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Q.2-14E

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Financial & Managerial Accounting
Found in: Page 84
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

Question: Use information from the T-accounts in Exercise 2-13 to prepare the general journal entries that were made for each of the seven transactions a through g.

Cash Web Servers

(a) 6,000 (b) 4,800 (a) 12,000

(e) 4,500 (d) 800

(f) 900 Accounts Payable

(g) 3,400 (f) 900 (c) 900

Common Stock

(a) 25,600

Services Revenue

Supplies (e) 4,500

(c) 900

Selling Expenses

(d) 800

Prepaid Insurance

(b) 4,800

Equipment

(a) 7,600

(g) 3,400

1. The company paid $4,800 cash in advance for prepaid insurance coverage.

2. D. Belle created a new business and invested $6,000 cash, $7,600 of equipment, and $12,000 in web servers in exchange for common stock.

3. The company purchased $900 of supplies on account.

4. The company received $4,500 cash for services provided.

5. The company paid $900 cash toward accounts payable.

6. The company paid $3,400 cash for equipment.

7. The company paid $800 cash for selling expenses.

Answer

Total of journal matches at $40,900

See the step by step solution

Step by Step Solution

Step 1: Journal Entry

Journal entry is the process of recording transactions at the very beginning as soon as the transaction takes place.

Step 2: Posting Journal Entry

Transaction.

Description

Debit

Credit

1.(b)

Prepaid Insurance

$4,800

Cash

$4,800

Being amount paid for prepaid insurance

2. (a)

Cash

$6,000

Equipment

$7,600

Web Services

$12,000

Common Stock

$25,600

Being common stock brought in the form of cash, equipment, and web services

3. (c)

Supplies

$900

Cash

$900

Being supplies bought in

4. (e)

Cash

$4,500

Service revenues

$4,500

Being services provided for cash

5. (f)

Accounts Payable

$900

Cash

$900

Being accounts payable paid off

6. (g)

Equipment

$3,400

Cash

$3,400

Being equipment purchased for cash

7. (d)

Selling Expenses

$800

Cash

$800

Being selling expenses paid off

Total

$40,900

$40,900

Most popular questions for Business-studies Textbooks

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.

Question: Karla Tanner opened a web consulting business called Linkworks and completed the following transactions in its first month of operations.

Apr. 1 Tanner invested $80,000 cash along with office equipment valued at $26,000 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.)

3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. 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 $6,000 project for a client, who must pay within 30 days.

13 The company paid $11,600 cash to settle the account payable created on April 3.

19 The company paid $2,400 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $2,400.)

22 The company received $4,400 cash as partial payment for the work completed on April 9.

25 The company completed work for another client for $2,890 on credit.

28 The company paid $5,500 cash in dividends.

29 The company purchased $600 of additional office supplies on credit.

30 The company paid $435 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 (403); and Utilities Expense (690). Post journal entries from part 1 to the ledger accounts and enter the balance after each posting.

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