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Chapter 2: 3TI (page 78)

EMB Consulting Services had the following transactions for the month of November. Journalize the transactions and include an explanation with each entry.

Nov. 1 The business received \(10,000 cash and issued common stock.

15 Purchased office supplies on account, \)400.

18 Paid advertising bill, \(150.

20 Received \)1,000 from customers for services rendered.

28 Cash dividends of $500 were paid to stockholders

Short Answer

Expert verified

Answer

Dividends are profits distributed to the shareholders and required entries are passed.

Step by step solution

01

Definition of Dividends

The dividends are defined as the part of the profits of the business which are distributed among the shareholders or the owners of the company.

02

Journal Entries

Date

Particulars

Amount ($)

Amount ($)

Nov 1

Cash

10,000

Common Stock

10,000

(Common stock issued)

Nov 15

Supplies

400

Accounts Payable

400

(Supplies purchased on credit)

Nov 18

Advertising Expense

150

Cash

150

(Advertising expenses paid)

Nov 20

Cash

1,000

Service Revenue

1,000

(Cash received for service revenue)

Nov 28

Dividends

500

Cash

500

(Dividends paid in cash)

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Most popular questions from this chapter

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

Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions:

Nov. 1 Received \(41,000 cash and issued common stock to Stewart.

4 Purchased office supplies, \)1,200, and furniture, \(2,300, on account.

6 Performed services for a law firm and received \)2,100 cash.

7 Paid \(27,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the \)800 within one week.

14 Paid for the furniture purchased on November 4 on account.

15 Paid assistant鈥檚 semimonthly salary, \(1,470.

17 Received cash on account, \)500.

20 Prepared a design for a school on account, \(680.

25 Received \)1,900 cash for design services to be performed in December.

28 Received \(3,100 cash for consulting with Plummer & Gordon.

29 Paid \)840 cash for a 12-month insurance policy starting on December 1.

30 Paid assistant鈥檚 semimonthly salary, \(1,470. 30 Paid monthly rent expense, \)650.

30 Received a bill for utilities, \(650. The bill will be paid next month.

30 Paid cash dividends of \)2,800.

Requirements 2. Open a T-account for each of the accounts.

Question:Preparing financial statements from the trial balance and calculating the debt ratio

The trial balance as of July 31, 2018, for Sara Simon, Registered Dietician, is presented below:

Account Title Debit Credit

Office Supplies 2,300

Cash 38,000

Accounts Receivable 9,000

Prepaid Insurance 2,400

Equipment 16,000

Accounts Payable 3,000

Unearned Revenue 3,912

Notes Payable 31,000

Common Stock 18,000

Dividends 2,800

Salaries Expense 1,700

Rent Expense 1,100

Utilities Expense 500

Service Revenue 17,888

Total Balance \( 73,800 \) 73,800

Requirements 3. Prepare the balance sheet as of July 31, 2018.

What are source documents? Provide examples of source documents that a business might use

Roy Akins was the accounting manager at Zelco, a tire manufacturer, and he played golf with Hugh Stallings, the CEO, who was something of a celebrity in the community. The CEO stood to earn a substantial bonus if Zelco increased net income by year-end. Roy was eager to get into Hugh鈥檚 elite social circle; he boasted to Hugh that he knew some accounting tricks that could increase company income by simply revising a few journal entries for rental payments on storage units. At the end of the year, Roy changed the debits from 鈥渞ent expense鈥� to 鈥減repaid rent鈥� on several entries. Later, Hugh got his bonus, and the deviations were never discovered.

Requirements 1. How did the change in the journal entries affect the net income of the company at year-end?

Explain the five steps in journalizing and posting transactions.
See all solutions

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