Q1E - Intermediate Accounting (Kieso)

Question

E3-1 (L02) (Transaction Analysis—Service Company) Beverly Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred.April 2 Invested \(32,000 cash and equipment valued at \)14,000 in the business.2 Hired an administrative assistant at a salary of \(290 per week payable monthly.3 Purchased supplies on account \)700. (Debit an asset account.)7 Paid office rent of \(600 for the month.11 Completed a tax assignment and billed client \)1,100 for services rendered. (Use Service Revenue account.)12 Received \(3,200 advance on a management consulting engagement.17 Received cash of \)2,300 for services completed for Ferengi Co.21 Paid insurance expense \(110.30 Paid administrative assistant \)1,160 for the month.30 A count of supplies indicated that \(120 of supplies had been used.30 Purchased a new computer for \)6,100 with personal funds. (The computer will be used exclusively for business purposes.)InstructionsJournalize the transactions in the general journal. (Omit explanations.)

Step-by-Step Solution

Answer

Journal entries are shown in step 2.

Step 1: Meaning of Journal Entries

The journal entries are the first step in the preparation of financial statements. A journal entry can be defined as the act of making the records of the transactions of the business in chronological order.

Step 2: Preparation of journal entries

Beverly Crusher
Journal entries
Date	Account	Debit $	Credit $
April2	Cash	32000
	Equipment	14000
	Owners capital		46000
April 3	Supplies	700
	Accounts payable		700
April 7	Rent expense	600
	Cash		600
April 11	Accounts receivable	1100
	Service revenue		1100
April 12	Cash	3200
	Unearned revenue		3200
April 17	Cash	2300
	Service revenue		2300
April 21	Insurance expense	110
	Cash		110
April 30	Wage expense	1160
	Cash		1160
April 30	Supplies expense	120
	Supplies		120
April 30	Equipment	6100
	Capital		6100

 

Note:No journal entry has to be passed on April 2 because just hiring an administrative assistant is not a monetary transaction.