Question

In this assignment, you are presented with a series of transactions for Andrew's Computer Rental. You must determine the appropriate journal entry (if any) that is required by each of the activities as they occur during the month. Andrew's Computer Rental began operations on June . Activity for Andrew's first month of business (June) was as follows 1. June: issued 1,000 shares of common stock (par value $1) in exchange for: $20,000 in cash, and b. furniture worth $12,000 a. 2. June: purchased computer repair supplies by paying S500 3. June 2: purchased computer equipment worth $3,600 (to be used by Andrew in operating his business; not for resale to customers) by paying $750 in cash and the balance on account. 4. June 3: signed a lease agreement, renting a small office on Green Street for $500 per month. 5. June 3: paid the first 6 months' office rent in advance. (A payment made in advance for expenses that will occur in the future is called a "prepaid"; here, "prepaid rent") 6. June 5: paid $150 for each of two advertisements that will be placed in the Journal and Register newspapers, running on June 23 7. June 15: received $950 cash in payment for computer repair services performed during the first half of the month. 8. June 20: signed a contract to repair computers for a local high school. The school paid $8,000 in advance for a 6-month service contract that will run from July 1 to December 31 (A payment received in advance for services to be performed in the future is called a "deferred", here, “deferred revenue".) 9. June 25: paid the balance due on the computer purchased on June 2 10. June 28: completed $1,200 worth of computer repairs for a customer. The customer paid Andrew $500 in cash. The balance of the bil is expected to be paid by the customer sometime in July 11. June 30: received S1,800 cash for computer repair services performed during the second half of the month. 12. June 30: billed ABC company for $700 of computer repair services completed on June 29 Required a. Prepare all necessary journal entries for these transactions as of the dates on which they occurred during the month. DO NOT prepare any month-end adjusting entries yet (this will be completed in written assignment #2). b. Pos al journal entries from part a. to T-accounts. c. Prepare a trial balance showing that DR CR after all entries are posted.

Answer 1

a.

No.	Date	General Journal	Debit	Credit
1	Jun-01	Cash	20000
		Furniture	12000
		Common stock (1000 x $1)		1000
		Paid-in capital in excess of par-common		31000
		(To record issuance of common stock)
2	Jun-01	Supplies	500
		Cash		500
		(To record computer repair supplies purchased)
3	Jun-02	Computer equipment	3600
		Cash		750
		Accounts payable		2850
		(To record computer equipment purchased)
4	Jun-03	No journal entry required
5	Jun-03	Prepaid rent (6 x $500)	3000
		Cash		3000
		(To record office rent paid in advance)
6	Jun-05	Advertising expense (2 x $150)	300
		Cash		300
		(To record advertising expense paid)
7	Jun-15	Cash	950
		Service revenue		950
		(To record cash received for service revenue earned)
8	Jun-20	Cash	8000
		Deferred revenue		8000
		(To record advance received for services)
9	Jun-25	Accounts payable	2850
		Cash		2850
		(To record payment on account)
10	Jun-28	Cash	500
		Accounts receivable	700
		Service revenue		1200
		(To record service revenue earned)
11	Jun-30	Cash	1800
		Service revenue		1800
		(To record cash received for service revenue earned)
12	Jun-30	Accounts receivable	700
		Service revenue		700
		(To record service revenue earned on account)

b.

Cash					Accounts Receivable
Beg. Bal.	0				Beg. Bal.	0
Jun-01	20000	500	Jun-01		Jun-28	700
Jun-15	950	750	Jun-02		Jun-30	700
Jun-20	8000	3000	Jun-03		End. Bal.	1400
Jun-28	500	300	Jun-05
Jun-30	1800	2850	Jun-25
End. Bal.	23850
Supplies					Prepaid Rent
Beg. Bal.	0				Beg. Bal.	0
Jun-01	500				Jun-03	3000
End. Bal.	500				End. Bal.	3000
Computer Equipment					Furniture
Beg. Bal.	0				Beg. Bal.	0
Jun-02	3600				Jun-01	12000
End. Bal.	3600				End. Bal.	12000
Accounts Payable					Deferred revenue
Beg. Bal.		0			Beg. Bal.		0
Jun-25	2850	2850	Jun-02				8000	Jun-20
End. Bal.		0			End. Bal.		8000
Common Stock					Paid-in Capital in Excess of Par
Beg. Bal.		0			Beg. Bal.		0
		1000	Jun-01				31000	Jun-01
End. Bal.		1000			End. Bal.		31000
Service Revenue					Advertising Expense
Beg. Bal.		0			Beg. Bal.	0
		950	Jun-15		Jun-05	300
		1200	Jun-28		End. Bal.	300
		1800	Jun-30
		700	Jun-30
End. Bal.		4650

c.

Andrew's Computer Rental
Trial Balance
At June 30
Account	Debit	Credit
Cash	23850
Accounts receivable	1400
Supplies	500
Prepaid rent	3000
Computer equipment	3600
Furniture	12000
Accounts payable		0
Deferred revenue		8000
Common stock		1000
Paid-in capital in excess of par		31000
Service revenue		4650
Advertising expense	300
Total $	44650	44650