43PS-1 Journalizing transactions, posti... [FREE SOLUTION]

Where are transactions initially recorded?

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:Courtney Meehan has trouble keeping her debits and credits equal. During a recent month, Courtney made the following accounting errors:

a. In preparing the trial balance, Courtney omitted a \(5,000 Notes Payable. The debit to Cash was correct.

b. Courtney posted a \)1,000 Utilities Expense as \(100. The credit to Cash was correct.

c. In recording a \)600 payment on account, Courtney debited Furniture instead of Accounts Payable.

d. In journalizing a receipt of cash for service revenue, Courtney debited Cash for $50 instead of the correct amount of $500. The credit was correct.

e. Courtney recorded a $210 purchase of office supplies on account by debiting Office Supplies for $120 and crediting Accounts Payable for \(120.

Requirements 2. Identify each account that has an incorrect balance and the amount and direction of the error (e.g., “Accounts Receivable \)500 too high”).

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

2. Open a T-account for each account

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.

Short Answer

Step by step solution

Definition of Accounts Payable

Recording Journal Entries

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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