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Financial & Managerial Accounting
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Short Answer

Humble Management Services opened for business and completed these transactions in September.

Sep. 1 Henry Humble, the owner, invested $38,000 cash along with office equipment valued at $15,000 in the company in exchange for common stock.

2 The company prepaid $9,000 cash for 12 months’ rent for office space. (Hint: Debit Prepaid Rent for $9,000.)

4 The company made credit purchases for $8,000 in office equipment and $2,400 in office supplies. Payment is due within 10 days.

8 The company completed work for a client and immediately received $3,280 cash.

12 The company completed a $15,400 project for a client, who must pay within 30 days.

13 The company paid $10,400 cash to settle the payable created on September 4.

19 The company paid $1,900 cash for the premium on an 18-month insurance policy. (Hint: Debit Prepaid Insurance for $1,900.)

22 The company received $7,700 cash as partial payment for the work completed on September 12.

24 The company completed work for another client for $2,100 on credit.

28 The company paid $5,300 cash in dividends.

29 The company purchased $550 of additional office supplies on credit.

30 The company paid $860 cash for this month’s utility bill.

Required

2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307); Dividends (319); Services Revenue (401); and Utilities Expense (690). Post journal entries from part 1 to the ledger accounts and enter the balance after each posting.

The total cash ledger balance amounts to $21,520.

See the step by step solution

Step by Step Solution

General Ledger (part 1)

Cash Account No. 101

Date

PR

Debit

Credit

Balance

Sept 1

G1

$ 38,000

$ 38,000

2

G1

$ 9,000

29,000

8

G1

3,280

32,280

13

G1

10,400

21,880

19

G1

1,900

19,980

22

G2

7,700

27,680

28

G2

5,300

22,380

30

G2

860

21,520

Accounts Receivables Account No. 106

Date

PR

Debit

Credit

Balance

Sept 12

G1

$ 15,400

$ 15,400

22

G2

$ 7,700

7,700

24

G2

2,100

9,800

Office Supplies Account No. 124

Date

PR

Debit

Credit

Balance

Sept 4

G1

$ 2,400

$ 2,400

29

G2

550

2,950

Prepaid Insurance Account No. 128

Date

PR

Debit

Credit

Balance

Apr 19

G1

$ 1,900

$ 1,900

Prepaid Rent Account No. 131

Date

PR

Debit

Credit

Balance

Sept 19

G1

$ 9,000

$ 9,000

General Ledger (part 2)

Office Equipment Account No. 163

Date

PR

Debit

Credit

Balance

Sept 1

G1

$ 15,000

$ 15,000

4

G1

8,000

$ 23,000

Accounts Payable Account No. 201

Date

PR

Debit

Credit

Balance

Sept 4

G1

$ 10,400

$ 10,400

13

G1

$ 10,400

29

G2

550

550

Common Stock Account No. 307

Date

PR

Debit

Credit

Balance

Sept 1

G1

$ 53,000

$ 53,000

Dividends Account No. 319

Date

PR

Debit

Credit

Balance

Sept 28

G2

$ 5,300

$ 5,300

Service Revenue Account No. 403

Date

PR

Debit

Credit

Balance

Sept 8

G1

$ 3,280

$ 3,280

12

G1

15,400

18,680

24

G2

2,100

20,780

Utility Expenses Account No. 690

Date

PR

Debit

Credit

Balance

Sept 30

G2

$ 860

$ 860

Most popular questions for Business-studies Textbooks

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

3. Prepare a trial balance as of the end of April.

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