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Chapter 2: Q 30PGA-3 (page 102)

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

Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:

Sep. 1 Received \(48,000 cash and issued common stock to Simpson.

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

6 Performed services for a law firm and received \)1,900 cash.

7 Paid \(18,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.

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

15 Paid assistant鈥檚 semimonthly salary, \(1,500.

17 Received cash on account, \)1,000.

20 Prepared a design for a school on account, \(650.

25 Received \)2,100 cash for design services to be performed in October.

28 Received \(2,900 cash for consulting with Plummer & Gordon.

29 Paid \)600 cash for a 12-month insurance policy starting on October 1.

30 Paid assistant鈥檚 semimonthly salary, \(1,500.

30 Paid monthly rent expense, \)600.

30 Received a bill for utilities, \(350. The bill will be paid next month.

30 Paid cash dividends of \)3,700.

Requirements 3. 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 dividends are the profit distributed to the owners of the business and required t-accounts are prepared in step 2.

Step by step solution

01

Step-by-Step SolutionStep 1: Definition of Dividends

The dividends are defined as the part of the profits which are distributed to the shareholders of the company.

02

Preparing T-Accounts

Cash

Sep 1 $48,000

$18,000 Sep 7

Sep 6 $1,900

$1,300 Sep 14

Sep 17 $1,000

$1,500 Sep 15

Sep 25 $2,100

$600 Sep 29

Sep 28 $2,900

$1,500 Sep 30

$600 Sep 30

$3,700 Sep 30

Bal. $28,700

Accounts Receivables

Sep 10 $1,200

$1,000 Sep 17

Sep 20 $650

Bal. $850

Office Supplies

Sep 4 $1,200

Bal $1,200

Prepaid Insurance

Sep 29 $600

Bal $600

Land

Sep 7 $18,000

Bal. $18,000

Furniture

Sep 4 $1,300

Bal. $1,300

Accounts Payable

Sep 14 $1,300

$2,500 Sep 4

$1,200 Bal.

Utilities Payable

$350 Sep 30

$350 bal.

Unearned Revenue

$2,100 Sep 25

$2,100 Bal.

Common Stock

$48,000 Sep 1

$48,000 Bal.

Dividends

Sep 30 $3,700

Bal. $3,700

Service Revenue

$1,900 Sep 6

$1,200 Sep 10

$650 Sep 20

$2,900 Sep 28

$6,650 Bal.

Salaries Expense

Sep 15 $1,500

Sep 30 $1,500

Bal $3,000

Rent Expense

Sep 30 $600

Bal. $600

Utilities Expense

Sep 30 $350

Bal $350

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Most popular questions from this chapter

Accounting uses a double-entry system. Explain what this sentence means

What is a T-account? On which side is the debit? On which side is the credit? Where does the account name go on a T-account?

Using the following accounts and their balances, calculate the debt ratio for Cooper Furniture Repair as of December 31.

Cash \( 7,000 Advertising Expense \) 1,200

Unearned Revenue 4,500 Utilities Expense 800

Equipment 10,000 Rent Expense 5,000

Service Revenue 8,000 Accounts Payable 2,300

Common Stock 12,200 Dividends 3,000

Using the following accounts and their balances, prepare the trial balance for Cooper Furniture Repair as of December 31, 2018. All accounts have normal balances.

Cash \( 7,000 Advertising Expense \) 1,200

Unearned Revenue 4,500 Utilities Expense 800

Equipment 10,000 Rent Expense 5,000

Service Revenue 8,000 Accounts Payable 2,300

Common Stock 12,200 Dividends 3,000

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

Problem P2-42 continues with the company introduced in Chapter 1, Canyon Canoe Company. Here you will account for Canyon Canoe Company鈥檚 transactions as it is actually done in practice. Begin by reviewing the transactions from Chapter 1. The transactions have been reprinted below.

Nov. 1 Received \(16,000 cash to begin the company and issued common stock to Amber and Zach.

2 Signed a lease for a building and paid \)1,200 for the first month鈥檚 rent.

3 Purchased canoes for \(4,800 on account.

4 Purchased office supplies on account, \)750.

7 Earned \(1,400 cash for rental of canoes.

13 Paid \)1,500 cash for wages.

15 Paid \(50 dividends to stockholders.

16 Received a bill for \)150 for utilities. (Use separate payable account.)

20 Received a bill for \(175 for cell phone expenses. (Use separate payable account.)

22 Rented canoes to Early Start Daycare on account, \)3,000.

26 Paid \(1,000 on account related to the November 3 purchase.

28 Received \)750 from Early Start Daycare for canoe rental on November 22.

30 Paid \(100 dividends to stockholders

In addition, Canyon Canoe Company completed the following transactions for December.

Dec. 1 Amber and Zack contributed land on the river (worth \)85,000) and a small building to use as a rental office (worth \(35,000) in exchange for common stock.

1 Prepaid \)3,000 for three months鈥� rent on the warehouse where the company stores the canoes.

2 Purchased canoes signing a note payable for \(7,200

4 Purchased office supplies on account for \)500.

9 Received \(4,500 cash for canoe rentals to customers.

15 Rented canoes to customers for \)3,500, but will be paid next month.

16 Received a \(750 deposit from a canoe rental group that will use the canoes next month.

18 Paid the utilities and telephone bills from last month.

19 Paid various accounts payable, \)2,000.

20 Received bills for the telephone (\(325) and utilities (\)295) which will be paid later.

31 Paid wages of \(1,800. 31 Paid cash dividend to stockholders, \)300.

Requirements

1. Journalize the transactions for both November and December, using the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Rent; Land; Building; Canoes; Accounts Payable; Utilities Payable; Telephone Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Canoe Rental Revenue; Rent Expense; Utilities Expense; Wages Expense; and Telephone Expense. Explanations are not required. (Hint: For November transactions, refer to your answer for Chapter 1.)

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

3. Post the journal entries to the T-accounts, and calculate account balances. Formal posting references are not required.

4. Prepare a trial balance as of December 31, 2018.

5. Prepare the income statement of Canyon Canoe Company for the two months ended December 31, 2018.

6. Prepare the statement of retained earnings for the two months ended December 31, 2018.

7. Prepare the balance sheet as of December 31, 2018.

8. Calculate the debt ratio for Canyon Canoe Company at December 31, 2018
See all solutions

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