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
3. Post the journal entries to the T-accounts, and calculate account balances
The trial balance shows the balances into debit and credit and the required trial balance is prepared in Step 2.
The trial balance is defined as the accounting equation worksheet which records the ledger balance into debits and credits.
Crystal Clear Cleaning
November 30, 2018
Question: The following transactions occurred for Wilke Technology Solutions:
May 1 The business received cash of $105,000 and issued common stock to Zoe Wilke.
2 Purchased office supplies on account, $550.
4 Paid $57,000 cash for building and land. The building had a fair market value of $45,000.
6 Performed services for customers and received cash, $3,600.
9 Paid $350 on accounts payable.
17 Performed services for customers on account, $3,500.
19 Paid rent expense for the month, $1,200.
20 Received $1,500 from customers for services to be performed next month.
21 Paid $900 for advertising in next month’s IT Technology magazine.
23 Received $3,100 cash on account from a customer.
31 Incurred and paid salaries, $1,700
Posting journal entries to four-column accounts
Requirements 1. Open four-column accounts using the following account numbers: Cash, 110; Accounts Receivable, 120; Office Supplies, 130; Prepaid Advertising, 140; Land, 150; Building, 160; Accounts Payable, 210; Unearned Revenue, 220; Common Stock, 310; Service Revenue, 410; Rent Expense, 510; and Salaries Expense, 520.
Using the following accounts and their balances, calculate the debt ratio for Cooper Furniture Repair as of December 31.
Cash $ 7,000 Advertising Expense $ 1,200
Unearned Revenue 4,500 Utilities Expense 800
Equipment 10,000 Rent Expense 5,000
Service Revenue 8,000 Accounts Payable 2,300
Common Stock 12,200 Dividends 3,000
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
Terrence Murphy opened a law office on January 1, 2018. During the first month of operations, the business completed the following transactions:
Jan. 1 Murphy contributed $78,000 cash to the business, Terrence Murphy, Attorney. The business issued common stock to Murphy.
3 Purchased office supplies, $600, and furniture, $1,700, on account.
4 Performed legal services for a client and received $1,000 cash.
7 Purchased a building with a market value of $130,000, and land with a market value of $25,000. The business paid $25,000 cash and signed a note payable to the bank for the remaining amount.
11 Prepared legal documents for a client on account, $400.
15 Paid assistant’s semimonthly salary, $1,120.
16 Paid for the office supplies purchased on January 3 on account.
18 Received $2,700 cash for helping a client sell real estate.
19 Defended a client in court and billed the client for $1,800.
25 Received a bill for utilities, $600. The bill will be paid next month.
29 Received cash on account, $1,500.
30 Paid $1,200 cash for a 12-month insurance policy starting on February 1.
30 Paid assistant’s semimonthly salary, $1,120.
31 Paid monthly rent expense, $1,800.
31 Paid cash dividends of $2,200.
2. Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Land, 141; Building, 151; Furniture, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.
Journalizing transactions, posting to T-accounts, and preparing a trial balance
Problem P2-42 continues with the company introduced in Chapter 1, Canyon Canoe Company. Here you will account for Canyon Canoe Company’s transactions as it is actually done in practice. Begin by reviewing the transactions from Chapter 1. The transactions have been reprinted below.
Nov. 1 Received $16,000 cash to begin the company and issued common stock to Amber and Zach.
2 Signed a lease for a building and paid $1,200 for the first month’s rent.
3 Purchased canoes for $4,800 on account.
4 Purchased office supplies on account, $750.
7 Earned $1,400 cash for rental of canoes.
13 Paid $1,500 cash for wages.
15 Paid $50 dividends to stockholders.
16 Received a bill for $150 for utilities. (Use separate payable account.)
20 Received a bill for $175 for cell phone expenses. (Use separate payable account.)
22 Rented canoes to Early Start Daycare on account, $3,000.
26 Paid $1,000 on account related to the November 3 purchase.
28 Received $750 from Early Start Daycare for canoe rental on November 22.
30 Paid $100 dividends to stockholders
In addition, Canyon Canoe Company completed the following transactions for December.
Dec. 1 Amber and Zack contributed land on the river (worth $85,000) and a small building to use as a rental office (worth $35,000) in exchange for common stock.
1 Prepaid $3,000 for three months’ rent on the warehouse where the company stores the canoes.
2 Purchased canoes signing a note payable for $7,200
4 Purchased office supplies on account for $500.
9 Received $4,500 cash for canoe rentals to customers.
15 Rented canoes to customers for $3,500, but will be paid next month.
16 Received a $750 deposit from a canoe rental group that will use the canoes next month.
18 Paid the utilities and telephone bills from last month.
19 Paid various accounts payable, $2,000.
20 Received bills for the telephone ($325) and utilities ($295) which will be paid later.
31 Paid wages of $1,800. 31 Paid cash dividend to stockholders, $300.
1. Journalize the transactions for both November and December, using the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Rent; Land; Building; Canoes; Accounts Payable; Utilities Payable; Telephone Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Canoe Rental Revenue; Rent Expense; Utilities Expense; Wages Expense; and Telephone Expense. Explanations are not required. (Hint: For November transactions, refer to your answer for Chapter 1.)
2. Open a T-account for each of the accounts.
3. Post the journal entries to the T-accounts, and calculate account balances. Formal posting references are not required.
4. Prepare a trial balance as of December 31, 2018.
5. Prepare the income statement of Canyon Canoe Company for the two months ended December 31, 2018.
6. Prepare the statement of retained earnings for the two months ended December 31, 2018.
7. Prepare the balance sheet as of December 31, 2018.
8. Calculate the debt ratio for Canyon Canoe Company at December 31, 2018
Before you begin this assignment, review the Tying It All Together feature in the chapter. Part of the Fry’s Electronics, Inc.’s experience involves providing technical support to its customers. This includes in-home installations of electronics and also computer support at their retail store locations.
3. What is the difference in how revenue is recorded in requirements 1 and 2? Clearly state when revenue is recorded in each requirement.
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