Maquoketa Services was formed on May 1, 2018. The following transactions took place during the first month.
Transactions on May 1
| 1 | Jay Bradford invested $40,000 cash in the company, as its sole owner. |
| 2 | Hired two employees to work in the warehouse. They will each be paid a salary of $3,050 per month. |
| 3 | Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year. |
| 4 | Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months. |
| 5 | Paid $1,800 cash for a one-year insurance policy on the furniture and equipment. |
Transactions during the remainder of the month:
| 6 | Purchased basic office supplies for $420 cash. |
| 7 | Purchased more office supplies for $1,500 on account. |
| 8 | Total revenues earned were $20,000-$8,000 cash and $12,000 on account. |
| 9 | Paid $400 to suppliers for accounts payable due. |
| 10 | Received $3,000 from customers in payment of accounts receivable. |
| 11 | Received utility bills in the amount of $380, to be paid next month. |
| 12 | Paid the monthly salaries of the two employees, totaling $6,100. |
Instructions
- Prepare Journal entries to record each of the events listed.
- Post the Journal entries to T-accounts.
- Prepare a trial balance as of May 31, 1018
The trial balance of Avtar Sandhu Co. Shown below does not balance
AVTAR SANDHU CO.
Trial Balance
June 30, 2019
Trial Balance
June 30, 2019
Each of the listed accounts has a normal balance per the general ledger. An examination of the ledger and Journal reveals the followings errors:
- Cash received from a customer in payment of its account was debited for $580, and Accounts Receivable was credited for the same amount. The actual collection was for $850
- the purchase of a computer on account for $710 was recorded as a debit to Supplies for $710 and credit to Accounts Payable for $710.
- Services were performed on account for a client for $980. Accounts Receivable was debited for $980, and Service Revenue was credited for $98.
- A debit posting to Salaries and Wages Expenses of $700 was omitted.
- A payment of a balance due for $306 was credited to Cash for $306 and credited to Accounts Payable for $360.
- The withdrawal of $600 cash for Sandhu's personal use was debited to Salaries and Wages Expense for $600 and credited to Cash for $600.
Instructions
Prepare a correct trial balance.
The Starr Theater, owned by Meg Vargo will begin operation in March. The Starr will be unique in that it will show only triple features of sequential theme movies. As of March 1, the ledger of Starr showed: No. 101. Cash $3,000, No. 140 Land $24,000, No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $10,000, No. 157 Equipment $10,000, No. 201 Accounts Payable $7,000, and No. 301 Owner's Capital $40,000. During the month of March, the following events and transactions occurred:
| March 2 | Rented the three Indiana Jones movies to be shown for the first 3 weeks of March. The film rental was $3,500; $1,500 was paid in cash and $2,000 will be paid on March 10. |
| 3 | Ordered the Lord of the Rings movies to be shown the last 10 days of March. It will cost $200 per night. |
| 9 | Received $4,300 cash from admissions. |
| 10 | Paid balance due on Indiana Jones movies rental and $2,100 on March 1 accounts payable. |
| 11 | Starr Theater contracted with Adam Ladd to operate the concession stand Ladd is to pay 15% of gross concession receipts, payable monthly for the rental of the concession stand. |
| 12 | Paid advertising expenses $900. |
| 20 | Received $5,000 cash from customers for admissions. |
| 20 | Received the Lord of the Rings movies and paid the rental fee of $2,000. |
| 31 | Paid salaries of $3,100. |
| 31 | Received statement from Adam Ladd showing gross receipts from concessions of $6,000 and the balance due to Starr Theater of $900 ($6,000 X 15%) for March. Ladd paid one-half the balance due and will remit the remainder on April 5.. |
| 31 | Received $9,000 cash from customers for admissions. |
In addition to the accounts identified above, the chart of accounts includes: No. 112 Accounts Receivable, No. 400 Service Revenue, No. 429 Rent Revenue, No. 610 Advertising Expense, no. 726 Salaries and Wages Expense and No. 729 Rent Expense.
Instructions
- Enter the beginning balances in the ledger. Insert a check mark (√) in the reference column of the ledger for the beginning balance.
- Journalize the March transaction Starr records admission revenue as service revenue, rental of the concession stand as rent revenue, and film rental expense as rent expense.
- Post the March Journal entries to the ledger. Assume that all entries are posted from page 1 of the journal.
- Prepare a trial balance on March 31, 1018
Kim Yi has prepared the following list of statements about accounts:
- An account is an accounting record of either a specific asset or a specific liability.
- An account shows only increases, not decreases, in the item it relates to.
- Some items, such as Cash and Accounts Receivable, are combined into one account.
- An account has a left, or credit side, and a right, or debit side.
- A simple form of an account consisting of just the account title, the left side, and the right side, is called a T-account.
Instructions
Identify each statement as true or false. if false, indicates how to correct the statement
Selected transactions for A. Mane, an interior decorator, in her first month of business, are as follows:
| Jan. 2 | Invested $10,000 cash in the business |
| 3 | Purchased used car for $3,000 cash for use in business. |
| 9 | Purchased supplies on account for $500. |
| 11 | Billed customers $2,400 for services performed. |
| 16 | Paid $350 cash for advertising. |
| 20 | Received $700 cash from customers billed on January 11 |
| 23 | Paid creditor $300 cash on balance owed. |
| 28 | Withdrew $1,000 cash for personal use by owner. |
Instructions
For each transaction, indicate the following:
- The basic type of account debited and credited (asset, liability, owner's equity).
- The specific account debited and credited ( Cash, Rent Expense, Service Revenue, etc.)
- Whether the specific account is increased or decreased
- The normal balance of the specific account.
Use the following format, in which the January 2 transaction is given as an example.
The following information relates to Sanculi Real Estate Agency:
| Oct. 1 | Alan Sanculi begins business as a real estate agent with a cash investment of $15,000 |
| 2 | Hires an administrative assistant. |
| 3 | Purchases office furniture for $1,900, on account. |
| 6 | Sells a house and lot for R. Craig; bills R. Craig $3,800 for realty services performed. |
| 27 | Pays $1,100 on the balance related to the transaction of October 3. |
| 30 | Pays the administrative assistant $2,500 in salary for October. |
Instructions
Prepare the debit-credit analysis for each transaction.
Marx Industries had the following transactions:
- Borrowed $5,000 from the bank by signing a note.
- Paid $3,100 cash for a computer.
- Purchased $850 of supplies on account.
Instructions
- Indicate what accounts are increased and decreased by each transaction.
- Journalize each transaction. (Omit explanations.)
Halladay Enterprises had the following selected transactions:
| 1 | Bo Halladay invested $4,000 cash in the business. |
| 2 | Paid office rent of $840. |
| 3 | Performed consulting services and billed a client $5,200 |
| 4 | Bo Halladay withdrew $750 cash for personal use |
Instructions
- Indicate the effect each transaction has on the accounting equation (Assets = Liabilities + Owner's Equity). using plus and minus signs.
- Journalize each transaction.
Teresa Alvarez has prepared the following list of statements about the general ledger:
- The general ledger contains all the asset and liability accounts but no owner's equity accounts.
- The general ledger is sometimes referred to as simply the ledger.
- The accounts in the general ledger are arranged in alphabetical order.
- Each account in the general ledger is numbered for easier identification
- The general ledger is a book of original entry.
Instructions
Identify each statement as true or false. If false, indicate how to correct the statement.
Selected transactions from the journal of June Feldman, Investment broker, are presented below.
Instructions
- Post the transactions to T-accounts.
- Prepare a trial balance at August 31, 2020.
Minhajur Rahaman
