Concept explainers
1
Introduction: A journal is used to record financial transactions.It shows the debits and credits of each transaction.The process of recording transactions is called journalizing.After journalizing, the transactions are
The
1
Explanation of Solution
- Journal entries to record the transactions in September
S.no | Account title and Explanation | PR | Debit | Credit |
a | Cash | 101 | $60,000 | |
Office equipment | 163 | $25,000 | ||
H.V Capital | 301 | $85,000 | ||
Owners investment in business | ||||
b | Land | 172 | $40,000 | |
Building | 170 | $160,000 | ||
Cash | 101 | $30,000 | ||
Notes payable | 250 | $170,000 | ||
Record purchase of land and building for cash and note payable | ||||
c. | Office supplies | 108 | $2,000 | |
Accounts payable | 201 | $2,000 | ||
Purchase office supplies on credit | ||||
d. | Automobiles | 164 | $16,500 | |
HV Capital | 301 | $16,500 | ||
Record transfer of automobile to business | ||||
e. | Office equipment | 163 | $5,600 | |
Accounts payable | 201 | $5,600 | ||
Record purchase of office equipment on credit | ||||
f. | Salary expense | 601 | $1,800 | |
Cash | 101 | $1,800 | ||
Paid cash towards the salary expense | ||||
g. | Cash | 101 | $8,000 | |
Fee earned | 402 | $8,000 | ||
Received cash on service provided | ||||
h. | Utility Expense | 602 | $635 | |
Cash | 101 | $635 | ||
Record cash payment for utility expenses | ||||
i. | Accounts payable | 201 | $2,000 | |
Cash | 101 | $2,000 | ||
Record payment of cash to settle payable | ||||
j. | Office equipment | 163 | $20,300 | |
Cash | 101 | $20,300 | ||
Record purchase of office equipment for cash | ||||
k. | Accounts receivable | 106 | $6,250 | |
Fees earned | 402 | $6,250 | ||
Record of fees earned on service provided | ||||
l. | Salary expense | 601 | $1,800 | |
Cash | 101 | $1,800 | ||
Record payment of salary to assistant | ||||
m. | Cash | 101 | $4,000 | |
Accounts receivable | 106 | $4,000 | ||
Received cash on partial settlement of receivables | ||||
n. | HV withdrawals | 302 | $2,800 | |
Cash | 101 | $2,800 | ||
Record withdrawal of cash by owner for personal use |
2
Introduction: A journal is used to record financial transactions. It shows the debits and credits of each transaction. The process of recording transactions is called journalizing. After journalizing, the transactions are posted into ledgers.
The given ledger accounts.
2
Explanation of Solution
Posting of journal entries in ledgers
Cash Account no 101
Date | PR | Account title | Debit | Credit | Balance |
a. | HV Capital | $60,000 | $60,000 | ||
b. | Building | $30,000 | $30,000 | ||
f. | Salary expense | $1,800 | $28,200 | ||
g. | Fees earned | $8,000 | $36,200 | ||
h. | Utility expense | $635 | $35,565 | ||
i. | Accounts payable | $2,000 | $33,565 | ||
j. | Office equipment | $20,300 | $13,265 | ||
l. | Salary expense | $1,800 | $11,465 | ||
m. | Accounts receivable | $4,000 | $15,465 | ||
n. | HV withdrawals | $2,800 | $12,665 |
Accounts receivable Account no 106
Date | PR | Account title | Debit | Credit | Balance |
k. | Fee earned | $6,250 | $6,250 | ||
m. | Cash | $4,000 | $2,250 |
Office supplies Account no 124
Date | PR | Account title | Debit | Credit | Balance |
c. | Accounts payable | $2,000 | $2,000 |
Automobiles Account no 164
Date | PR | Account title | Debit | Credit | Balance |
d. | HV Capital | $16,500 | $16,500 |
Building Account no 170
Date | PR | Account title | Debit | Credit | Balance |
b. | $160,000 | $160,000 |
Land Account no 172
Date | PR | Account title | Debit | Credit | Balance |
b. | $40,000 | $40,000 |
Office equipment Account no 163
Date | PR | Account title | Debit | Credit | Balance |
a. | HV Capital | $25,000 | $25,000 | ||
e. | Accounts payable | $5,600 | $30,600 | ||
j. | Cash | $20,300 | $50,900 |
Accounts Payable Account no 201
Date | PR | Account title | Debit | Credit | Balance |
c. | Office supplies | $2,000 | $2,000 | ||
e. | Office equipment | $5,600 | $7,600 | ||
i. | Cash | $2,000 | $5,600 |
Notes payable Account no 250
Date | PR | Account title | Debit | Credit | Balance |
b. | $170,000 | $170,000 |
HV Capital Account no 301
Date | PR | Account title | Debit | Credit | Balance |
a. | Cash | $60,000 | $60,000 | ||
Office equipment | $25,000 | $85,000 | |||
d. | Automobiles | $16,500 | $101,500 |
A.N Withdrawals Account no 302
Date | PR | Account title | Debit | Credit | Balance |
n | Cash | $2,800 | $2,800 |
Fees earned Account no 402
Date | PR | Account title | Debit | Credit | Balance |
g. | Cash | $8,000 | $8,000 | ||
k. | Accounts receivable | $6,250 | $14,250 |
Salary expense Account no 601
Date | PR | Account title | Debit | Credit | Balance |
f. | Cash | $1,800 | $1,800 | ||
l. | Cash | $1,800 | $3,600 |
Utility expenses Account no 602
Date | PR | Account title | Debit | Credit | Balance |
h. | Cash | $635 | $635 |
3
Introduction: A journal is used to record financial transactions. It shows the debits and credits of each transaction. The process of recording transactions is called journalizing. After journalizing, the transactions are posted into ledgers.
The
3
Answer to Problem 4PSA
Trial balance total is $291,350.
Explanation of Solution
HV Consulting
Trial balance
For the month ended September
Account title | Debit | Credit |
Cash | $12,665 | |
Accounts receivable | $2,250 | |
Office equipment | $50,900 | |
Office supplies | $2,000 | |
Building | $160,000 | |
Automobiles | $16,500 | |
Land | $40,000 | |
Accounts payable | $5,600 | |
Note payable | $170,000 | |
HV Capital | $101,500 | |
HV Withdrawals | $2,800 | |
Fees earned | $14,250 | |
Salary expense | $3,600 | |
Utility expenses | $635 | |
Total | $291,350 | $291,350 |
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Chapter 2 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
- Inner Resources Company started its business on April 1, 2019. The following transactions occurred during the month of April. Prepare the journal entries in the journal on Page 1. A. The owners invested $8,500 from their personal account to the business account. B. Paid rent $650 with check #101. C. Initiated a petty cash fund $550 check #102. D. Received $750 cash for services rendered. E. Purchased office supplies for $180 with check #103. F. Purchased computer equipment $8,500, paid $1,600 with check #104 and will pay the remainder in 30 days. G. Received $1,200 cash for services rendered. H. Paid wages $560, check #105. I. Petty cash reimbursement office supplies $200, Maintenance Expense $140, Miscellaneous Expense $65. Cash on Hand $93. Check #106. J. Increased Petty Cash by $100, check #107.arrow_forwardTransaction Analysis and Financial Statements Just Rolling Along Inc. was organized on May 1 by two college students who recognized an opportunity to make money while spending their days at a beach along Lake Michigan. The two entrepreneurs plan to rent bicycles and in-line skates to weekend visitors to the lakefront. The following transactions occurred during the first month of operations: May 1: Received contribution of $9,000 from each of the two principal owners of the new business in exchange for shares of stock. May 1: Purchased ten bicycles for $300 each on an open account. The company has 30 days to pay for the bicycles. May 5: Registered as a vendor with the city and paid the $15 monthly fee. May 9: Purchased 20 pairs of in-line skates at $125 per pair, 20 helmets at $50 each, and 20 sets of protective gear (knee and elbow pads and wrist guards) at $45 per set for cash. May 10: Purchased $100 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. May 15: Paid $125 bill from local radio station for advertising for the last two weeks of May. May 17: Customers rented in-line skates and bicycles for cash of $1,800. May 24: Billed the local park district $1,200 for in-line skating lessons provided to neighborhood children. The park district is to pay one-half of the bill within five working days and the rest within 30 days. May 29: Received 50% of the amount billed to the park district. May 30: Customers rented in-line skates and bicycles for cash of $3,000. May 30: Paid wages of $160 to a friend who helped over the weekend. May 31: Paid the balance due on the bicycles. Required Prepare a table to summarize the preceding transactions as they affect the accounting equation. Use the format in Exhibit 3-1. Identify each transaction with the date. Prepare an income statement for the month of May. Prepare a classified balance sheet at May 31. Why do you think the two college students decided to incorporate their business rather than operate it as a partnership?arrow_forwardLavender Company started its business on April 1, 2019. The following are the transactions that happened during the month of April. Prepare the journal entries in the journal on Page 1. A. The owners invested $7,500 from their personal account to the business account. B. Paid rent $600 with check #101. C. Initiated a petty cash fund $250 check #102. D. Received $350 cash for services rendered. E. Purchased office supplies for $125 with check #103. F. Purchased computer equipment $1,500, paid $500 with check #104, and will pay the remainder in 30 days. G. Received $750 cash for services rendered. H. Paid wages $375, check #105. I. Petty cash reimbursement Office Supplies $50, Maintenance Expense $80, Miscellaneous Expense $60. Cash on hand $8. Check #106. J. Increased Petty Cash by $70, check #107.arrow_forward
- Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on transactions that occurred during the year: a. Purchased supplies on credit, $18,600 b. Paid $14,800 cash toward the purchase in Transaction a c. Provided services to customers on credit1 $46,925 d. Collected $39,650 cash from accounts receivable e. Recorded depreciation expense, $8,175 f. Employee salaries accrued, $15,650 g. Paid $15,650 cash to employees for salaries earned h. Accrued interest expense on long-term debt, $1,950 i. Paid a total of $25,000 on long-term debt, which includes $1.950 interest from Transaction h j. Paid $2,220 cash for l years insurance coverage in advance k. Recognized insurance expense, $1,340, that was paid in a previous period l. Sold equipment with a book value of $7,500 for $7,500 cash m. Declared cash dividend, $12,000 n. Paid cash dividend declared in Transaction m o. Purchased new equipment for $28,300 cash. p. Issued common stock for $60,000 cash q. Used $10,700 of supplies to produce revenues Summit Sales uses the indirect method to prepare its statement of cash flows. Required: 1. Construct a table similar to the one shown at the top of the next page. Analyze each transaction and indicate its effect on the fundamental accounting equation. If the transaction increases a financial statement element, write the amount of the increase preceded by a plus sign (+) in the appropriate column. If the transaction decreases a financial statement element, write the amount of the decrease preceded by a minus sign (-) in the appropriate column. 2. Indicate whether each transaction results in a cash inflow or a cash outflow in the Effect on Cash Flows column. If the transaction has no effect on cash flow, then indicate this by placing none in the Effect on Cash Flows column. 3. For each transaction that affected cash flows, indicate whether the cash flow would be classified as a cash flow from operating activities, cash flow from investing activities, or cash flow from financing activities. If there is no effect on cash flows, indicate this as a non-cash activity.arrow_forwardB. 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_forwardDomingo Company started its business on January 1, 2019. The following transactions occurred during the month of May. Prepare the journal entries in the journal on Page 1. A. The owners invested $10,000 from their personal account to the business account. B. Paid rent $500 with check #101. C. Initiated a petty cash fund $500 with check #102. D. Received $1,000 cash for services rendered. E. Purchased office supplies for $158 with check #103. F. Purchased computer equipment $2,500, paid $1,350 with check #104, and will pay the remainder in 30 days. G. Received $800 cash for services rendered. H. Paid wages $600, check #105. I. Petty cash reimbursement: office supplies $256, maintenance expense $108, postage expense $77, miscellaneous expense $55. Cash on hand $11. Check #106. J. Increased petty cash by $30, check #107.arrow_forward
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