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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Example Company A was incorporated on January 1, 2010 with an initial capital of 5,000 shares of common stock having $20 par value. During the first month of its operations, the company engaged in following transactions: Date Transaction Jan 2 An amount of $36,000 was paid as advance rent for three months. Jan 3 Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was recognized as a one year note payable with interest rate of 9%. Jan 4 Purchased office supplies costing $17,600 on account. Jan 13 Provided services to its customers and received $28,500 in cash. Jan 13 Paid the accounts payable on the office supplies purchased on January 4. Jan 14 Paid wages to its employees for first two weeks of January, aggregating $19,100. Jan 18 Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay the remaining amount. Jan 23 Received $15,300 from customers for the services provided on January 18. Jan 25 Received $4,000 as an advance payment from customers. Jan 26 Purchased office supplies costing $5,200 on account. Jan 28 Paid wages to its employees for the third and fourth week of January: $19,10o. Jan 31 Paid $5,000 as dividends. Jan 31 Received electricity bill of $2,470. Jan 31 Received telephone bill of $1,494. Jan 31 Miscellaneous expenses paid during the month totaled $3,470 The following table shows the journal entries for the above events.
Transcribed Image Text:Example Company A was incorporated on January 1, 2010 with an initial capital of 5,000 shares of common stock having $20 par value. During the first month of its operations, the company engaged in following transactions: Date Transaction Jan 2 An amount of $36,000 was paid as advance rent for three months. Jan 3 Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was recognized as a one year note payable with interest rate of 9%. Jan 4 Purchased office supplies costing $17,600 on account. Jan 13 Provided services to its customers and received $28,500 in cash. Jan 13 Paid the accounts payable on the office supplies purchased on January 4. Jan 14 Paid wages to its employees for first two weeks of January, aggregating $19,100. Jan 18 Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay the remaining amount. Jan 23 Received $15,300 from customers for the services provided on January 18. Jan 25 Received $4,000 as an advance payment from customers. Jan 26 Purchased office supplies costing $5,200 on account. Jan 28 Paid wages to its employees for the third and fourth week of January: $19,10o. Jan 31 Paid $5,000 as dividends. Jan 31 Received electricity bill of $2,470. Jan 31 Received telephone bill of $1,494. Jan 31 Miscellaneous expenses paid during the month totaled $3,470 The following table shows the journal entries for the above events.
Date Account Debit Credit Jan 1 Cash 100,000 Common Stock 100,000 Prepaid Rent Cash 36,000 Jan 2 36,000 Equipment Cash Jan 3 80,000 60,000 20,000 Notes Payable Office Supplies Accounts Payable Jan 4 17,600 17,600 Jan 13 Cash 28,500 Service Revenue 28,500 Accounts Payable Cash Jan 13 17,600 17,600 Wages Expense Cash Jan 14 19,100 19,100 Jan 18 Cash 32,900 21,200 Accounts Receivable Service Revenue 54,100 Jan 23 Cash Accounts Receivable 15,300 15,300 Cash Unearned Revenue Jan 25 4,000 4,000 Office Supplies Accounts Payable Jan 26 5,200 5,200 Wages Expense Cash Jan 28 19,100 19,100 Jan 31 Dividends 5,000 Cash 5,000 Electricity Expense Accounts Payable Jan 31 2,470 2,470 Telephone Expense Accounts Payable Jan 31 1,494 1,494 Jan 31 Miscella eous Expense 3,470 Cash 3,470
Transcribed Image Text:Date Account Debit Credit Jan 1 Cash 100,000 Common Stock 100,000 Prepaid Rent Cash 36,000 Jan 2 36,000 Equipment Cash Jan 3 80,000 60,000 20,000 Notes Payable Office Supplies Accounts Payable Jan 4 17,600 17,600 Jan 13 Cash 28,500 Service Revenue 28,500 Accounts Payable Cash Jan 13 17,600 17,600 Wages Expense Cash Jan 14 19,100 19,100 Jan 18 Cash 32,900 21,200 Accounts Receivable Service Revenue 54,100 Jan 23 Cash Accounts Receivable 15,300 15,300 Cash Unearned Revenue Jan 25 4,000 4,000 Office Supplies Accounts Payable Jan 26 5,200 5,200 Wages Expense Cash Jan 28 19,100 19,100 Jan 31 Dividends 5,000 Cash 5,000 Electricity Expense Accounts Payable Jan 31 2,470 2,470 Telephone Expense Accounts Payable Jan 31 1,494 1,494 Jan 31 Miscella eous Expense 3,470 Cash 3,470
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