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Chapter 2: 9RQ (page 90)
What are source documents? Provide examples of source documents that a business might use
The source document is a document that provides evidence of transactions and examples are cash memos, invoices, etc.
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Journalizing transactions John Daniel opened a medical practice in Sacramento, California, and had the following transactions during the month of January.
Jan. 1 The business received \(34,000 cash and issued common stock to Daniel.
2 Purchased medical supplies on account, \)17,000.
4 Performed services for patients receiving \(1,600.
12 Paid monthly office rent of \)3,000.
15 Recorded $7,000 revenue for services rendered to patients on account.
Journalize the transactions of John Daniel, M.D. Include an explanation with each entry.
What does a ledger show? What鈥檚 the difference between a ledger and a chart of accounts?
For each account, identify if the change would be recorded as a debit (DR) or credit (CR).
11. Increase to Cash 16. Increase to Interest Revenue
12. Decrease to Accounts Payable 17. Increase to Rent Expense
13. Increase to Common Stock 18. Decrease to Office Supplies
14. Increase to Unearned Revenue 19. Increase to Prepaid Rent
15. Decrease to Accounts Receivable 20. Increase to Notes Payable
Journalizing transactions, posting to T-accounts, and preparing a trial balance
Consider the following transactional data for the first month of operations for Crystal Clear Cleaning.
Nov. 1 Stockholders contributed \(15,000 and a truck, with a market value of \)3,000, to the business in exchange for common stock.
2 The business paid \(4,000 to Pleasant Properties for November through February rent. (Debit Prepaid Rent)
3 Paid \)4,800 for a business insurance policy for the term November 1, 2018 through October 31, 2019. (Debit Prepaid Insurance)
4 Purchased cleaning supplies on account, \(320.
5 Purchased on account an industrial vacuum cleaner costing \)1,500. The invoice is payable November 25.
7 Paid \(3,900 for a computer and printer.
9 Performed cleaning services on account in the amount of \)4,700.
10 Received \(200 for services rendered on November 9. 15 Paid employees, \)400.
16 Received \(15,000 for a 1-year contract beginning November
16 for cleaning services to be provided. Contract begins November 16, 2018, and ends November 15, 2019. (Credit Unearned Revenue)
17 Provided cleaning services and received \)400 cash.
18 Received a utility bill for \(175 with a due date of December 4, 2018. (Use Accounts Payable)
20 Borrowed \)36,000 from bank with interest rate of 6% per year.
21 Received \(500 on account for services performed on November 9.
25 Paid \)750 on account for vacuum cleaner purchased on November 5.
29 Paid \(200 for advertising.
30 Cash dividends of \)1,400 were paid to stockholders
3. Post the journal entries to the T-accounts, and calculate account balances
Journalizing transactions and posting to T-accounts
Roland Foster Optical Dispensary completed the following transactions during the latter part of March:
Mar. 15 Purchased office supplies on account, \(3,400.
28 Paid \)1,800 on account.
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