Q 30PGA-3 - 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 3. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal

Step-by-Step Solution

Answer

The dividends are the profit distributed to the owners of the business and required t-accounts are prepared in step 2.

Step-by-Step Solution Step 1: Definition of Dividends

The dividends are defined as the part of the profits which are distributed to the shareholders of the company.

Step 2: Preparing T-Accounts

Cash
Sep 1     $48,000	$18,000          Sep 7
Sep 6     $1,900	$1,300            Sep 14
Sep 17   $1,000	$1,500           Sep 15
Sep 25   $2,100	$600             Sep 29
Sep 28   $2,900	$1,500            Sep 30
	$600               Sep 30
	$3,700          Sep 30
Bal.   $28,700

Accounts Receivables
Sep 10    $1,200	$1,000        Sep 17
Sep 20    $650
Bal.        $850

Office Supplies
Sep 4   $1,200
Bal        $1,200

Prepaid Insurance
Sep 29   $600
Bal       $600

Land
Sep 7     $18,000
Bal.        $18,000

 

Furniture
Sep 4   $1,300
Bal.      $1,300

Accounts Payable
Sep 14       $1,300	$2,500        Sep 4
	$1,200         Bal.

Utilities Payable
	$350        Sep 30
	$350       bal.

Unearned Revenue
	$2,100        Sep 25
	$2,100        Bal.

Common Stock
	$48,000          Sep 1
	$48,000        Bal.

Dividends
Sep 30    $3,700
Bal.        $3,700

 

Service Revenue
	$1,900         Sep 6
	$1,200        Sep 10
	$650           Sep 20
	$2,900        Sep 28
	$6,650       Bal.

Salaries Expense
Sep 15     $1,500
Sep 30     $1,500
Bal           $3,000

Rent Expense
Sep 30     $600
Bal.         $600

Utilities Expense
Sep 30        $350
Bal              $350