Journal 3 [PDF]

Zitiervorschau

P2-3B Slowhand Services was formed on May 1, 2010. The following transactions took place during the first month. Transactions on May 1: 1. Eric Clapton invested $50,000 cash in the company, as its sole owner. 2. Hired two employees to work in the warehouse. They will each be paid a salary of $2,800 per month. 3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year. 4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months. 5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment. Transactions during the remainder of the month: 6. Purchased basic office supplies for $500 cash. 7. Purchased more office supplies for $1,500 on account. 8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account. 9. Paid $400 to suppliers for accounts payable due. 10. Received $3,000 from customers in payment of accounts receivable. 11. Received utility bills in the amount of $200, to be paid next month. 12. Paid the monthly salaries of the two employees, totalling $5,600. Instructions Prepare journal entries to record each of the events listed

Slowhand Services Journal entries Date 2010 May 1

Particulars 1.Cash Capital (Eric Clapton invested cash in her own firm) 2. Hiring employees has no financial effect on business, so there will be no entry 3.Prepaid Rent Cash (Paid prepaid rent in cash for 1 year) 4. Furniture and equipment Cash Accounts Payable (Purchased Furniture and equipment in cash and on account) 5. Prepaid Insurance Cash (Paid insurance on the furniture and

Ref.

Debit

Credit

50000 50000

24000 24000 30000 10000 20000

1800 1800

equipment for 1 year in advance) 6. Supplies Cash (Purchased office supplies in cash) 7. Supplies Accounts payable (Purchased office supplies on account) 8. Cash Accounts receivable Service Revenue (Earned service revenue in cash and on account) 9. Accounts payable Cash (Paid Supplier for accounts payable due) 10.Cash Accounts receivable (Received cash from customers in payment of accounts receivable) 11. Utility expense Accounts payable (Received utility bills to be paid next month) 12.Salary expense Cash (Paid salary expenses in cash)

500 500 1500 1500 8000 12000 20000

4000 4000

3000 3000

200 200

5600 5600

In the book of Slowhand Services Ledger accounts Cash Date 2010 May 1

Particulars 1.Capital

Prepaid Rent 4. Furniture and equipment 5. Prepaid Insurance 6. Supplies 8. Service Revenue 9. Accounts payable 10. Accounts receivable 12. Salary expense

Ref

Debit 50000

Credit 24000 10000 1800 500

3.

8000 4000 3000 5600

Balance 50000 26000 16000 14200 13700 21700 17700 20700 15100

Capial Date 2010 May 1

Particulars

Ref

Debit

Credit 50000

Balance (50000)

Debit 24000

Credit

Balance 24000

Credit

Balance 10000 30000

Credit 20000 1500

Balance (20000) (21500) (17500) (17700)

1. Cash

Prepaid Rent Date 2010 May 1

Particulars

Ref

3. Cash

Furniture and equipment Date 2010 May 1

Particulars

Ref

4.Cash Accounts Payable

Debit 10000 20000

Accounts Payable Date 2010 May 1

Particulars 4. Furniture and equipment 7. Supplies 9. Cash 11. Utility expense

Ref

Debit

4000 200

Prepaid Insurance Date 2010 May 1

Particulars 5. Cash

Ref

Debit 1800

Credit

Balance 1800

Supplies Date 2010 May 1

Particulars

Ref

Debit 500 1500

6. Cash 7. Accounts payable

Credit

Balance 500 2000

Credit 3000

Balance 12000 9000

Debit

Credit 8000 12000

Balance (8000) (20000)

Debit 200

Credit

Balance 200

Debit 5600

Credit

Balance 5600

Accounts receivable Date 2010 May 1

Particulars 8. Service Revenue 10. Cash

Ref

Debit 12000

Service Revenue Date 2010 May 1

Particulars

Ref

8. Cash Accounts receivable

Utility expense Date 2010 May 1

Particulars 11. Accounts payable

Ref

Salary expense Date 2010 May 1

Particulars 12. Cash

Ref

Date

Particulars

Ref

Debit

Credit

Balance