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Chapter 2: Q38PGB_3 (page 110)

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 17,000

Office Supplies 1,200

Accounts Receivable 10,500

Land 29,000

Furniture 0

Automobile 0

Accounts Payable 3,800

Unearned Revenue 0

Common Stock 46,200

Dividends 0

Rent Expense 1,000

Salaries Expense 2,500

Service Revenue 11,200

Total Balance \( 61,200 61,200

During April, the business completed the following transactions:

Apr. 4 Collected \)6,000 cash from a client on account.

8 Performed tax services for a client on account, \(5,500.

13 Paid \)3,300 on account.

14 Purchased furniture on account, \(4,000.

15 Menning contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)11,500.

18 Purchased office supplies on account, \(1,600.

19 Received \)2,750 for tax services performed on April 8.

20 Paid cash dividends of \(7,500.

21 Received \)4,900 cash for consulting work completed.

24 Received \(2,500 cash for accounting services to be completed next month.

27 Paid office rent, \)900.

28 Paid employee salary, $1,200.

Requirements 2. Open the four-column ledger accounts listed in the trial balance, together with their balances as of March 31. Use the following account numbers: Cash, 11; Accounts Receivable, 12; Office Supplies, 13; Land, 14; Furniture, 15; Automobile, 16; Accounts Payable, 21; Unearned Revenue, 22; Common Stock, 31; Dividends, 33; Service Revenue, 41; Salaries Expense, 51; and Rent Expense, 52.

Short Answer

Expert verified

The unearned revenue is the amount received for services not yet paid and required four-column accounts are prepared.

Step by step solution

01

Definition of Unearned Revenue

The unearned revenue is defined as the revenue for which the amount is received and the services are not yet provided.

02

Preparation of Four-Column Accounts

Cash Account Number – 11

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

Apr

$17,000

4

Accounts Receivables

$6,000

$23,000

13

Accounts Payable

$3,300

$19,700

19

Accounts Receivables

$2,750

$22,450

20

Dividends

$7,500

$14,950

21

Service Revenue

$4,900

$19,850

24

Unearned Revenue

$2,500

$22,350

27

Rent Expense

$900

$21,450

28

Salary Expense

$1,200

$20,250

Accounts Receivables Account Number – 12

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$10,500

Apr 4

Cash

$6,000

$4,500

8

Service Revenue

$5,500

$10,000

19

Cash

$2,750

$7,250

Office Supplies Account Number - 13

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$1,200

Apr 18

Accounts Payable

$1,600

$2,800

Land Account Number – 14

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$29,000

Furniture Account Number – 15

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$0

Apr 14

Accounts Payable

$4,000

$4,000

Automobile Account Number – 16

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$0

Apr 15

Common Stock

$11,500

$11,500

Accounts Payable Account Number - 21

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$3,800

Apr 13

Cash

$3,300

$500

14

Furniture

$4,000

$4,000

18

Office Supplies

$1,600

$5,600

Unearned Revenue Account Number – 22

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$0

Apr 24

cash

$2,500

$2,500

Common Stock Account Number – 31

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$46,200

Apr 15

Automobile

$11,500

$57,700

Dividends Account Number – 33

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$0

Apr 20

Cash

$7,500

$7,500

Service Revenue Account Number – 41

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$11,200

Apr 8

Accounts Receivables

$5,500

$16,700

Apr 21

Cash

$4,900

$21,600

Salaries Expense Account Number – 51

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$2,500

Apr 28

Cash

$1,200

$3,700

Rent Expense Account Number – 52

Balance

Date

Item

PR

Debit

Credit

Debit

Credit

$1,000

Apr 27

Cash

$900

$1,900

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Most popular questions from this chapter

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

Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:

Sep. 1 Received \(48,000 cash and issued common stock to Simpson.

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

6 Performed services for a law firm and received \)1,900 cash.

7 Paid \(18,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.

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

15 Paid assistant’s semimonthly salary, \(1,500.

17 Received cash on account, \)1,000.

20 Prepared a design for a school on account, \(650.

25 Received \)2,100 cash for design services to be performed in October.

28 Received \(2,900 cash for consulting with Plummer & Gordon.

29 Paid \)600 cash for a 12-month insurance policy starting on October 1.

30 Paid assistant’s semimonthly salary, \(1,500.

30 Paid monthly rent expense, \)600.

30 Received a bill for utilities, \(350. The bill will be paid next month.

30 Paid cash dividends of \)3,700.

Requirements 4. Prepare the trial balance of Ann Simpson, Designer, as of September 30, 2018.

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)

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

Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:

Sep. 1 Received \(48,000 cash and issued common stock to Simpson.

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

6 Performed services for a law firm and received \)1,900 cash.

7 Paid \(18,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.

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

15 Paid assistant’s semimonthly salary, \(1,500.

17 Received cash on account, \)1,000.

20 Prepared a design for a school on account, \(650.

25 Received \)2,100 cash for design services to be performed in October.

28 Received \(2,900 cash for consulting with Plummer & Gordon.

29 Paid \)600 cash for a 12-month insurance policy starting on October 1.

30 Paid assistant’s semimonthly salary, \(1,500.

30 Paid monthly rent expense, \)600.

30 Received a bill for utilities, \(350. The bill will be paid next month.

30 Paid cash dividends of \)3,700.

Requirements 2. Open a T-account for each of the accounts.

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
See all solutions

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