Question

Problem #1 Mr. Blue is a licensed skin doctor. During the first month of the operation of his business, the following events and transactions occurred.

· April 1 Invested $20,000 cash in his business.

· 1 Hired a secretary-receptionist at a salary of $700 per week payable monthly.

· 2 Paid office rent for the month $1,100.

· 3 Purchased doctor office’s supplies on account from Dazzle Company $4,000.

· 10 Performed medical services and billed insurance companies $5,100.

· 11 Received $1,000 cash advance from Sebastian for the medical service.

· 20 Received $2,100 cash for services performed from James.

· 30 Paid secretary-receptionist for the month $2,800.

· 30 Paid $2,400 to Dazzle for accounts payable due.

Mr. Blue uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

(a) Journalize the transactions.

(b) Post to the ledger accounts.

c) Prepare a trial balance on April 30, 2020

Answer 1

The following are the Journal Entries

Ledger Code	Ledger Name		Debit	Credit
101	Cash	dr	$20,000.00
301	Owner’s Capital			($20,000.00)
	(Invested $20,000 cash in his business.)
726	Salaries and Wages Expense	dr	$2,800.00
101	Cash			($2,800.00)
	(salary of $700 per week payable monthly.)
729	Rent Expense	dr	$1,100.00
101	Cash			($1,100.00)
	(office rent for the month $1,100.)
126	Supplies	dr	$4,000.00
201	Accounts Payable			($4,000.00)
	(supplies on account from Dazzle Company $4,000.)
112	Accounts Receivable	dr	$5,100.00
400	Service Revenue			($5,100.00)
	(medical services and billed insurance companies $5,100.)
101	Cash	dr	$1,000.00
209	Unearned Service Revenue			($1,000.00)
	($1,000 cash advance from Sebastian for the medical service.)
101	Cash	dr	$2,100.00
112	Accounts Receivable			($2,100.00)
	(cash for services performed from James)
201	Accounts Payable	dr	$2,100.00
101	Cash			($2,100.00)
	(Paid $2,400 to Dazzle for accounts payable due.)

Below are the Ledger Accounts:

Cash A/c
Particulars	Amount	Particulars	Amount
To Owner's Capital	$20,000	By Salaries & Wages	$2,800
To Unearned Service Revenue		By Rent Expense	$1,100
	$1,000	By Accounts Payable	$2,100
To Accounts Receivable		By Balance c/d	$17,100
	$2,100
Total	$23,100	Total	$23,100

Accounts Payable
Particulars	Amount	Particulars	Amount
To Cash	$2,100	By Supplies	$4,000
To Balance c/d	$1,900
Total	$4,000	Total	$4,000

Accounts Receivable
Particulars	Amount	Particulars	Amount
To Service Revenue	$5,100	By Cash	$2,100
		By Balance c/d	$3,000
Total	$5,100	Total	$5,100

Supplies
Particulars	Amount	Particulars	Amount
To Accounts Payable	$4,000	By Balance c/d	$4,000
Total	$4,000	Total	$4,000

Unearned Service Revenue
Particulars	Amount	Particulars	Amount
To Balance c/d	$1,000	By Cash A/c	$1,000
Total	$1,000	Total	$1,000

Owner’s Capital
Particulars	Amount	Particulars	Amount
To Balance c/d	$20,000	By Cash A/c	$20,000
Total	$20,000	Total	$20,000

Service Revenue
Particulars	Amount	Particulars	Amount
To Balance c/d	$5,100	By Accounts Receivable
			$5,100
Total	$5,100	Total	$5,100

Salaries and Wages Expense
Particulars	Amount	Particulars	Amount
To Cash	$2,800	By Balance c/d	$2,800
Total	$2,800	Total	$2,800

Rent Expense
Particulars	Amount	Particulars	Amount
To Cash	$1,100	By Balance c/d	$1,100
Total	$1,100	Total	$1,100

Below is the Trial Balance:

Ledger Code	Ledger Name	Debit	Credit
101	Cash	$17,100
112	Accounts Receivable	$3,000
126	Supplies	$4,000
201	Accounts Payable		$1,900
209	Unearned Service Revenue		$1,000
301	Owner’s Capital		$20,000
400	Service Revenue		$5,100
726	Salaries and Wages Expense	$2,800
729	Rent Expense	$1,100
	Total	$28,000	$28,000