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Chapter 2: 3TI (page 78)

EMB Consulting Services had the following transactions for the month of November. Journalize the transactions and include an explanation with each entry.

Nov. 1 The business received \(10,000 cash and issued common stock.

15 Purchased office supplies on account, \)400.

18 Paid advertising bill, \(150.

20 Received \)1,000 from customers for services rendered.

28 Cash dividends of $500 were paid to stockholders

Short Answer

Expert verified

Answer

Dividends are profits distributed to the shareholders and required entries are passed.

Step by step solution

01

Definition of Dividends

The dividends are defined as the part of the profits of the business which are distributed among the shareholders or the owners of the company.

02

Journal Entries

Date

Particulars

Amount ($)

Amount ($)

Nov 1

Cash

10,000

Common Stock

10,000

(Common stock issued)

Nov 15

Supplies

400

Accounts Payable

400

(Supplies purchased on credit)

Nov 18

Advertising Expense

150

Cash

150

(Advertising expenses paid)

Nov 20

Cash

1,000

Service Revenue

1,000

(Cash received for service revenue)

Nov 28

Dividends

500

Cash

500

(Dividends paid in cash)

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Most popular questions from this chapter

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.

Requirements

2. Assume Fry’s Electronics, Inc.’s Modesto, California, location received $24,000 for an annual contract to provide computer support to the local city government. How would Fry’s Electronics record this transaction? What financial statement(s) would this transaction affect?

Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance

Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions:

Nov. 1 Received \(41,000 cash and issued common stock to Stewart.

4 Purchased office supplies, \)1,200, and furniture, \(2,300, on account.

6 Performed services for a law firm and received \)2,100 cash.

7 Paid \(27,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the \)800 within one week.

14 Paid for the furniture purchased on November 4 on account.

15 Paid assistant’s semimonthly salary, \(1,470.

17 Received cash on account, \)500.

20 Prepared a design for a school on account, \(680.

25 Received \)1,900 cash for design services to be performed in December.

28 Received \(3,100 cash for consulting with Plummer & Gordon.

29 Paid \)840 cash for a 12-month insurance policy starting on December 1.

30 Paid assistant’s semimonthly salary, \(1,470. 30 Paid monthly rent expense, \)650.

30 Received a bill for utilities, \(650. The bill will be paid next month.

30 Paid cash dividends of \)2,800.b

Requirements 3. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal

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 2. Post the journal entries to the four-column accounts, and determine the balance in the account after each transaction. Assume that the journal entries were recorded on page 10 of the journal. Make sure to complete the Post. Ref. columns in the journal and ledger.

Your friend, Dean McChesney, requested that you advise him on the effects that certain transactions will have on his business, A-Plus Travel Planners. Time is short, so you cannot journalize the transactions. Instead, you must analyze the transactions without a journal. McChesney will continue the business only if he can expect to earn a monthly net income of \(6,000. The business completed the following transactions during June:

a. McChesney deposited \)10,000 cash in a business bank account to start the company. The company issued common stock to McChesney.

b. Paid \(300 cash for office supplies.

c. Incurred advertising expense on account, \)700.

d. Paid the following cash expenses: administrative assistant’s salary, \(1,400; office rent, \)1,000.

e. Earned service revenue on account, \(8,800.

f. Collected cash from customers on account, \)1,200.

Requirements

4. Compute the amount of net income or net loss for this first month of operations. Would you recommend that McChesney continue in business?

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
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