Q43PS-3 - Horngren'S Financial And Managerial Accounting

Question

Question: Journalizing transactions, posting to T-accounts, and preparing a trial balance 

Consider the following transactional data for the first month of operations for Crystal Clear Cleaning.

 Nov. 1 Stockholders contributed \(15,000 and a truck, with a market value of \)3,000, to the business in exchange for common stock. 

2 The business paid \(4,000 to Pleasant Properties for November through February rent. (Debit Prepaid Rent) 

3 Paid \)4,800 for a business insurance policy for the term November 1, 2018 through October 31, 2019. (Debit Prepaid Insurance) 

4 Purchased cleaning supplies on account, \(320. 

5 Purchased on account an industrial vacuum cleaner costing \)1,500. The invoice is payable November 25. 

7 Paid \(3,900 for a computer and printer. 

9 Performed cleaning services on account in the amount of \)4,700. 

10 Received \(200 for services rendered on November 9. 15 Paid employees, \)400. 

16 Received \(15,000 for a 1-year contract beginning November 

16 for cleaning services to be provided. Contract begins November 16, 2018, and ends November 15, 2019. (Credit Unearned Revenue) 

17 Provided cleaning services and received \)400 cash. 

18 Received a utility bill for \(175 with a due date of December 4, 2018. (Use Accounts Payable) 

20 Borrowed \)36,000 from bank with interest rate of 6% per year. 

21 Received \(500 on account for services performed on November 9. 

25 Paid \)750 on account for vacuum cleaner purchased on November 5. 

29 Paid \(200 for advertising. 

30 Cash dividends of \)1,400 were paid to stockholders

3. Post the journal entries to the T-accounts, and calculate account balances

Step-by-Step Solution

Answer

Answer

Advertising expenses are the cost of advertising and required t-accounts are prepared in step 2.

Step 1: Definition of Advertising Expense

The advertising expense is defined as the cost incurred by the business for promoting and advertising goods or services.

Step 2: Preparing the t-accounts

CASH
Nov 1     $15,000	$4,000      Nov 2
Nov 10    $200	$4,800         Nov 3
Nov 16       $15,000	$3,900         Nov 7
Nov 17    $400	$400            Nov 15
Nov 20       $36,000	$750            Nov 25
Nov 21    $500	$200            Nov 29
	$1,400         Nov 30
Bal.          $51,650

Accounts Receivables
Nov 9       $4,700	$200            Nov 10
	$500            Nov 21
Bal.    $4,000

Cleaning Supplies
Nov 4    $320
Bal.          $320

 

Prepaid rent
Nov 2         $4,000
Bal.             $4,000

Prepaid Insurance
Nov 3         $4,800
Bal.            $4,800

Equipment
Nov 5         $1,500
Nov 7         $3,900
Bal.            $5,400

Truck
Nov 1    $3,000
Bal.           $3,000

Accounts Payable
Nov 25    $750	$320    Nov 4
	$1,500 Nov 5

	$175    Nov 18
	$1,245   Bal.

Unearned Revenue
	$15,000        Nov 16
	$15,000        Bal.

Nots Payable
	$36,000    Nov 20
	$36,000        Bal.

Common stock
	$18,000           Nov 1
	$18,000           Bal.

Dividents
Nov 30       $1,400
Bal.             $1,400

Service Revenue
	$4,700          Nov 9
	$400             Nov 17
	$5,100          Bal.

Salaries Expense
Nov 15         $400
Bal.              $400

Advatising expese
Nov 29         $200
Bal.              $200

Utilities Expense
Nov 18    $175
Bal              $175