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Financial & Managerial Accounting
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Short Answer

Question: Denzel Brooks opened a web consulting business called Venture Consultants and completed the following transactions in March.

March 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company in exchange for common stock.

2 The company prepaid $6,000 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $6,000.)

3 The company made credit purchases of office equipment for $3,000 and office supplies for $1,200. 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 $7,500 project for a client, who must pay within 30 days.

12 The company paid $4,200 cash to settle the account payable created on March 3.

19 The company paid $5,000 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $5,000.)

22 The company received $3,500 cash as partial payment for the work completed on March 9.

25 The company completed work for another client for $3,820 on credit.

29 The company paid $5,100 cash in dividends.

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

31 The company paid $500 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.

The total of cash ledger balance amounts to $136,700.

See the step by step solution

Step by Step Solution

Step 1: General Ledger (part 1)

Cash Account No. 101

Date

PR

Debit

Credit

Balance

Mar 1

G1

$ 150,000

$ 150,000

2

G1

$ 6,000

144,000

6

G1

4,000

148,000

12

G1

4,200

143,800

19

G2

5,000

138,800

22

G2

3,500

142,300

29

G2

5,100

137,200

31

G2

500

136,700

Accounts Receivables Account No. 106

Date

PR

Debit

Credit

Balance

Mar 9

G1

$ 7,500

$ 7,500

22

G2

$ 3,500

4,000

25

G2

3,820

7,820

Office Supplies Account No. 124

Date

PR

Debit

Credit

Balance

Mar 3

G1

$ 1,200

$ 1,200

30

G1

600

1,800

Prepaid Insurance Account No. 128

Date

PR

Debit

Credit

Balance

Mar 19

G2

$ 5,000

$ 5,000

Step 2: General Ledger (part 2)

Prepaid Rent Account No. 131

Date

PR

Debit

Credit

Balance

Mar 2

G1

$ 6,000

$ 6,000

Office Equipment Account No. 163

Date

PR

Debit

Credit

Balance

Mar 1

G1

$ 22,000

$ 22,000

3

G1

3,000

$ 25,000

Accounts Payable Account No. 201

Date

PR

Debit

Credit

Balance

Mar 3

G1

$ 4,200

$ 4,200

12

G1

$ 4,200

30

G2

600

600

Common Stock Account No. 307

Date

PR

Debit

Credit

Balance

Mar 1

G1

$ 172,000

$ 172,000

Dividends Account No. 319

Date

PR

Debit

Credit

Balance

Apr 29

G2

$ 5,100

$ 5,100

Service Revenue Account No. 403

Date

PR

Debit

Credit

Balance

Mar 6

G1

$ 4,000

$ 4,000

9

G1

7,500

7,500

25

G2

3,820

3,820

Step 3: General Ledger (part 3)

Utility Expenses Account No. 690

Date

PR

Debit

Credit

Balance

Mar 31

G2

$ 500

$ 500

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

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

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

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

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