Question

Jan. 1 Issued ordinary shares in exchange for $100,000 cash. 2 Purchased inventory on account for $35,000 4 Paid an insurance company $2,400 for a one-year insurance policy. 10 Sold merchandise on account for $12,000. The cost of the merchandise was $7,000. 15 Borrowed $30,000 from a local bank and signed a note. Principal and interest at 10% is to be repaid in six months Paid employees $6,000 wages for the first half of the month. Sold merchandise for $10,000 cash. The cost of the merchandise was $6,000. Paid $15,000 to suppliers for the merchandise purchased on January 2. 26 Collected $6,000 on account from customers. 28 Paid $1,000 to the local utility company for January's gas and electricity. 30 Pald $4,000 rent for the building. $2,000 was for January's rent, and $2,000 for February's rent. Required: 1. Prepare general journal entries to record each transaction. Omit explanations. 2. Post the entries to T-accounts. 3. Prepare an unadjusted trial balance as of January 30, 2013. 20 22 24

Answer 1

1) General entries
Date	Particulars	Debit ($)	Credit ($)
01-01-2013	Cash in hand	1,00,000
	Oridnary issues capital		1,00,000
02-01-2013	Purchases account Merchandise	35,000
	Supplier Merchandise Liability		35,000
04-01-2013	Insurance expense	200
	Prepaid insurance expense	2,200
	Cash in hand		2,400
10-01-2013	Debtors on sale	12,000
	Sale of Merchandise		12,000
15-01-2013	Cash in hand	30,000
	Bank loan (Note)		30,000
20-01-2013	Wages expense	6,000
	Cash in hand		6,000
22-01-2013	Cash in hand	10,000
	Sale of Merchandise		10,000
24-01-2013	Supplier Merchandise Liability	15,000
	Cash in hand		15,000
26-01-2013	Cash in hand	6,000
	Debtors on sale		6,000
28-01-2013	Electricity and Gas expense	1,000
	Cash in hand		1,000
30-01-2013	Rent expense	2,000
	Prepaid rent	2,000
	Cash in hand		4,000
30-01-2013	Interest on loan	125
	Interest liability on loan		125
30-01-2013	Wages expense	6,000
	Wages liability		6,000
T Account
Particluars	Amount	Particluars	Amount
Opening Stock	0	Sale of Merchandise	22,000
Purchases account Merchandise	35000	Closing Stock	22,000
Gross Profit	9,000
		Gross Profit	9,000
Insurance expense	200
Wages expense	12,000
Electricity and Gas expense	1,000
Rent expense	2,000
Interest on loan	125
Net Loss	-6,325
Unadjusted Trial as of 30th Jan 2013
Particulars	Debit	Credit
Cash in hand	1,17,600
Oridnary issues capital		1,00,000
Supplier Merchandise Liability		20,000
Debtors on sale	6,000
Bank loan (Note)		30,000
Prepaid rent	2,000
Prepaid insurance expense	2,200
Interest liability on loan		125
Closing inventory	22,000
Wages liability		6,000
Net loss	6,325
Total	1,56,125	1,56,125	-