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Financial & Managerial Accounting
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Short Answer

Roshaun Gould started a web consulting firm called Gould Solutions. He began operations and completed seven transactions in April that resulted in the following accounts, which all have normal balances.

Cash ………………………………………. $20,000

Office supplies ……………………………….. 750

Prepaid rent ………………………………… 1,800

Office equipment …………………………. 12,250

Accounts payable ………………………… 12,250

Common stock ……………………………. 15,000

Dividends ……………………………………. 5,200

Consulting fees earned ………………….. 20,400

Miscellaneous expenses ………………….. 7,650

Required

2. The following seven transactions produced the account balances shown above.

a. Gould invested $15,000 cash in the business in exchange for common stock.

b. Paid $1,800 cash in advance for next month’s rent expense.

c. Paid $7,650 cash for miscellaneous expenses.

d. Purchased office supplies for $750 cash.

e. Purchased $12,250 of office equipment on credit (with accounts payable).

f. Received $20,400 cash for consulting services provided in April.

g. The company paid $5,200 cash in dividends.

Prepare a Cash T-account, enter the cash effects (if any) of each transaction, and compute the ending Cash balance (code each entry in the T-account with one of the transaction codes a through g).

The balance for the given cash account comes out to be $20,000.

See the step by step solution

Step by Step Solution

Cash Account

A cash account lists all cash receipts and payments during a given period. The account is prepared by debiting all cash inflows and crediting the outflows. The difference between the inflows and outflows is the balance of the cash account which is generally a debit balance.

Cash account in the given case

Cash Account

a.

$ 15,000

$ 1,800

b.

f.

20,400

7,650

c.

750

d.

5,200

g.

Balance

$ 20,000

Most popular questions for Business-studies Textbooks

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

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

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