Account No. 163 | ||||
Date | PR | Debit | Credit | Balance |
March 1 | G1 | $22,000 | $22,000 | |
March 3 | G1 | $3,000 | $25,000 |
As we know that in case of office equipment account debit side increase the ending balance while credit side decrease the ending balance of this account.
Accounts Payable Account No. 201 | ||||
Date | PR | Debit | Credit | Balance |
March 3 | G1 | $4,200 | $4,200 | |
March 12 | G1 | $4,200 | $0 | |
March 30 | G1 | $600 | $600 |
As we know that in case of accounts payable account credit side increase the ending balance while debit side decrease the ending balance of this account.
Common Stock Account No. 307 | ||||
Date | PR | Debit | Credit | Balance |
March 1 | G1 | $172,000 | $172,000 |
As we know that in case of common stock account credit side increase the ending balance while debit side decrease the ending balance of this account.
Dividends Account No. 319 | ||||
Date | PR | Debit | Credit | Balance |
March 29 | G1 | $5,100 | $5,100 |
As we know that in case of dividend account debit side increase the ending balance while credit side decrease the ending balance of this account because it is an expense.
Service Revenue Account No. 403 | ||||
Date | PR | Debit | Credit | Balance |
March 6 | G1 | $4,000 | $4,000 | |
March 9 | G1 | $7,500 | $11,500 | |
March 25 | G1 | $3,820 | $15,320 |
As we know that in case of service account credit side increase the ending balance while debit side decrease the ending balance of this account.
Utilities Expense Account No. 690 | ||||
Date | PR | Debit | Credit | Balance |
March 31 | G1 | $500 | $500 |
As we know that in case of utilities expense account debit side increase the ending balance while credit side decrease the ending balance of this account because it is an expense.
Concept introduction:
General Entries:
General entries are the primary records of business transactions. As we know that every business transaction need to be recorded in the books of account, but this recording starts with recording in general journal and recording in general journal is done through journal entries.
Hence, we can say that in the general entries every transaction is recorded primarily by debiting one side and by crediting other side of the business transaction.
Requirement 3:
Trial balance as of the end of March.
Answer to Problem 3PSA
Trial Balance | ||
As on March 31 | ||
Debit | Credit | |
Cash | $136,700 | |
Accounts receivable | $7,820 | |
Office supplies | $1,800 | |
Prepaid insurance | $5,000 | |
Prepaid rent | $6,000 | |
Office equipment | $25,000 | |
Accounts payable | $600 | |
Common stock | $172,000 | |
Dividends | $5,100 | |
Service revenue | $15,320 | |
Utilities expense | $500 | |
Totals | $187,920 | $187,920 |
Explanation of Solution
1. All expenses and losses have debit balance, that is why these are shown in the debit column of the trial balance.
2. All revenues and gains have credit balance, that is why these are shown in the credit column of the trial balance.
3. All assets have debit balance, that is why these are shown in the debit column of the trial balance.
4. Liabilities and equity have credit balance, that is why these are shown in the credit column of the trial balance.
Trial Balance | ||
As on March 31 | ||
Debit | Credit | |
Cash | $136,700 | |
Accounts receivable | $7,820 | |
Office supplies | $1,800 | |
Prepaid insurance | $5,000 | |
Prepaid rent | $6,000 | |
Office equipment | $25,000 | |
Accounts payable | $600 | |
Common stock | $172,000 | |
Dividends | $5,100 | |
Service revenue | $15,320 | |
Utilities expense | $500 | |
Totals | $187,920 | $187,920 |
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Chapter D Solutions
Managerial Accounting
- B. Kelso established Computer Wizards during November of this year. The accountant prepared the following chart of accounts: The following transactions occurred during the month: a. Kelso deposited 45,000 in a bank account in the name of the business. b. Paid the rent for the current month, 1,800, Ck. No. 2001. c. Bought office desks and filing cabinets for cash, 790, Ck. No. 2002. d. Bought a computer and printer from Cyber Center for use in the business, 2,700, paying 1,700 in cash and placing the balance on account, Ck. No. 2003. e. Bought a neon sign on account from Signage Co., 1,350. f. Kelso invested her personal computer software with a fair market value of 600 in the business. g. Received a bill from Country News for newspaper advertising, 365. h. Sold services for cash, 1,245. i. Received and paid the electric bill, 345, Ck. No. 2004. j. Paid on account to Country News, a creditor, 285, Ck. No. 2005. k. Sold services for cash, 1,450. l. Paid wages to an employee, 925, Ck. No. 2006. m. Received and paid the bill for the city business license, 75, Ck. No. 2007. n. Kelso withdrew cash for personal use, 850, Ck. No. 2008. o. Kelso withdrew cash for personal use, 850, Ck. No. 2008. Required 1. Record the owners name in the Capital and Drawing T accounts. 2. Correctly place the plus and minus signs for each T account and label the debit and credit sides of the accounts. 3. Record the transactions in T accounts. Write the letter of each entry to identify the transaction. 4. Foot the T accounts and show the balances. 5. Prepare a trial balance, with a three-line heading, dated November 30, 20--.arrow_forwardIn March, T. Carter established Carter Delivery Service. The account headings are presented below. Transactions completed during the month of March follow. a. Carter deposited 25,000 in a bank account in the name of the business. b. Bought a used truck from Degroot Motors for 15,140, paying 5,140 in cash and placing the remainder on account. c. Bought equipment on account from Flemming Company, 3,450. d. Paid the rent for the month, 1,000, Ck. No. 3001 (Rent Expense). e. Sold services for cash for the first half of the month, 6,927 (Service Income). f. Bought supplies for cash, 301, Ck. No. 3002. g. Bought insurance for the truck for the year, 1,200, Ck. No. 3003. h. Received and paid the bill for utilities, 349, Ck. No. 3004 (Utilities Expense). i. Received a bill for gas and oil for the truck, 218 (Gas and Oil Expense). j. Sold services on account, 3,603 (Service Income). k. Sold services for cash for the remainder of the month, 4,612 (Service Income). l. Paid wages to the employees, 3,958, Ck. Nos. 30053007 (Wages Expense). m. Carter withdrew cash for personal use, 1,250, Ck. No. 3008. Required 1. In the equation, write the owners name above the terms Capital and Drawing. 2. Record the transactions and the balance after each transaction. Identify the account affected when the transaction involves revenues or expenses. 3. Write the account totals from the left side of the equals sign and add them. Write the account totals from the right side of the equals sign and add them. If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forwardOn March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501. e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012. g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307. i. Received and paid the heating bill, 248, Ck. No. 504. j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128. k. Sold catering services for cash for the remainder of the month, 2,649. l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506. Required 1. Record the transactions and the balance after each transaction. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forward
- A business has the following transactions: The business is started by receiving cash from an investor in exchange for common stock $20,000 The business purchases supplies on account $500 The business purchases furniture on account $2,000 The business renders services to various clients on account totaling $9,000 The business pays salaries $2,000 The business pays this months rent $3,000 The business pays for the supplies purchased on account. The business collects from one of its clients for services rendered earlier in the month $1,500. What is total income for the month?arrow_forwardDuring December of this year, G. Elden established Ginnys Gym. The following asset, liability, and owners equity accounts are included in the chart of accounts: During December, the following transactions occurred: a. Elden deposited 35,000 in a bank account in the name of the business. b. Bought exercise equipment for cash, 8,150, Ck. No. 1001. c. Bought advertising on account from Hazel Company, 105. d. Bought a display rack on account from Cyber Core, 790. e. Bought office equipment on account from Office Aids, 185. f. Elden invested her exercise equipment with a fair market value of 1,200 in the business. g. Made a payment to Cyber Core, 200, Ck. No. 1002. h. Sold services for the month of December for cash, 800. Required 1. Write the account classifications (Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit. 2. Write the account names on the T accounts under the classifications, place the plus and minus signs for each T account, and label the debit and credit sides of the T accounts 3. Record the amounts in the proper positions in the T accounts. Write the letter next to each entry to identify the transaction. 4. Foot and balance the accounts.arrow_forwardP. Schwartz, Attorney at Law, opened his office on October 1. The account headings are presented below. Transactions completed during the month follow. a. Schwartz deposited 25,000 in a bank account in the name of the business. b. Bought office equipment on account from QuipCo, 9,670. c. Schwartz invested his personal law library, which cost 2,800. d. Paid the office rent for the month, 1,700, Ck. No. 2000. e. Bought office supplies for cash, 418, Ck. No. 2001. f. Bought insurance for two years, 944, Ck. No. 2002. g. Sold legal services for cash, 8,518. h. Paid the salary of the part-time receptionist, 1,820, Ck. No. 2003. i. Received and paid the telephone bill, 388, Ck. No. 2004. j. Received and paid the bill for utilities, 368, Ck. No. 2005. k. Sold legal services for cash, 9,260. l. Paid on account to QuipCo, 2,670, Ck. No. 2006. m. Schwartz withdrew cash for personal use, 2,500, Ck. No. 2007. Required 1. Record the transactions and the balance after each transaction. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forward
- A business has the following transactions: A. The business is started by receiving cash from an investor in exchange for common stock $10,000. B. Rent of $1,250 is paid for the first month. C. Office supplies are purchased for $375. D. Services worth $3,450 are performed. Cash is received for half. E. Customers pay $1,250 for services to be performed next month. F. $6,000 is paid for a one year insurance policy. G. We receive 25% of the money owed by customers in D. H. A customer has placed an order for $475 of services to be done this coming week. How much total revenue does the company have?arrow_forwardOn July 1, K. Resser opened Ressers Business Services. Ressers accountant listed the following chart of accounts: The following transactions were completed during July: a. Resser deposited 25,000 in a bank account in the name of the business. b. Bought tables and chairs for cash, 725, Ck. No. 1200. c. Paid the rent for the current month, 1,750, Ck. No. 1201. d. Bought computers and copy machines from Ferber Equipment, 15,700, paying 4,000 in cash and placing the balance on account, Ck. No. 1202. e. Bought supplies on account from Wigginss Distributors, 535. f. Sold services for cash, 1,742. g. Bought insurance for one year, 1,375, Ck. No. 1203. h. Paid on account to Ferber Equipment, 700, Ck. No. 1204. i. Received and paid the electric bill, 438, Ck. No. 1205. j. Paid on account to Wigginss Distributors, 315, Ck. No. 1206. k. Sold services to customers for cash for the second half of the month, 820. l. Received and paid the bill for the business license, 75, Ck. No. 1207. m. Paid wages to an employee, 1,200, Ck. No. 1208. n. Resser withdrew cash for personal use, 700, Ck. No. 1209. Required 1. Record the owners name in the Capital and Drawing T accounts. 2. Correctly place the plus and minus signs for each T account and label the debit and credit sides of the accounts. 3. Record the transactions in the T accounts. Write the letter of each entry to identify the transaction. 4. Foot the T accounts and show the balances. 5. Prepare a trial balance as of July 31, 20--. 6. Prepare an income statement for July 31, 20--. 7. Prepare a statement of owners equity for July 31, 20--. 8. Prepare a balance sheet as of July 31, 20--. LO 1, 2, 3, 4, 5, 6arrow_forwardANALYSIS OF TRANSACTIONS Charles Chadwick opened a business called Charlies Detective Service in January 20--. Set up T accounts for the following accounts: Cash; Accounts Receivable; Office Supplies; Computer Equipment; Office Furniture; Accounts Payable; Charles Chadwick, Capital; Charles Chadwick, Drawing; Professional Fees; Rent Expense; and Utilities Expense. The following transactions occurred during the first month of business. Record these transactions in T accounts. After all transactions are recorded, foot and balance the accounts if necessary. (a) Invested cash in the business, 30,000. (b) Bought office supplies for cash, 300. (c) Bought office furniture for cash, 5,000. (d) Purchased computer and printer on account, 8,000. (e) Received cash from clients for services, 3,000. (f) Paid cash on account for computer and printer purchased in transaction (d), 4,000. (g) Earned professional fees on account during the month, 9,000. (h) Paid cash for office rent for January, 1,500. (i) Paid utility bills for the month, 800. (j) Received cash from clients billed in transaction (g), 6,000. (k) Withdrew cash for personal use, 3,000. TRIAL BALANCE Based on the transactions recorded in Exercise 3-7A, prepare a trial balance for Charlies Detective Service as of January 31, 20--.arrow_forward
- The following information is provided for the first month of operations for Legal Services Inc.: A. The business was started by selling $100,000 worth of common stock. B. Six months rent was paid in advance, $4,500. C. Provided services in the amount of $1,000. The customer will pay at a later date. D. An office worker was hired. The worker will be paid $275 per week. E. Received $500 in payment from the customer in C. F. Purchased $250 worth of supplies on credit. G. Received the electricity bill. We will pay the $110 in thirty days. H. Paid the worker hired in D for one weeks work. I. Received $100 from a customer for services we will provide next week. J. Dividends in the amount of $1,500 were distributed. Prepare the necessary journal entries to record these transactions. If an entry is not required for any of these transactions, state this and explain why.arrow_forwardDuring February of this year, H. Rose established Rose Shoe Hospital. The following asset, liability, and owners equity accounts are included in the chart of accounts: The following transactions occurred during the month of February: a. Rose deposited 25,000 cash in a bank account in the name of the business. b. Bought shop equipment for cash, 1,525, Ck. No. 1000. c. Bought advertising on account from Milland Company, 325. d. Bought store shelving on account from Inger Hardware, 750. e. Bought office equipment from Sharas Office Supply, 625, paying 225 in cash and placing the balance on account, Ck. No. 1001. f. Paid on account to Inger Hardware, 750, Ck. No. 1002. g. Rose invested his personal leather working tools with a fair market value of 800 in the business h. Sold services for the month of February for cash, 250. PART 1: The Accounting Cycle for a Service Business: Analyzing Business Transactions Required 1. Write the account classifications (Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit. 2. Write the account names on the T accounts under the classifications, place the plus and minus signs for each T account, and label the debit and credit sides of the T accounts. 3. Record the amounts in the proper positions in the T accounts. Write the letter next to each entry to identify the transaction. 4. Foot and balance the accounts.arrow_forwardIn July of this year, M. Wallace established a business called Wallace Realty. The account headings are presented below. Transactions completed during the month follow. a. Wallace deposited 24,000 in a bank account in the name of the business. b. Paid the office rent for the current month, 650, Ck. No. 1000. c. Bought office supplies for cash, 375, Ck. No. 1001. d. Bought office equipment on account from Dellos Computers, 6,300. e. Received a bill from the City Crier for advertising, 455. f. Sold services for cash, 3,944. g. Paid on account to Dellos Computers, 1,500, Ck. No. 1002. h. Received and paid the bill for utilities, 340, Ck. No. 1003. i. Paid on account to the City Crier, 455, Ck. No. 1004. j. Paid truck expenses, 435, Ck. No. 1005. k. Wallace withdrew cash for personal use, 1,500, Ck. No. 1006. Required 1. Record the transactions and the balance after each transaction. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forward
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