Question 2BE - Intermediate Accounting (Kieso)

Question

Agazzi Repair Shop had the following transactions during the first month of business as a proprietorship. Journalize the transactions. (Omit explanations.) Aug. 2 Invested \(12,000 cash and \)2,500 of equipment in the business. 7 Purchased supplies on account for \(500. (Debit asset account.) 12 Performed services for clients, for which \)1,300 was collected in cash and \(670 was billed to the clients. 15 Paid August rent \)600. 19 Counted supplies and determined that only $270 of the supplies purchased on August 7 are still on hand.

Step-by-Step Solution

Answer

The amount of the owner’s capital is $14,500.

Meaning of Journal Entry

The record of business transactions in chronological order with equal amounts of debits and credits is called a journal entry. Simply we can say the recording of business transactions in the accounting record of a business.

Journal Entries for the above transactions are as follows:

Journal Entries
Date	Accounts Titles and Explanations	Debit	Credit
Aug 2	Cash	$12 000
	Equipment	$2,500
	Owner’s Capital		$14,500
Aug 7	Supplies	$500
	Accounts Payable		$500
Aug 12	Cash	$1,300
	Accounts receivable	$670
	Service Revenue		$1,970
Aug 15	Rent Expenses	$600
	Cash		$600
Aug 19	Supplies expenses	$230
	Supplies		$230