Question

Gordon Ramsey spent much of his childhood learning the art of cookie-making from his grandmother. They passed many happy hours mastering every type of cookie imaginable and later creating new recipes that were both healthy and delicious. Now at the start of his second year in college, Ramsey is investigating various possibilities for starting his own business as part of the requirements of the entrepreneurship program in which he is enrolled. The first difficult decision is coming up with the perfect name for his business. In the end, he settles on “Maze" and then moves on to more important issues. Ramsey decides to operate “Maze" as a proprietorship. He then starts the process of getting the business running. In August 2020, the following activities take place. August 1 Invested $45,000 cash in the business 1 Purchased a delivery van for $40,000, paying $15,000 cash and the remaining balance on account 3 Purchased cookie supplies for $12,000 on account 5 Paid $6,000 on a one-year insurance policy, effective August 1, 2019 12 Billed customers $11,500 for cookie services 18 Paid $10,000 of amount owed on van, and $4,000 of amount owed on cookie supplies 20 Paid $4,200 for employee salaries 21 Collected $5,400 from customers billed on August 12, 2019

Answer 1

1. First we have to know what is Journal:-A Journal is a detailed account that records all the financial transactions of a business, to be used for future reconciling of and transfer to other official accounting records, such as the general ledger.

-According to the question, we have to Journalize all the transactions first:

Date	Particulars	Debit amount($)	Credit Amount($)
August 1	.Cash a/c       To Capital a/c	45000	45000
1	Delivery van a/c To Cash a/c To Account payable	40000	15000 25000
3	Supplies on hand a/c To account payable	12000	12000
5	Insurance a/c To Bank a/c	6000	6000
12	Account receivable a/c To revenue a/c	11500	11500
18	Account payable a/c To Supplies on hand a/c To Delivery van a/c	14000	4000 10000
20	Salary a/c To cash a/c	4200	4200
21	Cash a/c To Account receivable	5400	5400

2. Our second step is posting the above Journal entries into Ledger account:

What is Ledger:-A ledger is a book containing accounts in which the classified and summarized information from the journals is posted as debits and credits.

We will post our journal entries step by step:-

(i) Cash a/c

Date	Particulars	Amount	Date	Particulars	Amount
August 1	To capital a/c	45000	August 1	By delivery van	15000
21	To account receivable	5400	20	By salary a/c	4200
				Balance c/d	31200
	Total	50400		Total	50400

(ii) Capital A/C:-

Date	Particulars	Amount	Date	Particulars	Amount
			August 1	By cash a/c	45000
	Balance c/d	45000
	Total	45000		Total	45000

(iii)Delivery van a/c:-

Date	Particulars	Amount	Date	Particulars	Amount
August 1	To cash a/c	15000	18	By account payable	10000
1	To account payable	25000		Balance c/d	30000
	Total	40000		Total	40000

(iv) Account payable:-

Date	Particulars	Amount	Date	Particulars	Amount
18	To Supplies on hand a/c	4000	1	By delivery van	25000
18	To Delivery van a/c	10000	3	By Supplies on hand a/c	12000
	Balance c/d	23000
	Total	37000		Total	37000

(v) Supplies on hand a/c:-

Date	Particulars	Amount	Date	Particulars	Amount
3	To account payable	12000	18	By account payable	4000
				Balance c/d	8000
	Total	12000		Total	12000

(vi) Insurance a/c:-

Date	Particulars	Amount	Date	Particulars	Amount
5	To bank a/c	6000
				Balance c/d	6000
	Total	6000		Total	6000

(vii) Bank a/c:-

Date	Particulars	Amount	Date	Particulars	Amount
			5	By Insurance a/c	6000
	Balance c/d	6000
	Total	6000		Total	6000

(viii) Account Receivable:-

Date	Particulars	Amount	Date	Particulars	Amount
12	To revenue a/c	11500	21	By cash	5400
				Balance c/d	6100
	Total	11500		Total	11500

(ix) Revenue a/c:-

Date	Particulars	Amount	Date	Particulars	Amount
			12	By account receivable	11500
	Balance c/d	11500
	Total	11500		Total	11500

(x) Salary a/c:-

Date	Particulars	Amount	Date	Particulars	Amount
20	To cash a/c	4200
				Balance c/d	4200
	Total	4200		Total	4200

Hence, we have done with both the parts of question i.e journal entries and ledger posting.