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Financial & Managerial Accounting
Found in: Page 89
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: 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

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

The total of general journal matches at $119,890.

See the step by step solution

Step by Step Solution

Step 1: Journal Entry (part 1) 

General Journal

Page 1

Date

Description

PR

Debit

Credit

Sept 1

Cash

101

$ 38,000

Office Equipment

163

15,000

Common Stock

307

$ 106,000

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

2

Prepaid Rent

131

9,000

Cash

101

9,000

Being rent paid in advance

4

Office Equipment

163

8,000

Office Supplies

124

2,400

Accounts Payable

201

10,400

Being office equipment and supplies purchased on credit

8

Cash

101

3,280

Service Revenue

401

3,280

Being cash received for providing services

12

Accounts Receivables

106

15.400

Service Revenues

403

15,400

Being services provided and payment due to receive

13

Accounts Payable

201

10,400

Cash

101

10,400

Being cash paid to creditors

19

Prepaid Insurance

128

1,900

Cash

101

1,900

Being insurance premium paid for 12 months

Carried Forward

$ 103,380

$ 103,380

Step 2: Journal Entry (part 2)

General Journal

Page 2

Date

Description

PR

Debit

Credit

Brought Forward

$ 103,380

$ 103,380

22

Cash

101

7,700

Accounts Receivables

106

7,700

Being amount received from receivables

24

Accounts Receivables

106

2,100

Service Revenues

403

2,100

Being services provided on credit

28

Dividends

319

5,300

Cash

101

5,300

Being dividend paid

29

Office supplies

124

550

Accounts payable

201

550

Being supplies purchased on credit

30

Utility Expense

690

860

Cash

101

860

Being utility expenses paid

Total

$ 119,890

$ 119,890

Most popular questions for Business-studies Textbooks

Zucker Management Services opened for business and completed these transactions in November.

Nov. 1 Matt Zucker, the owner, invested $30,000 cash along with $15,000 of office equipment in the company in exchange for common stock.

2 The company prepaid $4,500 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $4,500.)

4 The company made credit purchases of office equipment for $2,500 and of office supplies for $600. Payment is due within 10 days.

8 The company completed work for a client and immediately received $3,400 cash.

12 The company completed a $10,200 project for a client, who must pay within 30 days.

13 The company paid $3,100 cash to settle the payable created on November 4.

19 The company paid $1,800 cash for the premium on a 24-month insurance policy.

22 The company received $5,200 cash as partial payment for the work completed on November 12.

24 The company completed work for another client for $1,750 on credit.

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

29 The company purchased $249 of additional office supplies on credit.

30 The company paid $831 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 the journal entries from part 1 to the ledger 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

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

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