Question

Problem 2-3A Preparing and posting journal entries; preparing a trial balance LO C3, C4, A1, P1, P2

Denzel Brooks opened a Web consulting business called Venture Consultants and completed the following transactions in March.

March 1 Brooks invested $ 150,000 cash along with $ 22,000 in office equipment in the company in exchange for common

stock.

2 The company prepaid $ 6,000 cash for six months' rent for an office. (Hint: Debit Prepaid Rent for $ 6,000 .)

3 The company made credit purchases of office equipment for $ 3,000 and office supplies for $ 1,200. Payment is due

within 10 days.

6 The company completed services for a client and immediately received $ 4,000 cash.

9

12 The company completed a $ 7,500 project for a client, who must pay within 30 days.

19 The company paid $ 4,200 cash to settle the account payable created on March 3 .

19 The company paid $ 5,000 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for

$ 5,000 .)

22 The company received $ 3,500 cash as partial payment for the work completed on March 9 .

25 The company completed work for another client for $ 3,820 on credit.

29 The company paid $ 5,100 cash in dividends.

30

31 The company purchased $ 600 of additional office supplies on credit.

31 The company paid $ 500 cash for this month's utility bill.

Required:

1. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307); Dividends (319); Services Revenue (403); and Utilities Expense (690).

2. Post the journal entries from part 1 to the ledger accounts.

3. Prepare a trial balance as of the end of March.

Answer 1

1 Date Credit Account Titles and Explanation Debit $150,000 Mar-01 Cash Office Equipment $22,000 $172,000 Common Stock (invested cash and office equpment in exchangr of common stock) Mar-02 Prepaid rent $6,000 $6,000 Cash (rent paid in advance) Mar-03 Office Equipment $3,000 Office Supplies $1,200 Accounts Payable $4,200 (purchased office equipment and office supplies credit) on Mar-06 Cash $4,000 $4,000 Service Revenue (service revenue received) Mar-09 Accounts Receivable $7,500 $7,500 Service Revenue (service provided on credit) Mar-12 Accounts Payable $4,200 $4,200 Cash (cash paid for credit purchase made) Mar-19 Prepaid Insurance $5,000 $5,000 Cash (insurance prepaid) Mar-22 Cash S3,500 $3,500 Accounts Receivable (cash received for work completed earlier)

Mar-25 Accounts Receivable $3,820 $3,820 Service Revenue (provided service to client on credit) Mar-29 Dividends $5,100 $5,100 Cash (paid dividend) Mar-30 Office Supplies $600 $600 Accounts Payable (purchased office supplies on credit) Mar-31 Utilities Expenses $500 $500 Cash (paid for utilities expense)

2 Office Equipment Common Stock Cash $150,000 Prepaid rent $4,000 Accounts Payable S3,500 Prepaid Insurance Dividends Utilities Expenses Common Stock Cash Common Stock $150,000 $6,000 $22,000 Accounts Payable Office Equipment $22,000 Service Revenue $4,200 $3,000 Accounts Receivable $5,000 $5,100 End Balance End Balance $500 $25,000 $172,000 End Balance $136,700 $172.000 $157,500 $157,500 $25.000 25000 $172,000 Office Supplies Accounts Payable $4,200 Office Equipment Office Supplies $600 Office Supplies Prepaid rent Cash Accounts Payable Accounts Payable Cash $6.000 $1,200 $3,000 $1,200 $600 End Balance $6,000 Balance $1,800 $600 End Balance $1,800 $6,000 $1,800 $4,800 $6,000 $4,800 Service Revenue Dividends Prepaid Insurance Cash $4,000 Cash $5,000 Cash $5,100 Accounts Receivable $7,500 $15,320 Accounts Receivable $3,820 End Balance $5,000 Balance $5,100 Balance $15.320 $15,320 $5,000 $5,000 $5,100 $5,100 Utilities Expenses Accounts Receivable Cash $7.500 Cash $500 S3,500 Service Revenue $3,820 Service Revenue Balance End Balance $500 $7,820 $500 $500 $11,320 $11.320

3 Trial Balance Credit Debit Cash Office Equipment Common Stock Prepaid rent Office Supplies Accounts Payable Service Revenue Accounts Receivable Prepaid Insurance Dividends Utilities Expenses Total $136,700 $25,000 $172,000 $6,000 $1,800 $600 $15,320 $7,820 $5,000 $5,100 $500 $187,920 $187,920