Question

I

NTRODUCTORY

F

INANCIAL

A

CCOUNTING

I

J.

QUESTION 6

(19 marks)

You are the accountant for a newly formed company called Creative Architects Corporation. The

following business transactions occurred during the month of May 2018:

1.

Received $80,000 from shareholders in payment for 10,000 common shares that the

corporation issued.

2.

Hired an administrative assistant who will receive a salary of $2,400 each month.

3.

Purchased land for $30,000 and a building for $100,000 and paid $40,000 in cash and

signed a bank loan for the balance.

4.

Purchased $600 of office supplies on account.

5.

A customer was invoiced (billed) $1,800 for services provided.

6.

Paid $350 as partial payment for the office supplies purchased in transaction 4 above.

7.

Paid $1,800 for a one-year insurance policy.

8.

Received $1,000 as partial payment for the services provided in transaction 5 above.

9.

Received and paid the telephone bill for the month for $250.

10.

Received a bill for $450 for advertising for the current month.

11.

Paid $4,000 cash for salaries.

12.

Declared and paid $2,500 cash dividends to shareholders.

13.

Received $3,000 from a customer for services to be provided next month.

14.

Received $1,500 from a customer for a blueprint prepared for them.

PART A

(15 marks)

REQUIRED:

Record the transactions for May 2018 in the general journal provided below.

Do not provide

explanations for each entry.

If no entry is required, indicate by placing “No entry” in the

account titles area. Please leave a blank line between each set of journal entries and in the

Date column, enter the transaction number.

Answer 1

Journal Entries in the books of Creative Architects Corp Particulars Deb28 Credit Date Cash Al DY $80,000 To Common stock $80,000 No Entry DY $30,000 $ 100 000 Land Ale Building Alc To Cash Ale To Bank loan $49000 390,000 othe supplies Ale DX $ 600 $600 Office Supplies payable Ale I $1800 s Dr Accounts Recorvoble. Customer ah To Sales Revenue $1800 16. or $350 payable for office supplies ale - To Cash Ale $350 ? DY $ 1800 Insurance poemrum Ac TO Cash Alc 1800 Cash Ale Dy $1000 $1000 7o Accounts Recevable. Ale

• Particulars De bet Credit 8250 Telephone bill Alc o r To Payable for Telephone bill Al $250 Dr $250 Payable for Telephone bill ale To Cam Alc $250 $150 Advertising Eupenses Ale or $450 To payable for Advertising Eupenses Ale $ 1000 Salarie, Ale $4,000 TO Cash Ale Retained Eaonings Alo DY $2500 To Dividend Royable Alc $2500 Dr $2500 $2500 Dividend payable Ale no Cash Ale Cash Ale To Advance from Custimes DY $5.000 $3000 Cash Ale DY $1.500 Account To Bales Rovenue Receivable All Dy $1,500 10 Sales Revenue DY $1,500 $1,500 TO Accounts Recevable All Cash Alc