Q1DC_2
Question
Your friend, Dean McChesney, requested that you advise him on the effects that certain transactions will have on his business, A-Plus Travel Planners. Time is short, so you cannot journalize the transactions. Instead, you must analyze the transactions without a journal. McChesney will continue the business only if he can expect to earn a monthly net income of \(6,000. The business completed the following transactions during June:
a. McChesney deposited \)10,000 cash in a business bank account to start the company. The company issued common stock to McChesney.
b. Paid \(300 cash for office supplies.
c. Incurred advertising expense on account, \)700.
d. Paid the following cash expenses: administrative assistant’s salary, \(1,400; office rent, \)1,000.
e. Earned service revenue on account, \(8,800.
f. Collected cash from customers on account, \)1,200.
Requirements
2. Post the transactions directly to the accounts without using a journal. Record each transaction by letter. Calculate account balances.
Step-by-Step Solution
VerifiedT-accounts are a shorter form of ledger accounts and the required t-accounts are opened in step 2.
The t-accounts are defined as the shorter format of the ledger account in which journal entries are transferred.
Cash | |
A $10,000 | $300 B |
F $1,200 | $1,400 D |
| $1,000 D |
|
|
Bal. $8,500 |
|
Accounts Receivables | |
E $8,800 | $1,200 F |
Bal. $7,600 |
|
Office Supplies | |
B $300 |
|
Bal. $300 |
|
Accounts Payable | |
| $700 C |
| $700 Bal. |
Common Stock | |
| $10,000 A |
| $10,000 Bal. |
Service Revenue | |
| $8,800 E |
| $8,800 Bal. |
Salaries Expense | |
D $1,400 |
|
Bal. $1,400 |
|
Rent Expense | |
D $1,000 |
|
Bal. $1,000 |
|
Advertising Expense | |
C $700 |
|
Bal. $700 |
|