Question

Problem 2-3A

Preparing and posting journal entries; preparing a trial balance

Kaseb Nawar opens a web consulting business called Meshreki Consultants and completes the following transactions in March.

March 1 Nawar invested $150,000 cash along with $22,000 in office equipment in the company.

2 The company prepaid $6,000 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $6,000.)

3 The company made credit purchases of office equipment for $3,000 and office supplies for $1,200. Payment is

due within 10 days.

6 The company completed services for a client and immediately received $4,000 cash.

9 The company completed a $7,500 project for a client, who must pay within 30 days.

12 The company paid $4,200 cash to settle the account payable created on March 3.

19 The company paid $5,000 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $5,000.)

22 The company received $3,500 cash as partial payment for the work completed on March 9.

25 The company completed work for another client for $3,820 on credit.

29 Nawar withdrew $5,100 cash from the company for personal use.

30 The company purchased $600 of additional office supplies on credit.

31 The company paid $500 cash for this month’s utility bill.

Required

1. Prepare general journal entries to record these transactions (use the following account titles).

Their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); K. Nawar, Capital (301); K. Nawar, Withdrawals (302); Services Revenue (403); and Utilities Expense (690).

Problem 2-4B

Recording transactions; posting to ledger; preparing a trial balance

Ahmed Nadim Consulting completed the following transactions during June.

a. Ahmed Nadim, the owner, invested $35,000 cash along with office equipment valued at $11,000 in the new company.

b. The company purchased land valued at $7,500 and a building valued at $40,000. The purchase is paid with $15,000 cash and a long-term note payable for $32,500.

c. The company purchased $500 of office supplies on credit.

d. A. Nadim invested his personal automobile in the company. The automobile has a value of $8,000 and is to be used exclusively in the business.

e. The company purchased $1,200 of additional office equipment on credit.

f. The company paid $1,000 cash salary to an assistant.

g. The company provided services to a client and collected $3,200 cash.

h. The company paid $540 cash for this month’s utilities.

i. The company paid $500 cash to settle the payable created in transaction c.

j. The company purchased $3,400 of new office equipment by paying $3,400 cash.

k. The company completed $4,200 of services for a client, who must pay within 30 days.

l. The company paid $1,000 cash salary to an assistant.

m. The company received $2,200 cash in partial payment on the receivable created in transaction k.

n. A. Nadim withdrew $1,100 cash from the company for personal use.

Required

1. Prepare general journal entries to record these transactions (use account titles listed in part 2).

Their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (108); Office Equipment (163); Automobiles (164); Building (170); Land (172); Accounts Payable (201); Notes Payable (250); A. Nadim, Capital (301); A. Nadim, Withdrawals (302); Fees Earned (402); Salaries Expense (601); and Utilities Expense (602).

Answer 1

DEBIT CREDIT JOURNAL ENTRIES DATE March 1. Cash 150,000 Office EQUIPMENT 22,000 172000 equipment) 6000 . 4200 4000 Kasab Nawar's Capital Kto record investment bycash toffile 2. Prepaid Rent 6000 Cash lTovecord payment of rent for a moths) 3. Office Equipment 3000 Office Supplies 1200 Account Payable (Torecord purchase of office equipment and supplies on credit) 6 cash. Service Revenue 4000 |1J0 recard cash from received services) 912 Accounts Receivable 4200 Service Revenue (Jo record service provided on credit 19. Prepaid Insurance 5000 Cash |(Te record payment of insurance policy) 22. Cash Accounts Receivable 3500 (To record partial payments received for services provided) 05. Accounts Receivable Service Revenue 2820 (To record service provided on credit) 4200 5000 3500 3820

5100 5100 0 600 29. Nawar's Withdrawal Cash (To record with drawal of cash for personal use ) 30. Office Supplies Accounts payable (to record purchase of office supplies) 31. Utility Expenses Cash (to record payment of utility expenses) 600 700 700

Problem - 2 4B DATE JOURNAL ENTRIES DEBIT CREDIT June a) Cash 35000 11000 46000 7500 40000 15000 32500 500 Office Equipment Ahmed Nadi m's Capital (To record investment by cash and office equipment . b) hand Buildings Cash Note Payable c) Office Supplies Account Payable (To Record office supplies purchase on credit ) d) Automobile A. Nadim's Capital (To record automobile ) e) Office Equipment Account Payable (to vecrod purchase of office equipment on credit) f f) Salary Expense Cash (To record payment of salary) 500 8000 8000 1200 1200 1000 1000 g) Cash 3200 3200 Service Revenue (to record service provided) b) UTILITIES CASH (to record utility expenses ) S40 540

500 500 3400 3400 in Account Payable Cash Ito Record Settlement of transaction') i) Office Equipment Cash Kto record purchase of office equipment) I) | Salary Expense Cash Ito record salary paid to assisstant) K) Accounts Receivable Fees Earned Eto record services provided) 1000 1000 4200 4200 m) cash 2200 2200 Account Receivable e (to record receipt of transaction'k') (partiai) D A Nadim's with drawal Cash (To Record withdrawal of cash for personal use) 1600 1100: