Question

Adam's Accounting Service Oct 1 Owner invested $ 18,000 cash into business Oct 3 Purchased supplies on account $ 700 Oct 6 Bought furniture on account for $2 500 Oct 8 Provided services and billed customer $ 7,400 Oct 11 Paid six months insurance in advance rent for month $4800 Oct 14 Owner paid his personal utility bill of $ 405 with company's check Oct 16 Received electricity bill for $ 670 but still unpaid Oct 17 Paid S 1,200 to furniture company for furniture bought on October 6 Oct 19 Received $ 5,300 from customer who was billed on September 8 Oct 24 Paid rent for months 1400 Oct 30 Paid telephone bill for month $ 500 Chart of accounts: Cash 110; Accounts receivable 112; Supplies 114; Prepaid insurance 115; Furniture 116; Accounts Payable 210; Capital 301; Drawings 310; Service revenue 400; Rent expense 501; Utility expense 502; Telephone expense 504 Instructions: Journalize the transactions Post to the ledger (t-account format) Prepare trial balance Rules for debits and credits: Cash goes up/increases we debit cash. When cash is paid out or when cash goes down we credit cash. This same rule applies to all other assets such as accounts receivable, supplies, prepaid insurance and furniture. Drawings increase or go up we debit drawings. When expenses go up or when expenses are incurred but still not paid we debit that as rent expense, telephone expense, utilities expense. When a liability account goes up/increases we credit that account such as accounts payable. When a liability account goes down/is reduced or is paid we debit that liability account. When capital goes up we credit capital. When revenue goes up/increases or when we provide service even if we are not paid as yet we credit that revenue account such as service revenue, fees earned