Question

35. Recording and Posting Transactions (LO 3.3 &- 3.4) The following transactions took place during the first two weeks of operations of Not So Taxing, Inc., a walk-in tax preparation service. Mar. 2 Issued common stock of the corporation in exchange for $200,000 cash. Mar. 3 Purchased $4,000 of supplies on account from Kidd Supply Company. Mar. 4 Paid $3,000 of office rent for March. Mar. 5 Completed tax work for Mr. East and billed him $650. Mar. 6 Received a total of $7,400 from customers for services provided during the week. Mar. 9 Received a $1,000 advance from Mr. West for tax services that have not yet been provided. 37. Mar. 10 Placed a telephone order for a $550 laser printer. Mar. 11 Paid $1,200 to Kidd Supply Company. Mar. 12 Received $450 from Mr. East. Mar. 13 Paid an employee $790 for two weeks work. Mar. 13 Received $3,700 cash from customers for ser- vices provided during the week. Required: (a) Enter the transactions into the general journal. (b) Post the transactions to the general ledger and calcu- late balances for each account. Verify that the ledger is in balance.

Answer 1

Solution :

(a)		Journal entries
	Date	Particulars	Debit	Credit
	Mar.2	Cash	$200,000
		Common Stock		$200,000
	Mar.3	Supplies on hand	$4,000
		Accounts Payable		$4,000
	Mar.4	Office Rent	$3,000
		Cash		$3,000
	Mar.5	Accounts receivable	$650
		Service revenue		$650
	Mar.6	Cash	$7,400
		Accounts receivable		$7,400
	Mar.9	Service revenue	$1,000
		Service revenue received in Advance		$1,000
	Mar.10	Laser Printer advance	$550
		Cash		$550
	Mar.11	Accounts Payable	$1,200
		Cash		$1,200
	Mar.12	Cash	$450
		Accounts receivable		$450
	Mar.13	Wages expenses	$790
		Cash		$790
	Mar.13	Cash	$3,700
		Service revenue		$3,700

(b):

	General ledger
	Common Stock
date	Particulars	Debit	Credit	Balance
Mar.2			$200,000	$200,000	Capital - credit balance
	Cash Account
date	Particulars	Debit	Credit	Balance
Mar.2		$200,000		$200,000
Mar.4			$3,000	$197,000
Mar.6		$7,400		$204,400
Mar.9		$1,000		$205,400
Mar.10			$550	$204,850
Mar.11			$1,200	$203,650
Mar.12		$450		$204,100
Mar.13			$790	$203,310
Mar.13		$3,700		$207,010	Asset - Debit balance
	Supplies on hand
date	Particulars	Debit	Credit	Balance
Mar.3		$4,000		$4,000	Liability - credit balace
	Accounts Payable
date	Particulars	Debit	Credit	Balance
Mar.3			$4,000	$4,000
Mar.11		$1,200		$2,800	Liability - credit balace
	Office Rent
date	Particulars	Debit	Credit	Balance
Mar.4		$3,000		$3,000	expenses debit balance
	Accounts receivable
date	Particulars	Debit	Credit	Balance
Mar.5		$650		$650
Mar.12			$450	$200	Balance receivable is debit balance
	Service revenue received in Advance
date	Particulars	Debit	Credit	Balance
Mar.9			$1,000	$1,000	Liability - credit balace
	Laser Printer advance
date	Particulars	Debit	Credit	Balance
Mar.10		$550		$550	Asset ordered - debit balace
	Wages expenses
date	Particulars	Debit	Credit	Balance
Mar.13		$790		$790	expenses debit balance
	Service revenue
date	Particulars	Debit	Credit	Balance
Mar.5			$650	$650
Mar.6			$7,400	$8,050
Mar.13			$3,700	$11,750	Income/revenue - credit balance