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Chapter 2: Q43PS-4 (page 115)

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

Short Answer

Expert verified

The trial balance shows the balances into debit and credit and the required trial balance is prepared in Step 2.

Step by step solution

01

Definition of trial balance

The trial balance is defined as the accounting equation worksheet which records the ledger balance into debits and credits.

02

Preparing the trial balance

Crystal Clear Cleaning

Trial Balance

November 30, 2018

Account Title

Debit ($)

Credit ($)

Cash

$51,650

Accounts Receivables

$4,000

Cleaning Supplies

$320

Prepaid Rent

$4,000

Prepaid Insurance

$4,800

Equipment

$5,400

Truck

$3,000

Accounts Payable

$1,245

Unearned Revenue

$15,000

Notes Payable

$36,000

Common Stock

$18,000

Dividends

$1,400

Service Revenue

$5,100

Salaries Expense

$400

Advertising Expense

$200

Utilities Expense

$175

Total

$75,345

$75,345

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Most popular questions from this chapter

Your friend, Dean McChesney, requested that you advise him on the effects that certain transactions will have on his business, A-Plus Travel Planners. Time is short, so you cannot journalize the transactions. Instead, you must analyze the transactions without a journal. McChesney will continue the business only if he can expect to earn a monthly net income of \(6,000. The business completed the following transactions during June:

a. McChesney deposited \)10,000 cash in a business bank account to start the company. The company issued common stock to McChesney.

b. Paid \(300 cash for office supplies.

c. Incurred advertising expense on account, \)700.

d. Paid the following cash expenses: administrative assistant鈥檚 salary, \(1,400; office rent, \)1,000.

e. Earned service revenue on account, \(8,800.

f. Collected cash from customers on account, \)1,200.

Requirements

3. Prepare a trial balance at June 30, 2018

Question: Calculating the debt ratio

John Hart, M.D., reported the following trial balance as of September 30, 2018:

Account Title Office Supplies Cash Debit Credit Accounts Receivable Office Equipment Land Building Accounts Payable Utilities Payable Unearned Revenue Notes Payable Advertising Expense Utilities Expense Salaries Expense Service Revenue Dividends Common Stock Total Balance \( 256,700 \) 1,600 24,795 69,000 50,505 110,000 200 \( 30,000 \) 256,700 29,000 23,500 1,100 57,000 7,900 3,000 30,000 75,000 800 J

Calculate the debt ratio for John Hart, M.D

Question:The following transactions occurred for Lawrence Engineering:

Jul. 2 Received \(14,000 contribution from Brett Lawrence in exchange for common stock.

4 Paid utilities expense of \)370.

5 Purchased equipment on account, \(1,600.

10 Performed services for a client on account, \)2,900.

12 Borrowed \(7,100 cash, signing a notes payable.

19 Cash dividends of \)200 were paid to stockholders.

21 Purchased office supplies for $840 and paid cash.

27 Paid the liability from July 5.

Requirements 1. Open the following T-accounts for Lawrence Engineering: Cash; Accounts Receivable; Office Supplies; Equipment; Accounts Payable; Notes Payable; Common Stock; Dividends; Service Revenue; and Utilities Expense.

Calculating the balance of a T-account

Accounts Payable

May 2 6,000 21,000 May 1

May 22 11,500 500 May 5

8,500 May 15

500 May 23

Calculate the Accounts Payable balance.

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 1. Prepare the income statement for the month ended July 31, 2018.
See all solutions

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