THE SMITH COMPANY Using the business transactions below, complete T-accounts for the Smith Company. I have provided a blank sheet of t-accounts as an attachment to this assignment. The company started business on June 1, 2019. a. John Smith, owner, invested $120,000 cash in the company. b. The company purchased $10,000 of office equipment on credit. c. The company billed a customer $2,000 as fees for services provided. d. The company paid $1,000 cash for the monthly rent. e. The company purchased office supplies for $500 cash. f. The company paid $300 for the utilities for the month. g. The company received $15,000 cash as fees for services provided to a customer. h. The company paid the secretary's salary for the month, $3,000. i. John Smith withdrew $6,000 cash from the company for personal use. As you work this problem, be sure to label entries with the appropriate "letter" associated with the transaction. Also, be sure to compute the T-account balances when all transactions have been posted to the T-accounts. Use the Chart of Accounts provided for account names. CHART OF ACCOUNTS EQUITY J. Smith, Capital J. Smith, Drawing ASSETS EXPENSES Cash Accounts Receivable Office Supplies Office Equipment Rent Expense Utilities Expense Salary Expense Miscellaneous Expense REVENUES Service Fees Earned LIABILITIES Accounts Payable

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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Question 5

THE SMITH COMPANY
Using the business transactions below, complete T-accounts for the Smith Company. I have provided
a blank sheet of t-accounts as an attachment to this assignment. The company started business on
June 1, 2019.
a. John Smith, owner, invested $120,000 cash in the company.
b. The company purchased $10,000 of office equipment on credit.
c. The company billed a customer $2,000 as fees for services provided.
d. The company paid $1,000 cash for the monthly rent.
e. The company purchased office supplies for $500 cash.
f. The company paid $300 for the utilities for the month.
g. The company received $15,000 cash as fees for services provided to a customer.
h. The company paid the secretary's salary for the month, $3,000.
i. John Smith withdrew $6,000 cash from the company for personal use.
As you work this problem, be sure to label entries with the appropriate "letter" associated with the
transaction. Also, be sure to compute the T-account balances when all transactions have been
posted to the T-accounts. Use the Chart of Accounts provided for account names.
CHART OF ACCOUNTS
ASSETS
EQUITY
J. Smith, Capital
J. Smith, Drawing
EXPENSES
Cash
Accounts Receivable
Office Supplies
Office Equipment
Rent Expense
Utilities Expense
Salary Expense
Miscellaneous Expense
REVENUES
Service Fees Earned
LIABILITIES
Accounts Payable

Expert Solution

Step 1

T Accounts

1. Cash Account

Particular	Debit	Particular	Credit

To capital A/c	120,000	By rent	1,000
To service Revenue	15,000	By cash	500
		By utility Expense	300
		By salary	3,000
		By drawing	6,000
		By Balance C/d	124,200

Total	135,000	Total	135,000

2. Capital A/c

Particular	debit	Particular	Credit

To Balance C/d	120,000	By cash	120,000

Total	120,000	Total	120,000

3. Office Equipment

Particular	Debit	Particular	Credit

To Accounts payable	10,000	By balance C/d	10,000

Total	10,000	Total	10,000

4. Accounts payable

Particular	Debit	Particular	Credit

To Balance C/d	10,000	By office equipment	10,000

Total	10,000	Total	10,000

5. Accounts receivable

Particular	Debit	Particular	Credit

To Service Revenue	2,000	By Balance C/d	2,000

Total	2,000	Total	2,000

6. Service Revenue

Particular	Debit	Particular	Credit

By Profit and loss A/c	17,000	By Accounts receivable	2,000
		By Cash	15,000

Total	17,000	Total	17,000

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