Question

Presented below is information related to Pickett Real Estate Agency ment of $30,000 in Oct. 1 Jeff Pickett begins business as a real estate agent with a cash investme exchange for common stock. 2 Hires an administrative assistant. 3 Purchases office equipment for $3,500, by paying $500 cash with the balan account 6 Sells a house and lot for N. Foster, earning a fee of $6,900 with $900 collected in ce and the balance billed to N. Foster. 27 Pays $1,000 on the balance related to the transaction of October 3. 30 Pays the administrative assistant $2,300 in salary for October 31 Collects $1,500 of the balance owed by N. Foster. Jnstructions 1. Journalize the transactions. (You may omit explanations.) 2. Post the transactions. 3. What balance would Pickett Real Estate Agency report for Accounts Payable in its October 31 financial statements? In which category of which financial statements would it be found? 4. What balance would Pickett Real Estate Agency report for Accounts Receivable in its October 31 financial statements? In which category of which financial statements would it be found?

Answer 1

Solution

Jeff Pickett

1. Journal Entries:

Date	Account Titles	Debit	Credit
Oct-01	Cash	$30,000
	Common Stock		$30,000
Oct-02	No Entry
Oct-03	Office Equipment	$3,500
	Cash		$500
	Accounts Payable		$3,000
Oct-06	Cash	$900
	Accounts Receivable	$6,000
	Fees Earned		$6,900
Oct-27	Accounts Payable	$1,000
	Cash		$1,000
Oct-30	Salaries Expense	$2,300
	Cash		$2,300
Oct-31	Cash	$1,500
	Accounts Receivable		$1,500

2. T- Accounts

Cash
Description	Amount		Description				Amount
Common Stock	30,000		Office equipment				$500
Fees Earned	900		Accounts Payable				1,000
			Salaries Expense				2,300
Accounts Receivable	1,500
ending balance	28,600
Accounts Payable
Cash	1,000		Office Equipment				3,000
			Ending balance				2,000
Accounts Receivable
Fees Earned		6,000		Cash	1,500
Ending balance		4,500

Office Equipment
Cash	500
Accounts Payable	3,000
Ending balance	3,500

Fees Earned
		Cash	900
		Accounts Receivable	6,000
NA	NA
		Ending Balance	6,900

Common Stock
		Cash	30,000
NA	NA
		Ending Balance	30,000

Salaries Expense
Cash	2,300
			NA
Ending balance	2,300	NA

3. Accounts payable balance in October 31, financial statement:

Picket Real Estate Agency would record the accounts payable balance = $2,000

(From T-account above)

Category –

Accounts payable is categorized as ‘Current Liabilities’ within the ‘Liabilities and Owner’s Equity’ section of the balance sheet.

4. Accounts Receivable balance in October 31, financial statement:

Picket Real Estate Agency would record the Accounts Receivable balance of $4,500 in its October 31, financial statements.

Category –

Accounts Receivable is categorized as ‘Current Assets’ within the ‘Assets’ section of the balance sheet.