Question

ACI01 Exam 1 Summer 2019 Page 5 19. Selected transactions for Garver Company during its first month in business are presented below. Sept. 1 Invested $25,000 cash in the business in exchange for common stock. S Purchased equipment for $27,000 paying $6,000 in cash and the balance on account 11 Performed $3,900 of services for clients, collecting $1,000 cash and billing them for the remaninder 25 Paid $7,000 cash on balance owed for equipment. 30 Declared and paid a $600 cash dividend. 30 Collected $1,200 from the clients from the September 11 transactions. The Chart of accounts shows: No. 101 Cash, No. 112 Accounts Receivable, No. 157 Equipment, No. 201 Accounts Payable, No. 311 Common Stock, No. 332 Dividends, and No. 400 Service Revenue. Instructions (a) Journalize the transactions on page 1 of the journal (Omit explanations). (b) Post the transactions using the standard account form. (c) Based only on these transactions, what amount would Garver Company report as total assets in the October 31 balance sheet? (d) Based only total liabilities in the October 31 balance sheet. on these transactions, what amount would Garver Company report as 20. For each of the following accounts, indicate the effects of (a) a debit and (b) the normal account balance. Notes Payable 2. 1. Prepaid Insurance Salaries and Wages Expense 3. 4. Service Revenue Equipment 5. 6 Common Stock

Answer 1

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Part a
Date	Account	Debit	Credit
Sep 1	Cash	$ 25,000
Sep 1	Common Stock		$ 25,000
Sep 5	Equipment	$ 27,000
Sep 5	Cash		$    6,000
Sep 5	Accounts Payable		$ 21,000
Sep 11	Cash	$    1,000
Sep 11	Accounts Receivable	$    2,900
Sep 11	Service Revenue		$    3,900
Sep 25	Accounts Payable	$    7,000
Sep 25	Cash		$    7,000
Sep 30	Dividend	$       600
Sep 30	Cash		$       600
Sep 30	Cash	$    1,200
Sep 30	Accounts Receivable		$    1,200
Part b
	Account	Date	Debit	Credit	Balance
	Accounts Payable	Sep 5		$ 21,000	$ 21,000
		Sep 25	$    7,000		$ 14,000
	Accounts Receivable	Sep 11	$    2,900		$    2,900
		Sep 30		$    1,200	$    1,700
	Cash	Sep 1	$ 25,000		$ 25,000
		Sep 5		$    6,000	$ 19,000
		Sep 11	$    1,000		$ 20,000
		Sep 25		$    7,000	$ 13,000
		Sep 30		$       600	$ 12,400
		Sep 30	$    1,200		$ 13,600
	Dividend	Sep 30	$       600		$       600
	Equipment	Sep 5	$ 27,000		$ 27,000
	Common Stock	Sep 1		$ 25,000	$ 25,000
	Service Revenue	Sep 11		$    3,900	$    3,900
Part c
	Total Assets:
	Accounts Receivable	$    1,700
	Cash	$ 13,600
	Equipment	$ 27,000
	Total Assets	$ 42,300
Part d
	Total Liabilities:
	Accounts Payable	$ 14,000
	Total Liabilities	$ 14,000
Question 20
		Debit	Normal
	Note Payable	Reduce	Credit
	Prepaid Insurance	Increase	Debit
	Salaries and Wages Expense	Increase	Debit
	Service Revenue	Reduce	Credit
	Equipment	Increase	Debit
	Common Stock	Reduce	Credit