Question

Transactions Sept. 1 Stockholders invested $20,000 cash in the business Sept. 2 Paid $1,000 cash for store rent for the month of September Sept. 3 Purchased industrial carpet-cleaning equipment for $25.000, paying $10,000 in casa and signing a $15,000 6-month, 12% note payable. Sept. 4 Paid $1,200 for 1-year accident insurance policy. Sept. 10 Recievd bill from the Daily News for advertising the opening of the cleaning service, $200. Sept. 15 Performed services on account for $6,200. Sept.20 Paid a $700 cash dividend to stockholders. Sept. 30 Received $5000 from customers billed on Sept 15th. Prepare the following: (a) journal entries, (b) ledger "T" accounts, (c) a trial balance worksheet

Answer 1

a.

Credit Date Account Title and Explations Sept. 1 Cash Common Stock Debit $20,000 $20,000 $1,000 Sept. 2 Rent expense Cash $1,000 Sept. 3 Equipment $25,000 Cash Note Payable $10,000 $15,000 $1,200 Sept. 4 Prepaid Insurance Cash $1,200 $200 Sept. 10 Advertising expense Accounts Payable $200 $6,200 Sept. 15 Accounts Receivable Service Revenue $6,200 $700 Sept. 20 Dividend Cash $700 $5,000 Sept. 30 Cash Accounts Receivable $5,000

b.

Common Stock Accounts Receivable Cash $20,000 Rent Expense $5,000 Equipment Prepaid Insurance Dividend End. Bal. $25,000 $1,000 $10,000 $1,200 $700 $12, 100 $25,000 $20,000 Common Stock Cash $20,000 $20,000 End. Bal. $20,000 Cash Rent Expense $1,000 End. Bal. $1,000 $1,000 $1,000 Cash Note Payable Equipment $10,000 $15,000 End. Bal. $25,000 $25,000 $25,000 $15,000 Note Payable Equipment $15,000 $15,000 End. Bal. $15,000 Cash Prepaid Insurance $1,200 End. Bal. $1,200 $1,200 $1,200 Accounts Payable Advertising Expense $200 End. Bal. $200 $200 $200 $200 Accounts Payable Advertising Exper $200 $200 End. Bal. $200 Service Revenue Accounts Receivable $6,200 Cash End. Bal. $6,200 $5,000 $1,200 $6,200 $6,200 Service Revenue Accounts Receivable $6,200 $6,200 End. Bal. $6,200 Cash Dividend $700 End. Bal. $700 $700 $700

c.

Trial Balance Accounts Debit Credit Cash $12,100 Common Stock $20,000 Rent Expense $1,000 Equipment $25,000 Note Payable $15,000 Prepaid Insurance $1,200 Advertising Expense $200 Accounts Payable $200 Accounts Receivable $1,200 Service Revenue $6,200 Dividend $700 $41,400 $41,400

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