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Chapter 2: 7SE_2 (page 92)

Journalizing transactions and posting to T-accounts

Roland Foster Optical Dispensary completed the following transactions during the latter part of March:

Mar. 15 Purchased office supplies on account, \(3,400.

28 Paid \)1,800 on account.

Requirements ,

2. Open the following accounts (use T-account format): Cash (Beginning Balance of $21,000), Office Supplies, and Accounts Payable. Post the journal entries from Requirement 1 to the accounts, and compute the balance in each account.

Short Answer

Expert verified

The closing balance of cash is $19,200, the closing balance of office supplies is $3,400 and the closing balance of accounts payable is $1,600.

Step by step solution

01

T-account of Cash

Dr Cash Cr

March 1 21,000

1,800 March 28

Balance 19,200

02

T-account of Office Supplies

Dr Office Supplies Cr

March 15 3,400

Balance 3,400

03

T-account of Accounts Payable

Dr Accounts Payable Cr

March 28 1,800

3,400 March 15

1,600 Balance

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Most popular questions from this chapter

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

The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:

Cash 11,000

Office Supplies 400

Accounts Receivable 16,500

Land 30,000

Furniture 0

Automobile 0

Accounts Payable 3,800

Unearned Revenue 0

Common Stock 52,300

Dividends 0

Rent Expense 800

Salaries Expense 5,600

Service Revenue 8,200

Total Balance \( 64,300 64,300

During April, the business completed the following transactions:

Apr. 4 Collected \)2,500 cash from a client on account.

8 Performed tax services for a client on account, \(5,400.

13 Paid \)3,000 on account.

14 Purchased furniture on account, \(3,600.

15 Merry contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)9,500.

18 Purchased office supplies on account, \(900.

19 Received \)2,700 for tax services performed on April 8.

20 Paid cash dividends of \(6,500.

21 Received \)5,700 cash for consulting work completed.

24 Received \(2,400 cash for accounting services to be completed next month.

27 Paid office rent, \)600.

28 Paid employee salary, $1,700.

Requirements

  1. Record the April transactions in the journal. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Furniture; Automobile; Accounts Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; and Rent Expense. Include an explanation for each entry

Journalizing transactions John Daniel opened a medical practice in Sacramento, California, and had the following transactions during the month of January.

Jan. 1 The business received \(34,000 cash and issued common stock to Daniel.

2 Purchased medical supplies on account, \)17,000.

4 Performed services for patients receiving \(1,600.

12 Paid monthly office rent of \)3,000.

15 Recorded $7,000 revenue for services rendered to patients on account.

Journalize the transactions of John Daniel, M.D. Include an explanation with each entry.

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.

Correcting errors in a trial balance

The trial balance of Love to Learn Child Caredoes not balance.

Account Title Debit Credit

Office Supplies 1,000

Cash 8,060

Accounts Receivable 8,700

Prepaid Insurance 1,700

Equipment 90,400

Accounts Payable 3,000

Notes Payable 45,000

Common Stock 54,000

Dividends 3,740

Service Revenue 16,300

Rent Expense 400

Salaries Expense 4,350

Total Balance \( 118,350 \) 118,300

The following errors are detected:

a. Cash is understated by \(1,800.

b. A \)3,800 debit to Accounts Receivable was posted as a credit.

c. A \(1,000 purchase of office supplies on account was neither journalized nor posted.

d. Equipment was incorrectly transferred from the ledger as \)90,400. It should have been transferred as \(82,500.

e. Salaries Expense is overstated by \)350.

f. A \(300 cash payment for advertising expense was neither journalized nor posted.

g. A \)160 cash dividend was incorrectly journalized as \(1,600.

h. Service Revenue was understated by \)4,000.

i. A 12-month insurance policy was posted as a $1,400 credit to Prepaid Insurance. Cash was posted correctly.

Prepare the corrected trial balance as of May 31, 2018. Journal entries are not required.

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
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