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Chapter 2: 6SE (page 92)

Journalizing transactions

Harper Sales Consultants completed the following transactions during the latter part of January:

Jan. 22 Performed services for customers on account, \(7,500.

30 Received cash on account from customers, \)8,000.

31 Received a utility bill, \(220, which will be paid during February.

31 Paid monthly salary to salesman, \)2,500.

31 Received \(2,310 for three months of consulting service to be performed starting in February.

31 Cash dividends of \)950 were paid to stockholders.

Journalize the transactions of Harper Sales Consultants. Include an explanation with each journal entry.

Short Answer

Expert verified

The dividend is distributed profit and required journal entries are passed is step 2.

Step by step solution

01

Definition of Dividend

The dividends are defined as the part of profits that are distributed to the owner or shareholder of the company.

02

Journal Entries

Journal entry

Date

Particulars

Debit ($)

Credit ($)

Jan

22

Accounts Receivables

7,500

Service Revenue

7,500

(Services provided on credit)

30

Cash

8,000

Accounts Receivables

8,000

(Cash received from clients)

31

Utility Expense

220

Accounts Payable

220

(Utility expense incurred)

31

Salary Expense

2,500

Cash

2,500

(Salary expenses are paid)

31

Cash

2,310

Unearned Revenue

2,310

(Cash received for unearned revenue)

31

Dividends

950

Cash

950

(Cash Dividends are paid)

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Most popular questions from this chapter

When are credits increases? When are credits decreases?

What is the purpose of the chart of accounts? Explain the numbering typically associated with the accounts.

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

  1. Suppose Fry’s Electronics, Inc. provides $10,500 of computer support at the Dallas-Fort Worth store during the month of November. How would Fry’s Electronics record this transaction? Assume all customers paid in cash. What financial statement(s) would this transaction affect?

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

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 1. For each of these errors, state whether total debits equal total credits on the trial balance.

See all solutions

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