Question

Wo Computer Corporation had the following opening account balances at the end of April: Cash $5000, Accounts receivable $6000, Accounts payable $2000, Common shares $5000 and Retained earnings $4000. It entered the following transactions during the month of May. Prepare a journal entry in good format for the following: 1 Purchased equipment on account for $8000 2 Paid $1600 for rent for the month of May 3 Provided computer services for $3800 on account 4 Paid Sask Power $300 cash for utilities used in May 5 Borrowed $20,000 from the bank 6 Paid supplier for equipment purchased in transaction 1 7 Purchased a one year accident insurance policy for $500 cash 8 Received $3000 cash in partial payment of the account owed in transaction 3

Answer 1

• Journal:
• · It records transactions in chronological order.
• · It referred to as the book of original entry;
• · For each transaction, the journal shows the debit and credit effects on specific accounts.
• · It discloses in one place the complete effects of a transaction.
• · It is important to use correct and specific account titles in journalizing.

	Journal Entry
No.	Account titles	Debit	Credit
1	Equipment	$        8,000
	Accounts Payable		$              8,000
	(To record purchase of equipment on account)
2	Rent Expense	$        1,600
	Cash		$              1,600
	(To record rent paid for cash)
3	Accounts Receivable	$        3,800
	Service Revenue		$              3,800
	(To record computer services on account)
4	Utilities Expense	$            300
	Cash		$                  300
	(To record utilites expense paid for cash)
5	Cash	$     20,000
	Loan		$            20,000
	(To record cash receipt of bank borrowings)
6	Accounts Payable	$        8,000
	Cash		$              8,000
	(To record payment to creditors for $800)
7	Prepaid Insurance	$            500
	Cash		$                  500
	(To record purchase of one year insurance policy)
8	Cash	$        3,000
	Accounts Receivable		$              3,000
	(To record cash receipt from customers)

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