Question

McDonough Construction, Inc., completed the following transactions during August 2018, its first month of operations: (Click the icon to view the transactions.) Read the requirements, Requirement 1. Record transactions in the journal. Explanations are not required. (Record debits first, then credits. Exclude explanations from any journal entries.) Aug 2: Sold $85,000 of common stock to D.J. McDonough to start the construction business. Journal Entry Date Accounts Debit Credit Aug 0 Requirements Aug 3: Paid monthly office rent, $1,000. Journal Entry Date Accounts Credit Debit 1000 1. 2. Aug 3 Supplies Record transactions in the journal. Explanations are not required. Post the journal entries to the T-accounts that have been set up for you. Identify all items by date. Calculate the ending balance in each account. Prepare a trial balance at August 31, 2018 Prepare the income statement, statement of retained earnings, and balance sheet for the month of August. 3. 4. Aug 6: Paid cash for new construction equipment, $1,600. Print Done Journal Entry Date Accounts Debit Credit Aug

Answer 1

1. Journal Entries -

Date McDonough Construction, Inc. Journal Entries Accounts Title Debit Credit Cash $ 85,000 Common Stock $ 85,000 (Being Cash invested against common stock) Aug 2 Aug 3 $ 1,000 Rent Expense Cash (Being Rent Paid) $ 1,000 Aug 6 Construction Equipment $ 1,600 Cash $ 1,600 (Being Construction Equipment Purchased) Aug 8 Furniture $ 2,000 Accounts Payable (Being Furniture Purchased on account) $ 2,000 Aug 11 Supplies $ 1,200 Accounts Payable (Being Supplies Purchased on account) $ 1,200 Aug 19 Accounts Receivable $ 2,500 Service Revenue (Being Service earned on account) $ 2,500 100 Aug 20 Utility Expense $ Cash (Being Utilities Expense Paid) $ 100 Aug 28 Cash $ 2,200 Service Revenue (Being Service earned on cash) $ 2,200

2. Ledgers -

Aug 2 Aug 28 Cash $ 85,000 Aug 3 $ 2,200 Aug 6 Aug 20 $ 1,000 $ 1,600 $ 100 Accounts Payable Aug 8 Aug 11 $ 2,000 $ 1,200 Aug 31 $ 3,200 Aug 31 $ 84,500 $ 87,200 $ 87,200 Supplies $ 1,200 Common Stock Aug 2 Aug 11 $ 85,000 Aug 31 $ 1,200 Aug 31 $ 85,000 Accounts Receivable $ 2,500 Aug 19 Service Revenue Aug 19 $ 2,500 Aug 28 $ 2,200 Aug 31 $ 2,500 Aug 31 $ 4,700 Construction Equipment $ 1,600 Rent Expense $ 1,000 Aug 6 Aug 3 Aug 31 $ 1,600 Aug 31 $1,000 Furniture $ 2,000 Utility Expense $ 100 Aug 8 Aug 20 Aug 31 $ 2,000 Aug 31 $ 100

3. Trial Balance -

Credit McDonough Construction, Inc. Trial Balance As on August 31, 2018 Accounts Title Debit Cash $ 84,500 Supplies $ 1,200 Accounts Receivable $ 2,500 Construction Equipment $ 1,600 Furniture $ 2,000 Accounts Payable Common Stock Service Revenue Rent Expense $ 1,000 Utility Expense $ 100 $ 3,200 $ 85,000 $ 4,700 Total $ 92,900 $ 92,900

4. Income Statement -

McDonough Construction, Inc. Income Statement For the Month Ended August 31, 2018 Service Revenue $ 4,700 Expenses: Rent Expense Utility Expense Total Expenses $ 1,000 $ 100 $ 1,100 Net Income $ 3,600

5. Statement of Retained Earnings -

McDonough Construction, Inc. Statement of Retained Earnings For the Month Ended August 31, 2018 Retained Earnings Opening Add: Net Income $ 3,600 $ 3,600 Retained Earnings Closing $ 3,600

6. Balance Sheet -

$ 3,200 Assets Cash Supplies Accounts Receivable Construction Equipment Furniture McDonough Construction, Inc. Balance Sheet As on August 31, 2018 Liabilities $ 84,500 Accounts Payable $ 1,200 $ 2,500 $ 1,600 Stockholder's Equity $ 2,000 Common Stock Retained Earnings Total Stockholder's Equity $ 85,000 $ 3,600 $ 88,600 Total Assets $ 91,800 Total Liabilities & Stockholder's Equity $ 91,800