Question

Four transactions for Automotive Maintenance and Repair Shop that took place in November 20X1 appear below. DATE TRANSACTION Nov. 1 Ryan O'Malley invested $63,000 in cash plus tools with a fair market value of $2,800 to start the business. 2 Purchased equipment for $1,870 and supplies for $370 from Office Depot, Invoice 501, issued Check 100 for $520 as a down payment with the balance due in 30 days. 1e Performed services for Patricia Reed for $3,700, who paid $1,400 in cash with the balance due in 30 days. 20 Purchased machinery for $4,800 from Craft Machinery, Inc., Invoice 709; issued Check 101 for $1,900 in cash as a down payment with the balance due in 30 days. Record the transactions in the general journal and post them to the appropriate ledger accounts. Analyze: What liabilities does the business owe as of November 30?

Answer 1

GENERAL JOURNAL
IN THE BOOKS OF AUTOMATIVE MAINTAINENCE AND REPAIR SHOP

DATE

PARTICULARS

DEBIT($)

CREDIT$)

NOV 1 CASH A/C ----------DR 63000   
TOOLS A/C -------DR 2800
TO CAPITAL A/C 65800
(BEING RYAN O ' MALLEY STARTED
BUSINESS WITH CASH AND TOOLS

  
NOV 2 EQUIPMENT A/C ---DR 1870
SUPPLIES A/C ------DR 370
TO BANK A/C 520
TO ACCOUNT PAYABLE A/C 1720
(BEING EQUIPMENT AND SUPPIES
PURCHASED FROM OFFICE DEPOT ,CHEQUE ISSUED
FOR $520 AND BALANCE IS PAYABLE )

NOV10 CASH A/C---------------------------DR 1400
ACCOUNT RECEIVABLE A/C---DR 2300
TO SERVICES A/C 3700
(BEING SERVICES ARE PERFORMED ,
$1400 RECIEVED IN CASH AND BALANCE IS DUE )

NOV20 MACHINERY A/C-----------------DR 4800
TO CASH A/C (BANK) 1900
TO ACCOUNT PAYABLE A/C 2900
(BEING MACHINERY PURCHASED FROM CRAFT MACHINERY ,
CASH PAID AMOUNTED $1900 AND BALANCE $2900 IS PAYABLE)


LEDGERS POSTING
LEDGERS TO BE MAINTAINED:

• CASH ACCOUNT
• BANK ACCOUNT
• ACCOUNT PAYABLE ACCOUNT
• ACCOUNT RECIEVEABLE ACCOUNT
• EQUIPMENT ACCOUNT
• SUPPLIES ACCOUNT
• MACHINERY ACCOUNT
  • 
    
    CASH ACCOUNT

  • PARTICULARS	DEBIT($)	PARTICULARS	CREDIT($)
    	63000		1900
    	1400	BALANCE C/D	64400
    TOTAL	64400	TOTAL	64400

    
    BANK ACCOUNT

    PARTICULARS	DEBIT($)	PARTICULARS	CREDIT($)
    BALANCE C/D	2420		520
    			1900
    TOTAL	2420	TOTAL	2420

    EQUIPMENT ACCOUNT
    

    PARTICULARS	DEBIT($)	PARTICULARS	CREDIT($)
    	1870	BALANCE C/D	1870
    TOTAL	1870	TOTAL	1870

    
    SUPPLIES ACCOUNT

    PARTICULARS	DEBIT($)	PARTICULARS	CREDIT($)
    	370	BALANCE C/D	370
    TOTAL	370	TOTAL	370

    
    MACHINERY ACCOUNT

    PARTICULARS	DEBIT($)	PARTICULARS	CREDIT($)
    	4800	BALANCE C/D	4800
    TOTAL	4800	TOTAL	4800

    ACCOUNT RECIEVABLE

    PARTICULARS	DEBIT($)	PARTICULARS	CREDIT($)
    	2300	BALANCE C/D	2300
    TOTAL	2300	TOTAL	2300

    
    ACCOUNT PAYABLE

    PARTICULARS	DEBIT($)	PARTICULARS	CREDIT($)
    BALANCE C/D	4620		1720
    			2900
    TOTAL	4620	TOTAL	4620

    
    
    
    LIABILITIES OF BUSINESS AS OF 30TH NOVEMBER
  • AMOUNT OF $1720 HAS TO PAY TO THE OFFICE DEPOT.
  • AMOUNT OF$2900 HAS TO PAY TO THE CRAFT MACHINERY INCORPORATION.