Q37PGB_3 - 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 semi monthly 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 semi monthly salary, \(1,200. 

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

30 Paid cash dividends of $3,200.

Requirements 3. Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal references, and posting references. Assume the journal entries were recorded on page 1 of the journal.

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 to exchange 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

Cash                                                                       Account Number – 101
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan
1	Common Stock		70,000		70,000
4	Service Revenue		2,000		72,000
7	Land			30,000	42,000
	Building			10,000	32,000
15	Salaries Expense			1,200	30,800
16	Accounts Payable			1,100	29,700
18	Service Revenue		2,700		32,400
28	Accounts Receivables		1,100		33,500
29	Prepaid Insurance			3,600	29,900
29	Salary Expense			1,200	28,700
30	Rent Expense			2,100	26,900
30	Dividends			3,200	23,700

Accounts Receivables                                                     Account Number – 111
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 11	Service Revenue		400		400
19	Service Revenue		1,700		2,100
28	Cash			1,100	1,000

Office Supplies                                                               Account Number – 121
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 3	Accounts Payable		1,100		1,100

Prepaid Insurance                                                                 Account Number – 131
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 29	Cash		3,600		3,600

Land                                                                                     Account Number – 141
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 7	Cash		30,000		30,000

Building                                                                         Account Number – 151
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 7	Notes Payable		140,000		140,000
Jan 7	Cash		10,000		150,000

Furniture                                                                     Account Number – 161
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 3	Accounts Payable		1,300		1,300

Accounts Payable                                                   Account Number – 201
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 3	Office Supplies			1,100
	Furniture			1,300		2,400
Jan 16	Cash			1,100		3,500

Utilities Payable                                                       Account Number – 211
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 25	Utilities Expense			650		650

Notes Payable                                                         Account Number – 221
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 7	Building			140,000		140,000

Common Stock                                                               Account Number – 301
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 1	Cash			70,000		70,000

Dividends                                                                             Account Number – 311
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 30	Cash		3,200		3,200

Service Revenue                                                         Account Number – 411
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan
4	Cash			2,000		2,000
Jan 11	Accounts Receivables			400		2,400
18	Cash			2,700		5,100
19	Accounts Receivables			1,700		6,800

Salaries Expense                                                                   Account Number - 511
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 15	Cash		1,200		1,200
Jan 29	Cash		1,200		2,400

Rent Expense                                                                   Account Number - 521
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 30	Cash		2,100		2,100

Utilities Expense                                                           Account Number - 531
					Balance
Date	Item	PR	Debit	Credit	Debit	Credit
Jan 25	Utilities Payable		650		650