18E - Horngren'S Financial And Managerial Accounting

Question

Question: The following transactions occurred for Wilke Technology Solutions: 

May 1 The business received cash of \(105,000 and issued common stock to Zoe Wilke. 

2 Purchased office supplies on account, \)550. 

4 Paid \(57,000 cash for building and land. The building had a fair market value of \)45,000. 

6 Performed services for customers and received cash, \(3,600. 

9 Paid \)350 on accounts payable. 

17 Performed services for customers on account, \(3,500. 

19 Paid rent expense for the month, \)1,200. 

20 Received \(1,500 from customers for services to be performed next month. 

21 Paid \)900 for advertising in next month’s IT Technology magazine. 

23 Received \(3,100 cash on account from a customer. 

31 Incurred and paid salaries, \)1,700.

Analyzing and journalizing transactions 

Journalize the transactions of Wilke Technology Solutions. Include an explanation with each journal entry. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Advertising; Land; Building; Accounts Payable; Unearned Revenue; Common Stock; Service Revenue; Rent Expense; and Salaries Expense

Step-by-Step Solution

Answer

Journalizing is the recording of journal entries and required journal entries are passed in step 2.

Step-by-Step Solutions Step 1: Definition of Journalising

Journalizing is defined as the process of recording and reporting journal entries. It is the first step of the accounting process.

Step 2: Recording of Journal Entries

	Journal entry
Date	Particulars	Debit ($)	Credit ($)
May
1	Cash	105,000
	Common Stock		105,000
	(Common stock issued for cash)
2	Office Supplies	550
	Accounts Payable		550
	(Office supplies purchased on credit)
4	Building	45,000
	Land	12,000
	Cash		57,000
	(Land and building purchased on cash)
6	Cash	3,600
	Service Revenue		3,600
	(Services provided on ca ash)
9	Accounts Payable	350
	Cash		350
	(Accounts Payable using cash)
17	Accounts Receivables	3,500
	Service Revenue		3,500
	(Services rendered to clients on credit)
19	Rent Expense	1,200
	Cash		1,200
	(Rent expense is paid in cash)
20	Cash	1,500
	Unearned Revenue		1,500
	(Cash received for services to be provided)
21	Prepaid Expense	900
	Cash		900
	(Prepaid advertising expense paid)
23	Cash	3,100
	Accounts Receivables		3,100
	(Cash received from the customers)
31	Salaries Expense	1,700
	Cash		1,700
	(Salaries Expenses paid in cash)