Question

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.

Short answer

The accounts payable is the amount owed to suppliers and required journal entries are passed in step 2.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of Accounts Payable

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

Recording Journal Entries

	Journal entry
Date	Particulars	Debit ($)	Credit ($)
Sep
1	Cash	$48,000
	Common Stock		$48,000
4	Office Supplies	$1,200
	Furniture	$1,300
	Accounts Payable		$2,500
6	Cash	$1,900
	Service Revenue		$1,900
7	Land	$18,000
	Cash		$18,000
10	Accounts Receivables	$1,200
	Service Revenue		$1,200
14	Accounts Payable	$1,300
	Cash		$1,300
15	Salary Expense	$1,500
	Cash		$1,500
17	Cash	$1,000
	Accounts Receivables		$1,000
20	Accounts Receivables	$650
	Service Revenue		$650
25	Cash	$2,100
	Unearned Revenue		$2,100
28	Cash	$2,900
	Service Revenue		$2,900
29	Prepaid Insurance	$600
	Cash		$600
30	Salary Expense	$1,500
	Cash		$1,500
30	Rent expense	$600
	Cash		$600
30	Utilities Expense	$350
	Utilities Payable		$350
30	Dividends	$3,700
	Cash		$3,700