Q 36PGB-1 - Horngren'S Financial And Managerial Accounting

Question

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

Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions: 

Nov. 1 Received \(41,000 cash and issued common stock to Stewart. 

4 Purchased office supplies, \)1,200, and furniture, \(2,300, on account. 

6 Performed services for a law firm and received \)2,100 cash. 

7 Paid \(27,000 cash to acquire land to be used in operations. 

10 Performed services for a hotel and received its promise to pay the \)800 within one week. 

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

15 Paid assistant’s semimonthly salary, \(1,470. 

17 Received cash on account, \)500. 

20 Prepared a design for a school on account, \(680. 

25 Received \)1,900 cash for design services to be performed in December. 

28 Received \(3,100 cash for consulting with Plummer & Gordon. 

29 Paid \)840 cash for a 12-month insurance policy starting on December 1. 

30 Paid assistant’s semimonthly salary, \(1,470. 30 Paid monthly rent expense, \)650. 

30 Received a bill for utilities, \(650. The bill will be paid next month. 

30 Paid cash dividends of \)2,800.

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

Salary expense is the cost incurred for the compensation of the employees and the required journal entries are passed in step 2.

Step-by-Step Solution Step 1: Definition of Salary Expense

The salary expense is defined as the cost incurred by the company for compensating the employees of the business.

Step 2: Recording Journal Entries

	Journal entry
Date	Particulars	Debit ($)	Credit ($)
Nov
1	Cash	$41,000
	Common Stock		$41,000
4	Office Supplies	$1,200
	Furniture	$2,300
	Accounts Payable		$3,500
6	Cash	$2,100
	Service Revenue		$2,100
7	Land	$27,000
	Cash		$27,000
10	Accounts Receivables	$800
	Service Revenue		$800
14	Accounts Payable	$2,300
	Cash		$2,300
15	Salary Expense	$1,470
	Cash		$1,470
17	Cash	$500
	Accounts Receivables		$500
20	Accounts Receivables	$680
	Service Revenue		$680
25	Cash	$1,900
	Unearned Revenue		$1,900
28	Cash	$3,100
	Service Revenue		$3,100
29	Prepaid Insurance	$840
	Cash		$840
30	Salary Expense	$1,470
	Cash		$1,470
30	Rent expense	$650
	Cash		$650
30	Utilities Expense	$650
	Utilities Payable		$650
30	Dividends	$2,800
	Cash		$2,800