Journal entry is an entry to journal account which records the accounting transactions in a chronological order.
1.
To prepare: Journal entry for October transactions.
Explanation of Solution
Journal entries to record the transactions
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 1 | Cash | 45,000 | ||
Office Equipment | 8,000 | |||
Computer Equipment | 20,000 | |||
Capital account | 73,000 | |||
( Being cash and equipment has been invested by the owner.) |
Table (1)
- Cash and all the equipment has been converted into capital to invest in the business so the entire amount has been debited
- Amount invested in the business is actually generated from all the cash and equipment and owner invested the entire amount in business so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 2 | Prepaid rent | 3,300 | ||
Cash | 3,300 | |||
( Being 4 months’ rent has been paid in advance.) |
Table (2)
- Prepaid belongs to asset accounts it has been debited as its payment resulted in increase in assets.
- Cash is an asset account it has been credited for the payment of rent as it resulted in decrease in asset account.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 3 | Computer Supplies | 1,420 | ||
Account payable | 1,420 | |||
( Being computer supplies has been purchased for credit.) |
Table (3)
- Computer supplies belong to asset accounts it has been debited as their purchase resulted in increase in assets.
- Accounts payable is a liability account it has been credited for the purchase of supplies as it resulted in increase in liability account.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 5 | Prepaid Insurance | 2,220 | ||
Cash | 2,220 | |||
( Being premium of 12 months for insurance has been paid in advance) |
Table (4)
- Prepaid expense belongs to asset account so there is an increase in asset account so it is debited.
- While cash is also a part of asset account it is credited because there is decrease in cash account for the payment of premium.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 6 | Account receivable | 4,800 | ||
Services revenue | 4,800 | |||
( Being customer billed for providing services.) |
Table (5)
- Account receivable is belonging to asset so providing services on crdit causes increase in asset account so debited.
- Services have been provided so it recorded in credited account.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 8 | Accounts payable | 1,420 | ||
Cash | 1,420 | |||
( Being paid balance due on account payable) |
Table (6)
- Paid the balance for computer supplies that were purchased on credit. Since the liability is decreased so accounts payable account is debited.
- Cash is an asset account it has been credited for the payment of computer supplies as it resulted in decrease in asset account so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 12 | Accounts receivable | 1,400 | ||
Service Revenue | 1,400 | |||
( Being customer billed for providing services.) |
Table (7)
- Account receivable is debited as it is a current asset account so it will give rise to the asset account.
- Services have been provided but cash not received as the money would be received later on so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 15 | Cash | 4,800 | ||
Accounts receivable | 4,800 | |||
( Being amount received for credit services.) |
Table (8)
- Cash is an asset account it is debited because receiving cash for previously providing services will increase asset account.
- While accounts receivable is also an asset account so receiving credit money will decrease it so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 17 | Repairs expense | 805 | ||
Cash | 805 | |||
( Being amount paid for incurring repair) |
Table (9)
- Repairs are expense and increase in expense account is debited.
- Cash is an asset account using cash for repairs will decrease asset account so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 20 | Advertising expense | 1,728 | ||
Cash | 1,728 | |||
( Being rented on credit.) |
Table (10)
- Advertising is an expense and increase in expense account is debited.
- Cash is an asset account using cash for advertising will decrease asset account so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 22 | Cash | 1,400 | ||
Account Receivable | 1,400 | |||
( Being cash for previously provided services) |
Table (11)
- Cash account is an asset account. Since cash is earned, so it is to be increased. Therefore, cash account is to be debited.
- Account receivable is belonging to asset account so receiving amount which was due will decrease it so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 28 | Account receivable | 5,208 | ||
Service revenue | 5,208 | |||
( Being customer billed for providing services.) |
Table (12)
- Account receivable is debited as it is a current asset account so it will give rise to the asset account.
- Services have been provided but cash not received as the money would be received later on so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 31 | Wages expense | 875 | ||
Cash | 875 | |||
( Being wages paid on cash for part time work ) |
Table (13)
- Wages expense account is an expense account. Since wages expense is increased, expense is to be increased. So, debit the wages expense account.
- Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Oct 31 | Dividends | 3,600 | ||
Cash | 3,600 | |||
( Being cash is paid in form of dividend.) |
Table (14)
- Since dividends has been paid and it will decrease equity so debited
- Cash is credited as dividends have been paid in cash which decrease the account so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 1 | Mileage Expense | 320 | ||
Cash | 320 | |||
( Being mileage expense paid on cash) |
Table (15)
- Mileage expense is an expense account. Since mileage expense is increased, expense is to be increased. So, debit the mileage expense account.
- Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 2 | Cash | 4,633 | ||
Service revenue | 4,633 | |||
( Being cash received for providing services.) |
Table (16)
- Being cash received for the services which has been provided earlier so debited as it will increase asset account.
- Since there is a decrease in account receivable for the services which was provide earlier so it is credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 5 | Computer Supplies | 1,125 | ||
Cash | 1,125 | |||
( Being purchase of computer supplies for cash.) |
Table (17)
- Computer supplies belong to asset accounts it has been debited as their purchase resulted in increase in assets.
- Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 8 | Account receivable | 5,668 | ||
Service revenue | 5,668 | |||
( Being customer billed for providing services.) |
Table (18)
- Account receivable is debited as it is a current asset account so it will give rise to the asset account.
- Services have been provided but cash not received as the money would be received later on so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 18 | Cash | 2,208 | ||
Account receivable | 2,208 | |||
( Being cash received for previously provided services) |
Table (19)
- Cash account is an asset account. Since cash is earned, so it is to be increased. Therefore, cash account is to be debited.
- Account receivable is belonging to asset account so receiving amount which was due will decrease it so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 22 | Miscellaneous Expense | 250 | ||
Cash | 250 | |||
( Being miscellaneous expense paid on cash) |
Table (20)
- Miscellaneous expense is an expense account. Since miscellaneous expense is increased, expense is to be increased. So, debit the miscellaneous expense account.
- Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 24 | Account receivable | 3,950 | ||
Service revenue | 3,950 | |||
( Being customer billed for providing services.) |
Table (21)
- Account receivable is debited as it is a current asset account so it will give rise to the asset account.
- Services have been provided but cash not received as the money would be received later on so credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 28 | Mileage expenses | 384 | ||
Cash | 384 | |||
( Being cash paid for expenses occurred.) |
Table (22)
- Mileage expense is an expense account. Since mileage expense is increased, expense is to be increased. So, debit the mileage expense account.
- Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 30 | Wages expenses | 1,750 | ||
Cash | 1,750 | |||
( Being salary paid to part time worker) |
Table (23)
- Wages expense is an expense account. Since Wages expense is increased, expense is to be increased. So, debit the wages expense account.
- Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.
Date | Account Title and Explanation | Post.ref | Debit($) | Credit($) |
Nov 30 | Dividends | 2,000 | ||
Cash | 2,000 | |||
( Being cash is paid in form of dividend.) |
Table (24)
- Since dividends has been paid and it will decrease equity so debited
- Cash is credited as dividends have been paid in cash which decrease the account so credited.
2.
To prepare: Ledger account.
2.
Explanation of Solution
Cash | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 1 | Capital | 45,000 | 45,000 | ||
Oct 2 | Prepaid rent | 3,330 | 41,700 | ||
Oct 5 | Prepaid Insurance | 2,220 | 39,480 | ||
Oct 8 | Account Payable | 1,420 | 38,060 | ||
Oct 15 | Account receivables | 4,800 | 42,860 | ||
Oct 17 | Repair Expense | 805 | 42,055 | ||
Oct 20 | Advertising Expense | 1,728 | 40,327 | ||
Oct 22 | Account receivables | 1,400 | 41,727 | ||
Oct 31 | Wages | 875 | 40,852 | ||
Oct 31 | Dividends | 3,600 | 37,252 | ||
Nov 1 | Mileage Expense | 320 | 36,932 | ||
Nov 2 | Computer service revenue | 4,633 | 41,565 | ||
Nov 5 | Computer Supplies | 1,125 | 40,440 | ||
Nov 18 | Account receivables | 2,208 | 42,648 | ||
Nov 22 | Miscellaneous Expense | 250 | 42,398 | ||
Nov 28 | Mileage Expense | 384 | 42,014 | ||
Nov 30 | Wages expense | 1,750 | 40,264 | ||
Nov 30 | Dividends | 2,000 | 38,264 |
Table (25)
So the ending balance is $38,264
Account receivable | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 6 | Computer service revenue | 4,800 | 4,800 | ||
Oct 12 | Computer service revenue | 1,400 | 6,200 | ||
Oct 15 | Cash | 4,800 | 1,400 | ||
Oct 22 | Cash | 1,400 | 0 | ||
Oct 28 | Computer service revenue | 5,208 | 5,208 | ||
Nov 8 | Computer service revenue | 5,668 | 10,876 | ||
Nov 18 | Cash | 2,208 | 8,668 | ||
Nov 24 | Computer service revenue | 3,950 | 12,618 |
Table (26)
So the ending balance is $12,618
Prepaid Insurance | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 5 | Cash | 2,220 | 2,220 |
Table (27)
So the ending balance is $2,220
Office Equipment | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 1 | Cash | 8,000 | 8,000 |
Table (28)
So the ending balance is $8,000
Computer Equipment | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 1 | Cash | 20,000 | 20,000 |
Table (29)
So the ending balance is $20,000
Prepaid Rent | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 2 | Cash | 3,300 | 3,300 |
Table (30)
So the ending balance is $3,300
Accounts payable | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 3 | Computer supplies | 1,420 | 1,420 | ||
Oct 8 | Cash | 1,420 | 0 |
Table (31)
So the ending balance is $0
Common stock | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 1 | Cash | 73,000 | 73,000 |
Table (32)
So the ending balance is $73,000
Dividends | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 31 | Cash | 3,600 | 3,600 | ||
Nov 30 | Cash | 2,000 | 5,600 |
Table (33)
So the ending balance is $5,600
Service revenue | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 6 | Accounts receivable | 4,800 | 4,800 | ||
Oct 12 | Accounts receivable | 1,400 | 6,200 | ||
Oct 28 | Accounts receivable | 5,208 | 11,408 | ||
Nov 2 | Cash | 4,633 | 16,041 | ||
Nov 28 | Cash | 5,668 | 21,709 | ||
Nov 24 | Accounts receivable | 3,950 | 25,659 |
Table (34)
So the ending balance is $25,659
Wages expense | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 31 | Cash | 875 | 875 | ||
Nov 30 | Cash | 1,750 | 2,625 |
Table (35)
So the ending balance is $2,625
Advertising expense | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 20 | Cash | 1,728 | 1,728 |
Table (36)
So the ending balance is $1,728
Mileage expense | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Nov 1 | Cash | 320 | 320 | ||
Nov 28 | Cash | 384 | 704 |
Table (37)
So the ending balance is $704
Miscellaneous expense | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Nov 22 | Cash | 250 | 250 |
Table (38)
So the ending balance is $250
Repairs expense | |||||
Date | Account Title and Explanation | Post ref | Debit($) | Credit($) | Balance($) |
Oct 17 | Cash | 805 | 805 |
Table (39)
So the ending balance is $805
3.
To prepare:
3.
Explanation of Solution
BS | ||
Trial Balance | ||
November 30, 2017 | ||
Accounts Title | Amount($) | Amount($) |
Cash | 38,264 | |
Accounts Payable | 0 | |
Accounts Receivable | 12,618 | |
Equipment | 8,000 | |
Computer Equipment | 20,000 | |
Prepaid rent | 3,300 | |
Prepaid insurance | 2,220 | |
Misc. expense | 250 | |
Mileage expense | 704 | |
Capital | 73,000 | |
Dividends | 5,600 | |
Fees earned | 25,659 | |
Wages Expenses | 2,625 | |
Repair expenses | 805 | |
Advertising Expense | 1,728 | |
Supplies | 2,545 | |
Totals | 98,659 | 98,659 |
Table (40)
So, total trial balance is $98,659.
Want to see more full solutions like this?
Chapter 2 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
- Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.arrow_forwardAssume that you recently accepted a position with Five Star National Bank & Trust as an assistant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for $300,000 from West Gate Auto Co., a small proprietor- ship. In support of the loan application, Joan Whalen, owner, submitted a "Statement of Accounts" (trial balance) for the first year of operations ended October 31, 2019. West Gate Auto Co. Statement of Accounts October 31, 2019 Cash 5,000 Billings Due from Others. Supplies (chemicals, etc.) Building... 40,000 7,500 222,300 Equipment.. 50,000 Amounts Owed to Others.. 31,000 Investment in Business 179,000 Service Revenue 215,000 Wages Expense 75,000 Utilities Expense 10,000 8,000 Rent Expense . Insurance Expense Other Expenses 6,000 1,200 425,000 425,000 Explain to Joan Whalen why a set of financial statements (income statement, 1. statement of owner's equity, and balance sheet) would be useful to you in evaluating the…arrow_forwardRecord any five accounting transactions of your own choice for Ali furniture business (AFB) for the year 2019, Starting from the owner investment of $100,000. Post them in General journal, make ledger, and Trial balance for those entries. with explanation and to make it in best formate.arrow_forward
- Record any 5 transactions of your choice for Company ABC for the year 2019, starting from the owner investment of $100,000. Post them in General Journal, Make ledger and trial balance for those enteries.arrow_forwardRecord any 5 accounting transactions of your own choice for furniture business for the year 2019, starting from the owner investment of $100,000. Post them in general journal,make ledger and trial balance for those entries.arrow_forwardMaria Cruz formed the Kiddies Jade on October 1, 2020. She deposited 250,000 in BDO bank under the name of the new business entity. During October 2020, the following transactions occurred: Required: Do its Journal Entryarrow_forward
- On June 7,2019, Dilby Mechanical Corp completed $50,00 of servicing work for a client and billed them for that amount plus a GST of $2,500 and PST of $3,50; terms are N20. Required: a. Prepare the journal entry as it would appear in Dilby's accounting records. b. Assume the receivable established on June 7 was collected on June 27. Record the entry.arrow_forwardPlanning Wizards, LLC is an event-planning company. Which of the following would be included in the current asset section of a classified balance sheet dated December 31, 2019? a. 15-month certificate of deposit b. Customer advances on New Year's parties c. Last month rent payment (lease expires in 2021) d. Investment in stocks, to be sold in 2020 e. Income tax refund receivable f. Inventory Select one: d, e, and f e and f a, b, c, e, and f a, b, c, d, e, and f b, e, farrow_forwardSammi started her business on 1 January 2021 called Trendy. You are required to prepare the GENERAL JOURNAL for the following transactions of Trendy for the first month of operations. Jan 01Sammi invested RM50, 000 cash into the business.Jan 02Trendy purchased used motor vehicle for RM20,000.Jan 08Trendy paid rent for RM4, 000.Jan 08Trendy completed work for a client and immediately received RM15, 000.Jan 12Sammi signed a RM50,000 small business loans with CIMB Bank under Trendy’s name.Jan 15Ideal Homes renovated and installed fixtures and fittings at a cost of RM3, 000. Trendy will pay the bill at a later date.Jan 15Trendy paid RM1, 000 cash for advertisement in a local magazine.Jan 28Trendy completed work for another client on credit and invoiced the client RM5, 000. The client is allowed to settle the bill within 30 days.Jan 30Trendy paid Ideal Homes that installed the fixtures and fittings earlier.Jan 30Trendy paid RM150 for usage of electricity for the month.arrow_forward
- Mr. Hussein is a trade supplier who has been approached by Al Shinas Trading LLC which is requesting credit terms for the first time.Their managing director has provided Mr. Hussein with the following extracts from the final accounts for the past two years and Mr.Hussein has approached you for advice.Details 2019 (OMR) 2020 (OMR)Accounts payables 75,000 65,000Sales revenue 620,000 910,000Equipment 30,000 22,000Cost of Goods sold 400,000 350,000Machinery 3,150,000 3,128,000Inventory 50,000 80,000Operating costs 192,000 170,000Non-operating expenses 25,000 15,000Common share capital 550,000 550,000Bonds 95,000 90,000Retained earnings 70,000 90,000Bank (25,000) 65,000Accounts Receivables 50,000 85,000Long-term loan 100,000 70,000Shareholders’ fund…arrow_forwardPrepare journal entries for the following transactions. Make sure to observe the proper format of journal entries. Use EXCEL in presenting your answers. Mr. Panatag opened the Panatag Security Services. The following financial transactions and other arrangements took place from July 01 to August, 2019: July 01 Mr. Panatag invested his savings in the business amounting to P895,000, and his old car with market value of P545,000. July 02 Mr. Panatag signed a lease contract to be used as the office of his business. In accordance with the lease contract, Mr. Panatag paid the advance rental for three months amounting to P60,000. July 03 The owner purchased furniture amounting to P50,00. Paid 70% cash and the balance will be paid after 30 days. July 04 Mr. Panatag conducted interviews of security guards, and hired 10 security guards with a monthly salary of P13,000 per month. July 05 The owner secured a loan from the bank amounting to P250,000 payable over the…arrow_forwardThe following transactions occurred during 2021 for the Beehive Honey Corporation: Feb. 1 Borrowed $12,000 from a bank and signed a note. Principal and interest at 10% will be paid on January 31, 2022. Apr. 1 Paid $3,600 to an insurance company for a two-year fire insurance policy. July 17 Purchased supplies costing $2,800 on account. The company records supplies purchased in an asset account. At the year-end on December 31, 2021, supplies costing $1,250 remained on hand. Nov. 1 A customer borrowed $6,000 and signed a note requiring the customer to pay principal and 8% interest on April 30, 2022. Required:1. Record each transaction in general journal form.2. Prepare any necessary adjusting entries at the year-end on December 31, 2021. No adjusting entries were recorded during the year for any item.arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENTFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning