Q 30PGA-1 - Horngren'S Financial And Managerial Accounting

Question

Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance 

Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions: 

Sep. 1 Received \(48,000 cash and issued common stock to Simpson. 

4 Purchased office supplies, \)1,200, and furniture, \(1,300, on account. 

6 Performed services for a law firm and received \)1,900 cash. 

7 Paid \(18,000 cash to acquire land to be used in operations. 

10 Performed services for a hotel and received its promise to pay the \)1,200 within one week. 

14 Paid for the furniture purchased on September 4 on account. 

15 Paid assistant’s semimonthly salary, \(1,500. 

17 Received cash on account, \)1,000. 

20 Prepared a design for a school on account, \(650. 

25 Received \)2,100 cash for design services to be performed in October. 

28 Received \(2,900 cash for consulting with Plummer & Gordon. 

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

30 Paid assistant’s semimonthly salary, \(1,500. 

30 Paid monthly rent expense, \)600. 

30 Received a bill for utilities, \(350. The bill will be paid next month. 

30 Paid cash dividends of \)3,700.

Requirements 1. Record each transaction in the journal using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Furniture; Accounts Payable; Utilities Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanations are not required.

Step-by-Step Solution

Answer

The accounts payable is the amount owed to suppliers and required journal entries are passed in step 2.

Step-by-Step Solution Step 1: Definition of Accounts Payable

The accounts payable are defined as the amount of money owed by the business to the supplier of goods or services.

Step 2: Recording Journal Entries

	Journal entry
Date	Particulars	Debit ($)	Credit ($)
Sep
1	Cash	$48,000
	Common Stock		$48,000
4	Office Supplies	$1,200
	Furniture	$1,300
	Accounts Payable		$2,500
6	Cash	$1,900
	Service Revenue		$1,900
7	Land	$18,000
	Cash		$18,000
10	Accounts Receivables	$1,200
	Service Revenue		$1,200
14	Accounts Payable	$1,300
	Cash		$1,300
15	Salary Expense	$1,500
	Cash		$1,500
17	Cash	$1,000
	Accounts Receivables		$1,000
20	Accounts Receivables	$650
	Service Revenue		$650
25	Cash	$2,100
	Unearned Revenue		$2,100
28	Cash	$2,900
	Service Revenue		$2,900
29	Prepaid Insurance	$600
	Cash		$600
30	Salary Expense	$1,500
	Cash		$1,500
30	Rent expense	$600
	Cash		$600
30	Utilities Expense	$350
	Utilities Payable		$350
30	Dividends	$3,700
	Cash		$3,700