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Horngren'S Financial And Managerial Accounting
Found in: Page 115

Short Answer

Journalizing transactions, posting to T-accounts, and preparing a trial balance

Consider the following transactional data for the first month of operations for Crystal Clear Cleaning.

Nov. 1 Stockholders contributed $15,000 and a truck, with a market value of $3,000, to the business in exchange for common stock.

2 The business paid $4,000 to Pleasant Properties for November through February rent. (Debit Prepaid Rent)

3 Paid $4,800 for a business insurance policy for the term November 1, 2018 through October 31, 2019. (Debit Prepaid Insurance)

4 Purchased cleaning supplies on account, $320.

5 Purchased on account an industrial vacuum cleaner costing $1,500. The invoice is payable November 25.

7 Paid $3,900 for a computer and printer.

9 Performed cleaning services on account in the amount of $4,700.

10 Received $200 for services rendered on November 9. 15 Paid employees, $400.

16 Received $15,000 for a 1-year contract beginning November

16 for cleaning services to be provided. Contract begins November 16, 2018, and ends November 15, 2019. (Credit Unearned Revenue)

17 Provided cleaning services and received $400 cash.

18 Received a utility bill for $175 with a due date of December 4, 2018. (Use Accounts Payable)

20 Borrowed $36,000 from bank with interest rate of 6% per year.

21 Received $500 on account for services performed on November 9.

25 Paid $750 on account for vacuum cleaner purchased on November 5.

29 Paid $200 for advertising.

30 Cash dividends of $1,400 were paid to stockholders

Requirements 1. Journalize the transactions, using the following accounts: Cash; Accounts Receivable; Cleaning Supplies; Prepaid Rent; Prepaid Insurance; Equipment; Truck; Accounts Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Advertising Expense; and Utilities Expense. Explanations are not required.

Accounts payable is the amount to the supplier and the required journal entries are recorded in Step 2

See the step by step solution

Step by Step Solution

Step 1: Definition of Accounts Payable

The accounts payable are defined as the amount owed by the company to the supplier of goods or services.

Step 2: Recording Journal Entries

Journal entry

Date

Particulars

Debit ($)

Credit ($)

Nov

1

Cash

$15,000

Truck

$3,000

Common stock

$18,000

2

Prepaid Rent

$4,000

Cash

$4,000

3

Prepaid Insurance

$4,800

Cash

$4,800

4

Cleaning Supplies

$320

Accounts Payable

$320

5

Equipment

$1,500

Accounts Payable

$1,500

7

Equipment

$3,900

Cash

$3,900

9

Accounts Receivables

$4,700

Service Revenue

$4,700

10

Cash

$200

Accounts Receivables

$200

15

Salary Expense

$400

Cash

$400

16

Cash

$15,000

Unearned Revenue

$15,000

17

Cash

$400

Service Revenue

$400

18

Utility Expense

$175

Accounts Payable

$175

20

Cash

$36,000

Notes Payable

$36,000

21

Cash

$500

Accounts Receivables

$500

25

Accounts Payable

$750

Cash

$750

29

Advertising Expense

$200

Cash

$200

30

Dividends

$1,400

Cash

$1,400

Most popular questions for Business-studies Textbooks

Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance

Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:

Sep. 1 Received $48,000 cash and issued common stock to Simpson.

4 Purchased office supplies, $1,200, and furniture, $1,300, on account.

6 Performed services for a law firm and received $1,900 cash.

7 Paid $18,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the $1,200 within one week.

14 Paid for the furniture purchased on September 4 on account.

15 Paid assistant’s semimonthly salary, $1,500.

17 Received cash on account, $1,000.

20 Prepared a design for a school on account, $650.

25 Received $2,100 cash for design services to be performed in October.

28 Received $2,900 cash for consulting with Plummer & Gordon.

29 Paid $600 cash for a 12-month insurance policy starting on October 1.

30 Paid assistant’s semimonthly salary, $1,500.

30 Paid monthly rent expense, $600.

30 Received a bill for utilities, $350. The bill will be paid next month.

30 Paid cash dividends of $3,700.

Requirements 1. Record each transaction in the journal using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Furniture; Accounts Payable; Utilities Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanations are not required.

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