Q37PGB-2 - Horngren'S Financial And Managerial Accounting

Question

Question: Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

 Theodore McMahon opened a law office on April 1, 2018. During the first month of operations, the business completed the following transactions:

Apr. 1 McMahon contributed \(70,000 cash to the business, Theodore McMahon, Attorney. The business issued common stock to McMahon. 

3 Purchased office supplies, \)1,100, and furniture, \(1,300, on account. 

4 Performed legal services for a client and received \)2,000 cash. 

7 Purchased a building with a market value of \(150,000, and land with a market value of \)30,000. The business paid \(40,000 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, \(1,200. 

16 Paid for the office supplies purchased on April 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 \(1,700. 

25 Received a bill for utilities, \)650. The bill will be paid next month. 

28 Received cash on account, \(1,100. 

29 Paid \)3,600 cash for a 12-month insurance policy starting on May 1. 

29 Paid assistant’s semimonthly salary, \(1,200. 

30 Paid monthly rent expense, \)2,100. 

30 Paid cash dividends of $3,200.

Requirements 2: Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Land, 141; Building, 151; Furniture, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.

Step-by-Step Solution

Answer

Answer

The dividends are profits that are distributed to the owners and the required four-column accounts are prepared in step 2.

Step 1: Definition of Accounts Receivables

The dividends are defined as part of the profit which is distributed among the owners and the shareholders of the business.

Step 2: Opening four-column accounts

Cash    Account Number – 101
Date	Item	PR	Debit	Credit	Debit	Credit

 

Accounts Receivables                                            Account Number - 111
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Office Supplies                                                Account Number - 121
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Prepaid Insurance                                                                                                        Account Number - 131
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

 

Land                                                                                                                         Account Number - 141
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Building                                                                                Account Number - 151
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Accounts Payable                                                                                                                                                 Account Number - 201
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

 

Utilities Payable                                                                                                            Account Number - 211
Date	Item	PR	Debit	Credit	Debit	Credit

Notes Payable                                                                                    Account Number - 221
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Common Stock                                                                       Account Number – 301
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Dividends                                                                       Account Number - 311
Date	Item	PR	Debit	Credit	Debit	Credit

Service Revenue                                                                Account Number - 411
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Salaries Expense                                                                              Account Number - 511
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Rent Expense                                            Account Number - 521
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit

Utilities Expense                                                          Account Number - 531
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit