Q 31PGA-4
Question
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
Terrence Murphy opened a law office on January 1, 2018. During the first month of operations, the business completed the following transactions:
Jan. 1 Murphy contributed \(78,000 cash to the business, Terrence Murphy, Attorney. The business issued common stock to Murphy.
3 Purchased office supplies, \)600, and furniture, \(1,700, on account.
4 Performed legal services for a client and received \)1,000 cash.
7 Purchased a building with a market value of \(130,000, and land with a market value of \)25,000. The business paid \(25,000 cash and signed a note payable to the bank for the remaining amount.
11 Prepared legal documents for a client on account, \)400.
15 Paid assistant’s semimonthly salary, \(1,120.
16 Paid for the office supplies purchased on January 3 on account.
18 Received \)2,700 cash for helping a client sell real estate.
19 Defended a client in court and billed the client for \(1,800.
25 Received a bill for utilities, \)600. The bill will be paid next month.
29 Received cash on account, \(1,500.
30 Paid \)1,200 cash for a 12-month insurance policy starting on February 1.
30 Paid assistant’s semimonthly salary, \(1,120.
31 Paid monthly rent expense, \)1,800.
31 Paid cash dividends of $2,200.
Requirements
4. Prepare the trial balance of Terrence Murphy, Attorney, at January 31, 2018.
Step-by-Step Solution
VerifiedThe prepaid expense is the amount paid but not yet incurred and the required four-column accounts are prepaid in step 2.
The Prepaid Expense is defined as the amount of money paid in advance for the expense which has not been incurred.
| Terrence Murphy | ||
| Trial Balance | ||
| January 18, 2018 | ||
Account Title | Debit ($) | Credit ($) |
|
|
|
Cash | $50,160 |
|
Accounts Receivables | $700 |
|
Office Supplies | $600 |
|
Prepaid Insurance | $1,200 |
|
Land | $25,000 |
|
Building | $130,000 |
|
Furniture | $1,700 |
|
Accounts Payable |
| $2,900 |
Utilities Payable |
| $600 |
Notes Payable |
| $130,000 |
Common Stock |
| $78,000 |
Dividends | $2,200 |
|
Service Revenue |
| $5,900 |
Salaries Expense | $2,240 |
|
Rent Expense | $1,800 |
|
Utilities Expense | $600 |
|
|
|
|
Total | $216,200 | $216,200 |