Question

You are operating your accounting firm. Your first client had the following transactions in April 20x7:

1. Borrowed $10,000 from the bank.
2. Purchased $2,250 of computer equipment for cash.
3. Paid $750 cash for this month’s rent.
4. Purchased $1,500 of office supplies on credit. It is expected that these supplies will last for 3 months.
5. Billed $500 to customers for services rendered during April.
6. Paid cash for the $1,500 balance owed to the vendor from Transaction 4.
7. Collected $450 cash of the amount billed to the customer in Transaction 5
8. Sold one-half of the equipment purchased in Transaction 2 for $1,125 in cash, with no gain or loss recognized on the sale. 9. Paid $1,000 of the principal from the loan in transaction 1, along with $50 in interest.

Required:

Use the four steps in the accounting cycle to analyze business transactions, a) Identifying transactions from source documents, b) Analyzing transactions using the accounting equation, c) Recording the journal entry and d) Posting the entry to the ledger to complete the following:

1. Prepare journal entries for each of the above transactions.
2. Post the journal entries to T–accounts and total the accounts.
3. From the T–accounts, prepare an unadjusted trial balance. List expenses in alphabetical order.

Use the following chart of accounts names and template:

Cash, Capital Stock, Equipment, Accounts Payable, Rent, Supplies, Accounts Receivable, Revenue.

Answer 1

Journal entries, T-accounts and Trial Balance are as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
1	Cash		10,000
	Loan Payable			10,000
	(for amount borrowed)
2	Equipment		2,250
	Cash			2,250
	(For equipment purchased)
3	Rent Expense		750
	Cash			750
	(For rent paid)
4	Supplies		1,500
	Accounts Payable			1,500
	(for supplies purchased)
5	Account Receivable		500
	Revenue			500
	(For customers billed)
6	Account Payable		1,500
	Cash			1,500
	(For paid to accounts payable)
7	Cash		450
	Account Receivable			450
	(For cash collected from accounts receivable)
8	Cash		1,125
	Equipment			1,125
	(For half equipment sold)
9	Loan Payable		1,000
	Interest Expense		50
	Cash			1,050
	(For loan 1st instalment paid)

Cash
Particulars	Amount	Particulars	Amount
1	10,000	2	2,250
7	450	3	750
8	1,125	6	1,500
		9	1,050
	11,575		5,550
Closing Balance	6,025
Account Receivable
Particulars	Amount	Particulars	Amount
5	500	7	450
	500		450
Closing Balance	50
Supplies
Particulars	Amount	Particulars	Amount
4	1,500
	1,500		0
Closing Balance	1,500
Equipment
Particulars	Amount	Particulars	Amount
2	2,250	8	1,125
	2,250		1,125
Closing Balance	1,125
Interest Expense
Particulars	Amount	Particulars	Amount
9	50
Closing Balance	50
Accounts Payable
Particulars	Amount	Particulars	Amount
6	1,500	4	1,500
	1,500		1,500
		Closing Balance	0
Loan Payable
Particulars	Amount	Particulars	Amount
9	1,000	1	10,000
	1,000		10,000
		Closing Balance	9,000
Revenue
Particulars	Amount	Particulars	Amount
		5	500
		Closing Balance	500
Rent Expense
Particulars	Amount	Particulars	Amount
3	750
Closing Balance	750

Unadjusted Trial Balance
Apr-30
	Debit	Credit
Cash	6,025
Account Receivable	50
Supplies	1,500
Equipment	1,125
Accounts Payable		0
Loan Payable		9,000
Revenue		500
Rent Expense	750
Interest Expense	50
Total	9,500	9,500