91Ó°ÊÓ

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

Theodore McMahon opened a law office on April 1, 2018. During the first month of operations, the business completed the following transactions:

Apr. 1 McMahon contributed \(70,000 cash to the business, Theodore McMahon, Attorney. The business issued common stock to McMahon.

3 Purchased office supplies, \)1,100, and furniture, \(1,300, on account.

4 Performed legal services for a client and received \)2,000 cash.

7 Purchased a building with a market value of \(150,000, and land with a market value of \)30,000. The business paid \(40,000 cash and signed a note payable to the bank for the remaining amount.

11 Prepared legal documents for a client on account, \)400.

15 Paid assistant’s semimonthly salary, \(1,200.

16 Paid for the office supplies purchased on April 3 on account. 18 Received \)2,700 cash for helping a client sell real estate.

19 Defended a client in court and billed the client for \(1,700.

25 Received a bill for utilities, \)650. The bill will be paid next month.

28 Received cash on account, \(1,100.

29 Paid \)3,600 cash for a 12-month insurance policy starting on May 1.

29 Paid assistant’s semimonthly salary, \(1,200.

30 Paid monthly rent expense, \)2,100.

30 Paid cash dividends of $3,200.

Requirements 2: Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Land, 141; Building, 151; Furniture, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.

Step by step solution

01

Definition of Accounts Receivables

The dividends are defined as part of the profit which is distributed among the owners and the shareholders of the business.

02

Opening four-column accounts

Cash Account Number – 101
Date	Item	PR	Debit	Credit	Debit	Credit

Accounts Receivables Account Number - 111
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Office Supplies Account Number - 121
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Prepaid Insurance Account Number - 131
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Land Account Number - 141
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Building Account Number - 151
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Accounts Payable Account Number - 201
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Utilities Payable Account Number - 211
Date	Item	PR	Debit	Credit	Debit	Credit

Notes Payable Account Number - 221
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Common Stock Account Number – 301
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Dividends Account Number - 311
Date	Item	PR	Debit	Credit	Debit	Credit

Service Revenue Account Number - 411
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Salaries Expense Account Number - 511
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Rent Expense Account Number - 521
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Utilities Expense Account Number - 531
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

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