The transactions of Spade Company appear below.
a. Kacy Spade, owner, invested $100,750 cash in the company in
exchange for common
stock.
b. The company purchased office supplies for $1,250. cash.
c. The company purchased $10,050 of office equipment on
credit.
d. The company received $15,500 cash as fees for services provided
to a customer.
e. The company paid $10,050 cash to settle the payable for the
office equipment
purchased in transaction c.
f. The company billed a customer $2,700 as fees for services
provided.
g. The company paid $1,225 cash for the monthly rent.
h. The company collected $1,125 cash as partial payment for the
account receivable created
in transaction f
i. The company paid a $10,000 cash dividend to the owner (sole
shareholder).
Required:
1. Prepare general journal entries to record the transactions above
for Spade Company by
using the following accounts: Cash; Accounts Receivable; Office
Supplies; Office Equipment;
Accounts Payable; Common Stock; Dividends; Fees Earned, and Rent
Expense.
2. Post the above journal entries to T-accounts, which serve as the
general ledger for this
assignment.
Solution:
Requirement 1: Journal Entries
Transaction | General Journal | Debit | Credit |
a | Cash | $ 100,750 | |
Common Stock | $ 100,750 | ||
(Being common stock issued) | |||
b | Office Supplies | $ 1,250 | |
Cash | $ 1,250 | ||
[ Being supplies purchased] | |||
c | Office Equipment | $ 10,050 | |
Accounts payable | $ 10,050 | ||
( Being equipment purchased) | |||
d | Cash | $ 15,500 | |
Fees Earned | $ 15,500 | ||
( Being service revenue earned) | |||
e | Account Payable | $ 10,050 | |
Cash | $ 10,050 | ||
(Being account payable paid) | |||
f | Account Receivable | $ 2,700 | |
Fees Earned | $ 2,700 | ||
( Being service revenue earned) | |||
g | Rent Expense | $ 1,225 | |
Cash | $ 1,225 | ||
(Being rent expense paid) | |||
h | Cash | $ 1,125 | |
Account Receivable | $ 1,125 | ||
( Being cash received on receivables) | |||
i | Dividends | $ 10,000 | |
Cash | $ 10,000 | ||
(Being dividend paid) |
Requirement 2: T-Accounts
Cash | |||
a | $ 100,750 | b | $ 1,250 |
d | $ 15,500 | e | $ 10,050 |
h | $ 1,125 | g | $ 1,225 |
i | $ 10,000 | ||
End Balance | $ 94,850 | ||
Common Stock | |||
a | $ 100,750 | ||
End Balance | $ 100,750 | ||
Fees Earned | |||
d | $ 15,500 | ||
f | $ 2,700 | ||
End Balance | $ 18,200 | ||
Accounts Receivable | |||
f | $ 2,700 | h | $ 1,125 |
End Balance | $ 1,575 | ||
Office Equipment | |||
c | $ 10,050 | ||
End Balance | $ 10,050 | ||
Office Supplies | |||
b | $ 1,250 | ||
End Balance | $ 1,250 | ||
Account Payable | |||
e | $ 10,050 | c | $ 10,050 |
End Balance | $ - | ||
Rent Expense | |||
g | $ 1,225 | ||
End Balance | $ 1,225 | ||
Dividends | |||
i | $ 10,000 | ||
End Balance | $ 10,000 |
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