43PS-2 - Horngren'S Financial And Managerial Accounting

Question

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

2. Open a T-account for each account

Step-by-Step Solution

Answer

Salaries expense is the compensation paid to employees and the required t-accounts are opened in Step 2.

Step 1: Definition of Salaries Expense

The salaries expense is defined as the cost incurred by the company for paying the employees of the business.

Step 2: Recording Journal Entries

Cash

Accounts Receivables

 

Cleaning Supplies

 

Prepaid Rent

 

Prepaid Insurance

 

Equipment

 

Truck

 

Accounts Payable

 

Unearned Revenue