Step by Step Assistance

Sunday, 20 May 2012

Problem 2-4A Preparing and posting journal entries; preparing a trial balance L.O. C3, C4, A1, P1, P2 Santo Birch opens a Web consulting business called Show-Me-the-Money and completes the following transactions in its first month of operations.


Problem 2-4A Preparing and posting journal entries; preparing a trial balance L.O. C3, C4, A1, P1, P2
Santo Birch opens a Web consulting business called Show-Me-the-Money and completes the following transactions in its first month of operations.

 March 1  
Birch invests $150,000 cash along with office equipment valued at $22,000 in the company in exchange for common stock.
2  
The company prepaid $6,000 cash for twelve months' rent for office space. (Hint: Debit Prepaid Rent for $6,000.)
3  
The company made credit purchases for $3,000 in office equipment and $1,200 in office supplies. Payment is due within 10 days.
6  
The company completed services for a client and immediately received $4,000 cash.
9  
The company completed a $7,500 project for a client, who must pay within 30 days.
13  
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 for dividends.
30  
The company purchased $600 of additional office supplies on credit.
31  
The company paid $200 cash for this month's utility bill.
  
Required:
1.
Record these transactions using the following titles: Cash, Accounts Receivable, Office Supplies, Prepaid Insurance, Prepaid Rent, Office Equipment, Accounts Payable, Common Stock, Dividends, Services Revenue, and Utilities Expense. (Omit the "$" sign in your response.)
  
Date
General Journal
           Debit
   Credit
March 1        
  Cash correct
 correct


   Office equipment correct
 correct


        Common stock correct

172,000 correct  

  


2        
  Prepaid rent correct
6,000 correct


        Cash correct

6,000 correct  

  


3        
   Office equipment correct
 correct


   Office supplies correct
 correct


        Accounts payable correct

4,200 correct  

  


6        
  Cash correct
4,000 correct


        Services revenue correct

4,000 correct  

  


9        
  Accounts receivable correct
7,500 correct


        Services revenue correct

7,500 correct  

  


13        
  Accounts payable correct
4,200 correct


        Cash correct

4,200 correct  

  


19        
  Prepaid insurance correct
5,000 correct


        Cash correct

5,000 correct  

  


22        
  Cash correct
3,500 correct


        Accounts receivable correct

3,500 correct  

  


25        
  Accounts receivable correct
3,820 correct


        Services revenue correct

3,820 correct  

  


29        
  Dividends correct
5,100 correct


        Cash correct

5,100 correct  

  


30        
  Office supplies correct
600 correct


        Accounts payable correct

600 correct  

  


31        
  Utilities expense correct
200 correct


        Cash correct

200 correct  


  
2.
Open the ledger accounts for the account titles referred in part 1 and post the journal entries from part 1 to the ledger accounts and enter the balance after each posting. (Record the transactions in given order.Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)
  
Cash
Date


Debit


Credit

Balance         
March
1

150,000 correct    


correct    

150,000 correct       

2

correct    


6,000 correct    

144,000 correct       

6

4,000 correct    


correct    

148,000 correct       

13

correct    


4,200 correct    

143,800 correct       

19

correct    


5,000 correct    

138,800 correct       

22

3,500 correct    


correct    

142,300 correct       

29

correct    


5,100 correct    

137,200 correct       

31

correct    


200 correct    

 137,000 correct       
  
Accounts Receivable
Date


Debit


Credit

Balance         
March
9

7,500 correct    


correct    

7,500 correct       

22

correct    


3,500 correct    

4,000 correct       

25

3,820 correct    


correct    

7,820 correct       
    
Office Supplies
Date


Debit


Credit

Balance         
March
3

1,200 correct    


correct    

1,200 correct       

30

600 correct    


correct    

1,800 correct       
  
Prepaid Insurance
Date


Debit


Credit

Balance         
March
19

5,000 correct    


correct    

5,000 correct       
  
Prepaid Rent
Date


Debit


Credit

Balance         
March
2

6,000 correct    


correct    

6,000 correct       
  
Office Equipment
Date


Debit


Credit

Balance         
March
1

22,000 correct    


correct    

22,000 correct       

3

3,000 correct    


correct    

25,000 correct       
  
Accounts Payable
Date


Debit


Credit

Balance         
March
3

correct    


4,200 correct    

4,200 correct       

13

4,200 correct    


correct    

correct       

30

correct    


600 correct    

600 correct       
  
Common Stock
Date


Debit


Credit

Balance         
March
1

correct    


172,000 correct    

172,000 correct       
  
Dividends
Date


Debit


Credit

Balance         
March
29

5,100 correct


correct    

5,100 correct       
  
Services Revenue
Date


Debit


Credit

Balance         
March
6

correct    


4,000 correct    

4,000 correct       

9

correct    


7,500 correct    

11,500 correct       

25

correct    


3,820 correct    

15,320 correct       
  
Utilities Expense
Date


Debit


Credit

Balance         
March
31

200 correct    


correct    

200 correct       


  
3.
Prepare a trial balance as of April 30. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Equity, Revenues, and Expenses. Omit the "$" sign in your response.)
  
SHOW-ME-THE-MONEY CONSULTANTS
Trial Balance
March 31

     Debit
   Credit
  Cash correct
$ 137,000 correct  

  Accounts receivable correct
7,820 correct  

  Office supplies correct
 correct  

  Prepaid insurance correct
 correct  

  Prepaid rent correct
 correct  

  Office equipment correct
 correct  

  Accounts payable correct

$ 600 correct  
  Common stock correct

172,000 correct  
  Dividends correct
5,100 correct  

  Services revenue correct

15,320 correct  
  Utilities expense correct
200 correct 

  




  Totals
$ 187,920 correct  
$ 187,920 correct