Question

Required:

Prepare the journal entries for the below transactions.

1. The firm was organized and the initial stockholders invested cash of $12,000.

2. The company borrowed $18,000 from a relative of one of the initial stockholders; a short-term note was signed.

3. Two zero-turn lawn mowers costing $7,600 each and a professional trimmer costing $2,600 were purchased for cash. The original list price of each mower was $10,200, but a discount was received because the seller was having a sale.

4. Gasoline, oil, and several packages of trash bags were purchased for cash of $1,800.

5. Advertising flyers announcing the formation of the business and a newspaper ad were purchased. The cost of these items, $3,400, will be paid in 30 days.

6. During the first two weeks of operations, 94 lawns were mowed. The total revenue for this work was $14,100; $9,300 was collected in cash, and the balance will be received within 30 days.

7. Employees were paid $8,400 for their work during the first two weeks.

8. Additional gasoline, oil, and trash bags costing $2,200 were purchased for cash.

9. In the last two weeks of the first month, revenues totaled $18,400, of which $7,500 was collected.

10. Employee wages for the last two weeks totaled $10,200; these will be paid during the first week of the next month.

11. It was determined that at the end of the month the cost of the gasoline, oil, and trash bags still on hand was $600.

12. Customers paid a total of $3,000 due from mowing services provided during the first two weeks. The revenue for these services was recognized in transaction 6.

Answer 1

lo. Credit Credit Debit $12,000 No. 7) Debit $8,400 1) $12,000 $8,400 2) $18,000 8) $2,200 $18,000 $2,200 3) $10,200 [$7,600 + $2,600] 9) $10,200 Account Titles and Explanation Cash Common Stock Cash Note Payable Equipment Property and Equipment Supplies Cash Advertising Expense Accounts Payable Cash Accounts Receivable Service Revenue $7,500 $10,900 ($18400 - $7500] Account Titles and Explanation Salaries Expense Cash Supplies Cash Cash Accounts Receivable Service Revenue Salaries Expense Salaries Payable Supplies Expense Supplies Cash Accounts Receivable 4) $1,800 $18,400 $1,800 10) $10,200 5) $3,400 $10,200 $3,400 11) $3,400 ($1800 + $2200 - $600] 6) $3,400 $9,300 $4,800 ($14100 - $9300] 12) $3,000 $14,100 $3,000