Chapter 2: 10RQ (page 90)
Where are transactions initially recorded?
The transaction is an exchange of good or service for some price consideration between two parties and in accounting the transactions are firstly recorded in the journal.
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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.
Requirements
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.
What is the purpose of the trial balance?
Journalizing transactions
Harper Sales Consultants completed the following transactions during the latter part of January:
Jan. 22 Performed services for customers on account, \(7,500.
30 Received cash on account from customers, \)8,000.
31 Received a utility bill, \(220, which will be paid during February.
31 Paid monthly salary to salesman, \)2,500.
31 Received \(2,310 for three months of consulting service to be performed starting in February.
31 Cash dividends of \)950 were paid to stockholders.
Journalize the transactions of Harper Sales Consultants. Include an explanation with each journal entry.
Question:Preparing financial statements from the trial balance and calculating the debt ratio
The trial balance as of July 31, 2018, for Sara Simon, Registered Dietician, is presented below:
Account Title Debit Credit
Office Supplies 2,300
Cash 38,000
Accounts Receivable 9,000
Prepaid Insurance 2,400
Equipment 16,000
Accounts Payable 3,000
Unearned Revenue 3,912
Notes Payable 31,000
Common Stock 18,000
Dividends 2,800
Salaries Expense 1,700
Rent Expense 1,100
Utilities Expense 500
Service Revenue 17,888
Total Balance \( 73,800 \) 73,800
Requirements 3. Prepare the balance sheet as of July 31, 2018.
Question: Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance Victor Yang practices medicine under the business title Victor Yang, M.D. During March, the medical practice completed the following transactions:
Mar. 1 Yang contributed \(62,000 cash to the business in exchange for common stock.
5 Paid monthly rent on medical equipment, \)570.
9 Paid \(14,000 cash to purchase land to be used in operations.
10 Purchased office supplies on account, \)1,500.
19 Borrowed \(27,000 from the bank for business use.
22 Paid \)1,400 on account.
28 The business received a bill for advertising in the daily newspaper to be paid in April, \(220.
31 Revenues earned during the month included \)6,700 cash and \(5,800 on account.
31 Paid employees’ salaries \)2,100, office rent \(1,500, and utilities \)350. Record as a compound entry.
31 The business received \(1,000 for medical screening services to be performed next month.
31 Paid cash dividends of \)7,100.
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; and Advertising Expense. Requirements 1. Journalize each transaction. Explanations are not required.
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