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Q. 2-4PSA-1

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Financial & Managerial Accounting
Found in: Page 88
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Business transactions completed by Hannah Venedict during the month of September are as follows.

a. Venedict invested $60,000 cash along with office equipment valued at $25,000 in exchange for common stock of a new company named HV Consulting.

b. The company purchased land valued at $40,000 and a building valued at $160,000. The purchase is paid with $30,000 cash and a long-term note payable for $170,000.

c. The company purchased $2,000 of office supplies on credit.

d. Venedict invested her personal automobile in the company in exchange for more common stock. The automobile has a value of $16,500 and is to be used exclusively in the business.

e. The company purchased $5,600 of additional office equipment on credit.

f. The company paid $1,800 cash salary to an assistant.

g. The company provided services to a client and collected $8,000 cash.

h. The company paid $635 cash for this month’s utilities.

i. The company paid $2,000 cash to settle the account payable created in transaction c.

j. The company purchased $20,300 of new office equipment by paying $20,300 cash.

k. The company completed $6,250 of services for a client, who must pay within 30 days.

l. The company paid $1,800 cash salary to an assistant.

m. The company received $4,000 cash in partial payment on the receivable created in transaction k.

n. The company paid $2,800 cash in dividends.

Required

1. Prepare general journal entries to record these transactions (use account titles listed in part 2).

The total of general journal matches at $356,685.

See the step by step solution

Step by Step Solution

Journal Entry (part 1)

General Journal

Page 1

Date

Description

PR

Debit

Credit

a

Cash

101

$ 60,000

Office Equipment

163

25,000

Common Stock

307

$ 85,000

Being investment made into the business in the form of cash and equipment

b.

Land

172

40,000

Building

170

160,000

Cash

101

30,000

Notes Payable

250

1,70,000

Being land and building purchased against cash and notes payable

c

Office Supplies

108

2,000

Accounts Payable

101

2,000

Being office supplies purchased on credit

d

Automobiles

164

16,500

Common Stock

307

16,500

Being automobiles invested into the business

e

Office Equipment

163

5,600

Accounts Payable

201

5,600

Being equipment purchased on credit

f

Salaries Expense

601

1,800

Cash

101

1,800

Being salary paid to assistant

g

Cash

101

8,000

Fees Earned

402

8,000

Being Services provided and amount due

Carried Forward

$ 318,900

$ 318,900

Journal Entry (part 2)

General Journal

Page 2

Date

Description

PR

Debit

Credit

Brought Forward

$ 318,900

$ 318,900

h

Utilities Expense

602

635

Cash

101

635

Being utilities expenses incurred

i

Accounts Payable

201

2,000

Cash

101

2,000

Being account settled for equipment purchased

j.

Office Equipment

163

20,300

Cash

101

20,300

Being equipment purchased on credit

k

Accounts Receivables

101

6,250

Fees Earned

402

6,250

Being services provided to client and amount due

l

Salaries Expense

601

1,800

Cash

101

1,800

Being salaries expenses paid to assistant

m

Cash

101

4,000

Accounts Receivables

106

4,000

Being cash collected from the customer

n

Dividends

319

2,800

Cash

101

2,800

Being dividend paid

Carried Forward

$ 356,685

$ 356,685

Most popular questions for Business-studies Textbooks

Question: Aracel Engineering completed the following transactions in the month of June.

a. Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment to launch the company in exchange for common stock.

b. The company purchased land worth $49,000 for an office by paying $6,300 cash and signing a longterm note payable for $42,700.

c. The company purchased a portable building with $55,000 cash and moved it onto the land acquired in b.

d. The company paid $3,000 cash for the premium on an 18-month insurance policy.

e. The company completed and delivered a set of plans for a client and collected $6,200 cash.

f. The company purchased $20,000 of additional drafting equipment by paying $9,500 cash and signing a long-term note payable for $10,500.

g. The company completed $14,000 of engineering services for a client. This amount is to be received in 30 days.

h. The company purchased $1,150 of additional office equipment on credit.

i. The company completed engineering services for $22,000 on credit.

j. The company received a bill for rent of equipment that was used on a recently completed job. The $1,333 rent cost must be paid within 30 days.

k. The company collected $7,000 cash in partial payment from the client described in transaction g.

l. The company paid $1,200 cash for wages to a drafting assistant.

m. The company paid $1,150 cash to settle the account payable created in transaction h.

n. The company paid $925 cash for minor maintenance of its drafting equipment.

o. The company paid $9,480 cash in dividends.

p. The company paid $1,200 cash for wages to a drafting assistant.

q. The company paid $2,500 cash for advertisements on the web during June.

Required

2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Prepaid Insurance (108); Office Equipment (163); Drafting Equipment (164); Building (170); Land (172); Accounts Payable (201); Notes

Payable (250); Common Stock (307); Dividends (319); Engineering Fees Earned (402); Wages Expense (601); Equipment Rental Expense (602); Advertising Expense (603); and Repairs Expense (604). Post the journal entries from part 1 to the accounts and enter the balance after each posting.

At the beginning of April, Bernadette Grechus launched a custom computer solutions company called Softworks. The company had the following transactions during April.

a. Bernadette Grechus invested $65,000 cash, office equipment with a value of $5,750, and $30,000 of computer equipment in the company in exchange for common stock.

b. The company purchased land worth $22,000 for an office by paying $5,000 cash and signing a longterm note payable for $17,000.

c. The company purchased a portable building with $34,500 cash and moved it onto the land acquired in b.

d. The company paid $5,000 cash for the premium on a two-year insurance policy.

e. The company provided services to a client and immediately collected $4,600 cash.

f. The company purchased $4,500 of additional computer equipment by paying $800 cash and signing a long-term note payable for $3,700.

g. The company completed $4,250 of services for a client. This amount is to be received within 30 days.

h. The company purchased $950 of additional office equipment on credit.

i. The company completed client services for $10,200 on credit.

j. The company received a bill for rent of a computer testing device that was used on a recently completed job. The $580 rent cost must be paid within 30 days.

k. The company collected $5,100 cash in partial payment from the client described in transaction i.

l. The company paid $1,800 cash for wages to an assistant.

m. The company paid $950 cash to settle the payable created in transaction h.

n. The company paid $608 cash for minor maintenance of the company’s computer equipment.

o. The company paid $6,230 cash in dividends.

p. The company paid $1,800 cash for wages to an assistant.

q. The company paid $750 cash for advertisements on the web during April.

Required

2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Prepaid Insurance (108); Office Equipment (163); Computer Equipment (164); Building (170); Land (172); Accounts Payable (201); Notes Payable (250); Common Stock (307); Dividends (319); Fees Earned (402); Wages Expense (601); Computer Rental Expense (602); Advertising Expense (603); and Repairs Expense (604). Post the journal entries from part 1 to the accounts and enter the balance after each posting.

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