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Chapter 2: 21E (page 96)

Question:E2-21 Journalizing transactions from T-accounts In December 2018, the first five transactions of Abling’s Lawn Care Company have been posted to the T-accounts. Prepare the journal entries that served as the sources for the five transactions. Include an explanation for each entry

Cash

  1. 57,000 40,000 (3) 3,800 (5) (2) 800 (3) 40,000 Office Supplies Common Stock Building Equipment Accounts Payable 800 (2) 46,000 (4) (5) 3,800 Notes Payable 57,000 (1) (4) 46,000 40,000 (3) 3,800 (5) (2) 800 (3) 40,000 Office Supplies Common Stock Building Equipment Accounts Payable 800 (2) 46,000 (4) (5) 3,800 Notes Payable 57,000 (1)

Short Answer

Expert verified

T-Account is a ledger account in the form t-shape and journal entries are recorded. Journal entry shown in step 2.

Step by step solution

01

Step-by-Step SolutionStep 1: Definition of T-Account

T-Account is defined as the summarised format of the ledger accounts which is prepared in the form of a T-shape.

02

Recording Journal Entries

Journal entry

Date

Particulars

Amount ($)

Amount ($)

1)

Cash

$57,000

Common Stock

$57,000

(Common stock issued for cash)

2)

Office Supplies

$800

Accounts Payable

$800

(Office supplies purchased on credit)

3)

Building

$40,000

Cash

$40,000

(Building purchased for cash)

4)

Cash

$46,000

Notes Payable

$46,000

(Cash raised using notes payable)

5)

Equipment

$3,800

Cash

$3,800

(Equipment purchased using cash)

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Most popular questions from this chapter

What are the four parts of a journal entry?

Question: Calculating the debt ratio

John Hart, M.D., reported the following trial balance as of September 30, 2018:

Account Title Office Supplies Cash Debit Credit Accounts Receivable Office Equipment Land Building Accounts Payable Utilities Payable Unearned Revenue Notes Payable Advertising Expense Utilities Expense Salaries Expense Service Revenue Dividends Common Stock Total Balance \( 256,700 \) 1,600 24,795 69,000 50,505 110,000 200 \( 30,000 \) 256,700 29,000 23,500 1,100 57,000 7,900 3,000 30,000 75,000 800 J

Calculate the debt ratio for John Hart, M.D

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.

Question:Preparing financial statements from the trial balance and calculating the debt ratio

Preparing financial statements from the trial balance and calculating the debt ratio

Account Title Debit Credit

Office Supplies 1,400

Cash 32,000

Accounts Receivable 9,100

Prepaid Insurance 2,600

Equipment 24,000

Accounts Payable 3,400

Unearned Revenue 1,296

Notes Payable 34,000

Common Stock 20,000

Dividends 3,000

Salaries Expense 1,600

Rent Expense 700

Utilities Expense 100

Service Revenue 15,804

Total Balance \( 74,500 \) 74,500

Requirements 4. Calculate the debt ratio as of July 31, 2018.

Question:The following transactions occurred for Lawrence Engineering:

Jul. 2 Received \(14,000 contribution from Brett Lawrence in exchange for common stock.

4 Paid utilities expense of \)370.

5 Purchased equipment on account, \(1,600.

10 Performed services for a client on account, \)2,900.

12 Borrowed \(7,100 cash, signing a notes payable.

19 Cash dividends of \)200 were paid to stockholders.

21 Purchased office supplies for $840 and paid cash.

27 Paid the liability from July 5.

Requirements 1. Open the following T-accounts for Lawrence Engineering: Cash; Accounts Receivable; Office Supplies; Equipment; Accounts Payable; Notes Payable; Common Stock; Dividends; Service Revenue; and Utilities Expense.
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