Question

Four transactions for Automotive Maintenance and Repair Shop that took place in November 2019 appear below. DATE TRANSACTION Nov. 1 Ryan O’Malley invested $65,000 in cash plus tools with a fair market value of $3,000 to start the business. 2 Purchased equipment for $1,850 and supplies for $350 from Office Depot, Invoice 501; issued Check 100 for $500 as a down payment with the balance due in 30 days. 10 Performed services for Patricia Reed for $3,900, who paid $1,500 in cash with the balance due in 30 days. 20 Purchased machinery for $5,000 from Craft Machinery, Inc., Invoice 709; issued Check 101 for $2,000 in cash as a down payment with the balance due in 30 days. Record the transactions in the general journal and post them to the appropriate ledger accounts. Analyze: What liabilities does the business owe as of November 30?

Answer 1

Solution

Automotive Maintenance and Repair Shop

General Journal

Date	Account Titles		Debit	Credit
Nov 1, 2019	Cash		$65,000
	Office Equipment		$3,000
	Ryan O'Malley, Capital			$68,000
	(To record investment of cash and tools into the business)
Nov 2, 2019	Office Equipment		$1,850
	Supplies		$350
	Cash			$500
	Accounts Payable			$1,700
	(to record equipment, supplies purchased partly for cash and on account)
Nov 10,2019	Cash		$1,500
	Accounts Receivable		$2,400
	Service Revenue			$3,900
	(To record services performed)
Nov 20, 2019	Machinery		$5,000
	Cash			$2,000
	Accounts Payable			$3,000
	(To record purchase of machinery)

T- Accounts

Cash
Date	Description	Amount	Date	Description	Amount
Nov-01	Ryan O'Malley	$65,000	Nov 2, 2019	Office Equipment	$420
Nov 10, 2019	Service Revenue	$1,500	Nov 2, 2019	Supplies	$80
			Nov 20, 2019	Machinery	$2,000
Dec 1, 2019	Beg. Balance	$64,000

Office Equipment
Date	Description	Amount	Date	Description	Amount
Nov 1, 2019	Ryan O'Malley	$3,000
Nov 2, 2019	Cash	$420
Nov 2, 2019	Accounts Payable	$1,430
Dec 1, 2019	Beg. Balance	$5,850

Service Revenue
Date	Description		Amount		Date			Description			Amount
					Nov 10, 2019			Cash			$1,500
					Nov 10, 2019			Accounts Receivable			$2,400
Accounts Receivable
Date		Description		Amount		Date	Description		Amount
Nov 10, 2019		Service Revenue		$2,400
Dec 1, 2019		Beg. Balance		$2,400

Supplies
Date	Description	Amount	Date	Description	Amount
Nov 2, 2019	Cash	$80
Nov 2, 2019	Accounts Payable	$270
Dec 1, 2019	Beg. Balance	$350

Machinery
Date	Description	Amount	Date	Description	Amount
Nov 20, 2019	Cash	$2,000
Nov 20, 2019	Accounts Payable	$3,000
Dec 1, 2019	Beg. Balance	$5,000

Accounts Payable
Date	Description	Amount	Date	Description	Amount
			Nov 2, 2019	Office Equipment	$1,430
			Nov 2, 2019	Supplies	$270
			Nov 20, 2019	Machinery	$3,000
			Dec 1, 2019	Beg. Balance	$4,700

Liabilities as of November 30, 2019

Current Liabilities:

Accounts Payable       $4,700

Owner’s Equity:

Ryan O’Malley, Capital         $68,000

Total Liabilities          $72,700

Total liabilities as of Nov 30, 2019 = $72,700