Question

1. Purchased a 1-year insurance policy, paid $2,000.

2. Billed a customer for a $2,100 job.

3. Received $4,800 to start an eight-month job,(each month is the same amount) beginning next month.

4. Bought a computer on credit for $3,600.

5. Deposited cash of $3,400 to a business checking account.

6. Received a gas bill, $300.

7. Paid $400 for van repairs.

8. Purchased supplies for $400 in cash.

9. Withdrew $3,600 to his personal checking account.

10. Received $1,150 for a job he just completed.

11. The first month of the job in number 3 above has passed.

12. Hired an assistant, agreed to pay them $800 per week.

13. Purchased a van for $22,000 cash and a computer for $5,000 on account.

14. Received $4,000 from a customer for a job previously completed.

15. Paid $3,500,000 for a building worth $8,000,000, signed a note payable for the remainder.

16. Paid $4,500 for 3 months rent.

17. Invested $2,000 of personal funds in the company’s cash account in exchange for equity.

18. Paid first of 12 installments regarding transaction in number 4, above.

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19. Paid his assistant for a month’s work.

20. Earned additional revenues amounting to $800: $600 in cash and $200 on account.

21. One month has passed since transaction number 16 above.

22. Depreciation on the building for the month was $120,000, credited accum. deprec.

23. Received $1,400 in payment for services previously rendered.

24. One month has passed since the insurance policy in number 1 above was purchased.

25. Customer paid $7,000 on a $9,000 job just completed.

Prepare the following journal entries in proper journal entry form.

Answer 1

Journal Entries:

Date	Account Titles and Explanations	Debit	Credit
1)	Prepaid Insurance	$2,000
	Cash		$2,000
	(To record the purchase of one year insurance policy)
2)	Accounts Receivable	$2,100
	Service Revenue		$2,100
	(To record the completion of a job on account)
3)	Cash	$4,800
	Unearned Service Revenue		$4,800
	(To record the receipt of cash for the job in advance)
4)	Computer	$3,600
	Accounts Payable		$3,600
	(To record the purchase of computer on account)
5)	Bank	$3,400
	Cash		$3,400
	(To record the deposited cash into bank)
6)	Gas Expense	$300
	Accounts Payable		$300
	(To record the receipt of Gas bill not yet paid)
7)	Repair Expenses	$400
	Cash		$400
	(To record the payment of repair expenses by cash)
8)	Supplies	$400
	Cash		$400
	(To record the purchase of supplies by cash)
9)	Drawings	$3,600
	Cash		$3,600
	(To record the with drawel of cash for personal use)
10)	Cash	$1,150
	Service Revenue		$1,150
	(To record the receipt of cash for the job completed)
11)	Unearned Service Revenue ($4,800/8 months * 1 month)	$600
	Service Revenue		$600
	(To record the services earned for first month)
12)	No entry is recorded because there is no transaction.
13)	Van	$22,000
	Computer	$5,000
	Accounts Payable		$27,000
	(To record the purchase of van and computer on account)
14)	Cash	$4,000
	Accounts Receivable		$4,000
	(To record the collection of cash from credit services)
15)	Buildings	$8,000,000
	Cash		$3,500,000
	Notes Payable ($8,000,000 - $3,500,000)		$4,500,000
	(To record the purchase of buildings half by cash and remaining by issuing a note)
16)	Prepaid Rent	$4,500
	Cash		$4,500
	(To record the prepayment of 3 month rent)
17)	Cash	$2,000
	Common Stock		$2,000
	(To record the issue of common stock for cash)
18)	Accounts Payable ($3,600/10)	$300
	Cash		$300
	(To record the payment of first installment)
19)	Salaries Expense ($800 per week * 4 weeks)	$3,200
	Cash		$3,200
	(To record the payment of cash for salaries)
	Note: Assumed there are 4 weeks in a month, if you want, you can put 5 weeks as well as per your problem.
20)	Cash	$600
	Accounts Receivable	$200
	Service Revenue		$800
	(To record the service revenue earned)
21)	Rent Expense	$1,500
	Prepaid Rent ($4,500/3)		$1,500
	(To record the expiration of one month rent)
22)	Depreciation Expense	$120,000
	Accumulated Depreciation - Buildings		$120,000
	(To record the depreciation on buildings)
23)	Cash	$1,400
	Accounts Receivable		$1,400
	(To record the collection of cash from credit services)
24)	Insurance Expense	$167
	Prepaid Insurance ($2,000/12 months)		$167
	(To record the expiration of one month insurance)
25)	Cash	$7,000
	Accounts Receivable ($9,000 - $7,000)	$2,000
	Service Revenue		$9,000
	(To record the collection of half amount of cash from service revenue and remainder on account)