Question

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.

Short answer

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

Step-by-step solution

Definition of Accounts Payable

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

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