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Chapter 2: 29PGA_2 (page 101)

Question: Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance

Vince York practices medicine under the business title Vince York, M.D. During July, the medical practice completed the following transactions:

Jul. 1 York contributed \(63,000 cash to the business in exchange for common stock.

5 Paid monthly rent on medical equipment, \)510.

9 Paid \(23,000 cash to purchase land to be used in operations.

10 Purchased office supplies on account, \)1,600.

19 Borrowed \(22,000 from the bank for business use.

22 Paid \)1,100 on account.

28 The business received a bill for advertising in the daily newspaper to be paid in August, \(240.

31 Revenues earned during the month included \)6,400 cash and \(6,000 on account.

31 Paid employees鈥� salaries \)2,200, office rent \(1,900, and utilities \)560. Record as a compound entry.

31 The business received \(1,120 for medical screening services to be performed next month.

31 Paid cash dividends of \)7,200.

The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; and Advertising Expense.

Requirements 2. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal.

Short Answer

Expert verified

The T-accounts are shortened forms of ledgeraccounts and all the required t-Accounts are prepared in step 2.

Step by step solution

01

Step-by-Step SolutionStep 1: Definition of T-Account

The t-accounts are defined as the shortened form of the ledger account which is prepared to post the journal entries

02

Step 2:Preparing T-Accounts

Cash

Jul 1 $63,000

$510 Jul 5

Jul 18 $22,000

$23,000 Jul 9

Jul 31 $1,120

$1,100 Jul 22

Jul 31 $6,400

$7,200 Jul 31

$2,200 July 31

$1,900 Jul 31

$560 Jul 31

Bal. $56,050

Accounts Receivables

Jul 31 $6,000

Bal $6,000

Office Supplies

Jul 10 $1,600

Bal $1,600

Land

Jul 9 $23,000

Bal. $23,000

Accounts Payable

Jul 22 $1,100

$1,600 Jul 10

$500 Bal.

Advertising Payable

$240 Jul 28

$240 Bal.

Unearned Revenue

$1,120 Jul 31

$1,120 Bal.

Notes Payable

$22,000 Jul 19

$22,000 Bal.

Common Stock

$63,000 Jul 1

$63,000 Bal.

Dividends

Jul 31 $7,200``

Bal. $7,200

Service Revenue

$6,400 Jul 31

$6,000 July 31

12,400 Bal.

Salaries Expense

Jul 31 $2,200

Bal. $2,200

Rent Expense

Jul 5 $510

Jul 31 $1,900

Bal. 2,410

Utilities Expense

Jul 31 $560

Bal. $560

Advertising Expense

Jul 28 $240

Bal. $240

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Most popular questions from this chapter

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:

Cash 11,000

Office Supplies 400

Accounts Receivable 16,500

Land 30,000

Furniture 0

Automobile 0

Accounts Payable 3,800

Unearned Revenue 0

Common Stock 52,300

Dividends 0

Rent Expense 800

Salaries Expense 5,600

Service Revenue 8,200

Total Balance \( 64,300 64,300

During April, the business completed the following transactions:

Apr. 4 Collected \)2,500 cash from a client on account.

8 Performed tax services for a client on account, \(5,400.

13 Paid \)3,000 on account.

14 Purchased furniture on account, \(3,600.

15 Merry contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)9,500.

18 Purchased office supplies on account, \(900.

19 Received \)2,700 for tax services performed on April 8.

20 Paid cash dividends of \(6,500.

21 Received \)5,700 cash for consulting work completed.

24 Received \(2,400 cash for accounting services to be completed next month.

27 Paid office rent, \)600.

28 Paid employee salary, $1,700.

Requirements

3. Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal references, and posting references. Assume the journal entries were recorded on page 5 of the journal.

Better Days Ahead, a charitable organization, has a standing agreement with First National Bank. The agreement allows Better Days Ahead to overdraw its cash balance at the bank when donations are running low. In the past, Better Days Ahead managed funds wisely and rarely used this privilege. Jacob Henson has recently become the president of Better Days Ahead. To expand operations, Henson acquired office equipment and spent large amounts on fundraising. During Henson鈥檚 presidency, Better Days Ahead has maintained a negative bank balance of approximately $10,000.

What is the ethical issue in this situation, if any?

State why you approve or disapprove of Henson鈥檚 management of Better Days Ahead鈥檚 funds.

Correcting errors in a trial balance

The trial balance of Beautiful Tots Child Care does not balance.

Account Title Debit Credit

Office Supplies 1,000

Cash 7,900

Accounts Receivable 6,700

Prepaid Insurance 300

Equipment 91,500

Accounts Payable 3,400

Notes Payable 45,000

Common Stock 57,000

Dividends 5,000

Service Revenue 12,350

Rent Expense 750

Salaries Expense 4,400

Total Balance \( 117,550 \) 117,750

The following errors are detected:

a. Cash is understated by \(1,500.

b. A \)4,100 debit to Accounts Receivable was posted as a credit.

c. A \(1,400 purchase of office supplies on account was neither journalized nor posted.

d. Equipment was incorrectly transferred from the ledger as \)91,500. It should have been transferred as \(83,000.

e. Salaries Expense is overstated by \)700.

f. A \(300 cash payment for advertising expense was neither journalized nor posted.

g. A \)200 cash dividend was incorrectly journalized as \(2,000.

h. Service Revenue was understated by \)4,100.

i. A 12-month insurance policy was posted as a $1,900 credit to Prepaid Insurance. Cash was posted correctly.

Prepare the corrected trial balance as of August 31, 2018. Journal entries are not required.

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:

Cash 11,000

Office Supplies 400

Accounts Receivable 16,500

Land 30,000

Furniture 0

Automobile 0

Accounts Payable 3,800

Unearned Revenue 0

Common Stock 52,300

Dividends 0

Rent Expense 800

Salaries Expense 5,600

Service Revenue 8,200

Total Balance \( 64,300 64,300

During April, the business completed the following transactions:

Apr. 4 Collected \)2,500 cash from a client on account.

8 Performed tax services for a client on account, \(5,400.

13 Paid \)3,000 on account.

14 Purchased furniture on account, \(3,600.

15 Merry contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)9,500.

18 Purchased office supplies on account, \(900.

19 Received \)2,700 for tax services performed on April 8.

20 Paid cash dividends of \(6,500.

21 Received \)5,700 cash for consulting work completed.

24 Received \(2,400 cash for accounting services to be completed next month.

27 Paid office rent, \)600.

28 Paid employee salary, $1,700.

Requirements

  1. Record the April transactions in the journal. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Furniture; Automobile; Accounts Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; and Rent Expense. Include an explanation for each entry

Where are transactions initially recorded?
See all solutions

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