Q37PGB_1 - Horngren'S Financial And Managerial Accounting

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 1. Record each transaction in the journal, using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Building; Furniture; Accounts Payable; Utilities Payable; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanations are not required.

Step-by-Step Solution

Answer

Accounts Receivables are the amount to the business by clients or customers and the required journal entries are passed in Step 2.

Step 1: Definition of Accounts Receivables

The accounts receivables are defined as the amount of money owed to the business for the exchange of goods or services to the clients and the customers.

Step 2: Recording journal entries

	Journal entry
Date	Particulars	Debit ($)	Credit ($)
Apr
1	Cash	$70,000
	Common Stock		$70,000
3	Office Supplies	$1,100
	Furniture	$1,300
	Accounts Payable		$2,400
4	Cash	$2,000
	Service Revenue		$2,000
7	Building	$150,000
	Land	$30,000
	Cash		$40,000
	Notes Payable		$140,000
11	Accounts Receivables	$400
	Service Revenue		$400
15	Salaries Expense	$1,200
	Cash		$1,200
16	Accounts Payable	$1,100
	Cash		$1,100
18	Cash	$2,700
	Service Revenue		$2,700
19	Accounts Receivables	$1,700
	Service Revenue		$1,700
25	Utilities Expense	$650
	Utilities Payable		$650
28	Cash	$1,100
	Accounts Receivables		$1,100
29	Prepaid Insurance	$3,600
	Cash		$3,600
29	Salary Expense	$1,200
	Cash		$1,200
30	Rent Expense	$2,100
	Cash		$2,100
30	Dividends	$3,200
	Cash		$3,200