Question

1. In March, Smith Co. completed the following transactions: Received $10,000 contribution from Bill Alone in exchange for capital. Paid utilities expense of $400. July1 12 Purchased equipment on account,$2,400 21 The owner, Bill Alone, withdrew $500 cash from the business. 27 Performed services for a client on account, $3,400 Journalize each of the above transactions

Answer 1

Answer =1)
Journal Entries
Date	Account Title and explanation	Debit	Credit
July 01,	Cash	$                      10,000
	To Capital Account		$                    10,000
July 05	Utilities Expenses	$                            400
	To Cash		$                          400
	Equipment	$                        2,400
July, 12	To Account Payable		$                       2,400
	Drawing Account	$                            500
July , 21	To Cash		$                          500
	Account Receivable	$                        3,400
July , 27	To Service Revenue		$                       3,400
	Answer =2)
	CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD
	Purchase Cost	$                  1,09,000
	Less: Residual Value	$                        4,000
	Net Value for Depreciation	$                  1,05,000
	Usefule life of the Assets	7 years
	Depreciation per year = Value for Depreciation / 7 years =	$                      15,000
	Total Depreciation Per year =	$                      15,000
	CALCULATION OF THE BOOK VALUE OF ASSETS AS ON JUNE 29,
	Purchase Value of Assets (A)	$                  1,09,000
	Less: Depreciation from June 2013 to June 2016 = $ 15,000 X 4 Years =	$                      60,000
	Depreciation in year 2017 = $ 15,000 X6/12 Months =	$                        7,500
	Total Depreciation (B)	$                      67,500
	Net Book Value (A-B) =	$                      41,500
	Less: Selling Cost	$                      45,500
	Gain on Sales ($ 45,500 - $ 41,500)	4,000.00
Journal Entries
Date	Account Title and explanation	Debit	Credit
Dec 31, 2013	Depreciation expenses	$                      15,000
	To Accumulated Depreciation		$                    15,000
June 29, 2017	Depreciation expenses	$                        7,500
	To Accumulated Depreciation		$                       7,500
June 29, 2017	Cash	$                      45,500
	Accumulated Depreciation on Machine	$                      67,500
	To Machiene		$                 1,09,000
	To Gain on sale of Machiene		$                       4,000