Question

bill and dan opened up HEB Inc. on September 1, 2013. During the first month of operations the following transactions occurred.

Date     Transaction

9-1-13 Common Stockholders invested $40,000 cash in this new business.

9-2        Paid $4,000 rent for its store for the month of September and prepaid October – December’s

               rent (e.g., 3 mo.). All rent is due on the 2^nd of the month.

9-3       Borrowed $10,000 from a bank via a 6-month (180 day) promissory note at a 12% annual

              rate. (use a 360 day year for all calculations)

9-4        Purchased $25,000 of cleaning equipment.

9-5       Paid $1,200 for 1-year insurance policy.

9-10    Received a bill from NEWSCORP for advertising the opening of their store, for $400.

9-15     Performed services on account for $6,200.

9-20     Received $2,200 for services originally performed on account.

9-30     Declared a cash dividend of $700 to shareholders of record on 10/1/13. The dividend is

               payable on 12/31/13.

Assignment:

Do:

1. Journalize all of the September transactions in the appropriate columns as indicated below in the GENERAL JOURNAL.

2. Open GENERAL LEDGER accounts (T-ACCOUNTS) and post all of the September transactions.

3. Prepare a TRIAL BALANCE as of September 30, 2013. (This is a pre-closing Trial Balance)

4. Prepare a TRIAL BALANCE as of December 31^st, 2013 (Please do NOT make closing entries)

     Please make all appropriate adjusting entries and assume no adjustments have been made prior to

    December 31^st.

Answer 1

Date	Account description	Debit	Credit
1-Sep	Bank	$ 40,000.00
	Common Stock		$ 40,000.00
2-Sep	Rent	$    4,000.00
	Prepaid rent	$ 12,000.00
	To Bank		$ 16,000.00
3-Sep	Bank	$ 10,000.00
	To 12% promissory note Payable		$ 10,000.00
4-Sep	Cleaning Equipment	$ 25,000.00
	To Bank		$ 25,000.00
	(Assumed it is purchased for Cash)
5-Sep	Insurance	$        100.00
	Prepaid Insurance	$    1,100.00
	To Bank		$    1,200.00
10-Sep	Advertising Expenses	$        400.00
	To NEWSCORP		$        400.00
15-Sep	Trade Receivables	$    6,200.00
	To Revenue		$    6,200.00
20-Sep	Bank	$    2,200.00
	Trade Receivables		$    2,200.00
20-Sep	Retained Earnings	$        700.00
	Dividend Payable		$        700.00
30-Sep	Interest	$        100.00
	Accrued Interest		$        100.00

Bank A/C
Particulars	Amount	Particulars	Amount
Common Stock	$ 40,000.00	Rent	$    4,000.00
promissory note Payable	$ 10,000.00	Prepaid rent	$ 12,000.00
Trade Receivables	$    2,200.00	Cleaning Equipment	$ 25,000.00
		Insurance	$        100.00
		Prepaid Insurance	$    1,100.00
		To Balance C/f	$ 10,000.00
	$ 52,200.00		$ 52,200.00
Common Stock A/C
Particulars	Amount	Particulars	Amount
		By Bank	$ 40,000.00
To Balance C/f	$ 40,000.00
	$ 40,000.00		$ 40,000.00
Rent A/C
Particulars	Amount	Particulars	Amount
To Bank	$    4,000.00	To Retained Earnings	$    4,000.00
	$    4,000.00		$    4,000.00
Prepaid Rent A/C
Particulars	Amount	Particulars	Amount
To Bank	$ 12,000.00
		To Balance C/f	$ 12,000.00
	$ 12,000.00		$ 12,000.00
12% promissory note Payable
Particulars	Amount	Particulars	Amount
		By Bank	$ 10,000.00
To Balance C/f	$ 10,000.00
	$ 10,000.00		$ 10,000.00
Cleaning Equipment
Particulars	Amount	Particulars	Amount
To Bank	$ 10,000.00
		To Balance C/f	$ 10,000.00
	$ 10,000.00		$ 10,000.00
Insurance
Particulars	Amount	Particulars	Amount
To bank	$        100.00
		Retained Earnings	$        100.00
	$        100.00		$        100.00
Prepaid Insurance
Particulars	Amount	Particulars	Amount
To bank	$    1,100.00
		To Balance C/f	$    1,100.00
	$    1,100.00		$    1,100.00
Advertising Expenses
Particulars	Amount	Particulars	Amount
To NEWSCORP	$        400.00
		Retained Earnings	$        400.00
	$        400.00		$        400.00
NEWSCORP
Particulars	Amount	Particulars	Amount
		Advertising Expenses	$        400.00
To Balance C/f	$        400.00
	$        400.00		$        400.00
Trade Receivables
Particulars	Amount	Particulars	Amount
To Revenue	$    6,200.00	Bank	$    2,200.00
		To Balance C/f	$    4,000.00
	$    6,200.00		$    6,200.00
Revenue
Particulars	Amount	Particulars	Amount
		Trade Receivables	$    6,200.00
To retained earnings	$    6,200.00
	$    6,200.00		$    6,200.00
Retained Earnings
Particulars	Amount	Particulars	Amount
Dividend Payable	$        700.00	Retained earnings	$    6,200.00
To Retained Earnings	$    4,000.00
Retained Earnings	$        100.00
Retained Earnings	$        400.00
Accrued Interest	$        100.00
To Profit for the Year	$        900.00
	$    6,200.00		$    6,200.00

Trial Balance as on 31st September
	Amount
Bank	$   10,000.00
Common Stock	$ (40,000.00)
Rent	$      4,000.00
Prepaid rent	$   12,000.00
12% promissory note Payable	$ (10,000.00)
Cleaning Equipment	$   25,000.00
Insurance	$         100.00
Prepaid Insurance	$      1,100.00
Advertising Expenses	$         400.00
NEWSCORP	$       (400.00)
Trade Receivables	$      4,000.00
To Revenue	$   (6,200.00)
Dividend	$         700.00
Dividend Payable	$       (700.00)
Accrued Interest	$       (100.00)
Interest	$         100.00
	$                   -

Trial Balance as on 31st December
	Opening	Transaction	Closing
Bank	$   10,000.00	$       (700.00)	$ 9,300.00
Common Stock	$ (40,000.00)		#########
Rent	$      4,000.00	$   12,000.00	#########
Prepaid rent	$   12,000.00	$ (12,000.00)	$               -
12% promissory note Payable	$ (10,000.00)		#########
Cleaning Equipment	$   25,000.00		#########
Insurance	$         100.00	$         300.00	$     400.00
Prepaid Insurance	$      1,100.00	$       (300.00)	$     800.00
Advertising Expenses	$         400.00		$     400.00
NEWSCORP	$       (400.00)		$   (400.00)
Trade Receivables	$      4,000.00		$ 4,000.00
To Revenue	$   (6,200.00)		#########
Dividend	$         700.00		$     700.00
Dividend Payable	$       (700.00)	$         700.00	$               -
Accrued Interest	$       (100.00)	$       (300.00)	$   (400.00)
Interest	$         100.00	$         300.00	$     400.00
			$               -