Chapter 2, Problem 1BPSB

To determine

Concept Introduction

Journal entry:

In double entry system of accounting, journalizing is the recording of the given accounting transactions by giving effects to debits and credits.

Ledger accounts: Ledger accounts are the refinement of journal entries by presenting them in an understandable form that helps in finding out the balance of an account at a given point in time.

Trial balance: Trial balance is the first step in the preparation of final accounts and for ensuring that the arithmetical accuracy of the books of accounts prepared.

To write:

The general journal entries, ledger accounts and the trial balance

Explanation of Solution

The journal entries are passed; ledger accounts and trial balance is prepared.

The debit-credit rules for recording the journal entries are as under −

1. Debit what comes in, credit what goes out.
2. Debit the receiver, credit the giver.
3. Debit the expenses and assets, credit the incomes and liabilities.

1. The journal entries in the books of Humble Management Services are passed as under-

Date	Particulars	Account No	Debit ($)	Credit ($)
01-Sep	Cash account	101	38,000
	Office equipment account	163	15,000
	H. Humble, capital account	301		53,000
02-Sep	Prepaid rent account	131	9,000
	Cash account	101		9,000
04-Sep	Office equipment account	163	8,000
	Office supplies account	124	2,400
	Accounts payable account	201		10,400
08-Sep	Cash account	101	3,280
	Services revenue account	401		3,280
12-Sep	Accounts receivable account	106	15,400
	Services revenue account	401		15,400
13-Sep	Accounts payable account	201	10,400
	Cash account	101		10,400
19-Sep	Prepaid insurance account	128	1,900
	Cash account	101		1,900
22-Sep	Cash account	101	7,700
	Accounts receivable account	106		7,700
24-Sep	Accounts receivable account	106	2,100
	Services revenue account	401		2,100
28-Sep	H. Humble, withdrawals account	302	5,300
	Cash account	101		5,300
29-Sep	Office supplies account	124	550
	Accounts payable account	201		550
30-Sep	Utilities expense account	690	860
	Cash account	101		860

2. Ledger accounts in the books of Humble Management Services are passed as under-

Cash account
Date	Particulars	Debit ($)	Credit ($)	Account #101 Balance (Dr)
01-Sep	Opening balance	---
01-Sep	H. Humble capital account	38,000		38,000
02-Sep	Prepaid rent account		9,000	29,000
08-Sep	Services revenue account	3,280		32,280
13-Sep	Accounts payable account		10,400	21,880
19-Sep	Prepaid insurance account		1,900	19,980
22-Sep	Accounts receivable account	7,700		27,680
28-Sep	H Humble withdrawals account		5,300	22,380
30-Sep	Utilities expense		860	21,520

Accounts receivable account
Date	Particulars	Debit ($)	Credit ($)	Account #106 Balance (Dr)
01-Sep	Opening Balance	---
12-Sep	Services revenue account	15,400		15,400
22-Sep	Cash account		7,700	7,700
24-Sep	Services revenue account	2,100		9,800

Office supplies account
Date	Particulars	Debit ($)	Credit ($)	Account #124 Balance (Dr)
04-Sep	Accounts payable account	2,400		2,400
29-Sep	Accounts payable account	550		2,950

Prepaid insurance account
Date	Particulars	Debit ($)	Credit ($)	Account #128 Balance (Dr)
01-Sep	Opening Balance	---
19-Sep	Cash account	1,900		1,900

Prepaid rent account
Date	Particulars	Debit ($)	Credit ($)	Account #131 Balance (Dr)
01-Sep	Opening Balance	---
02-Sep	Cash account	9,000		9,000

Office equipment account
Date	Particulars	Debit ($)	Credit ($)	Account #163 Balance (Dr)
01-Sep	Opening Balance	---
01-Sep	H. Humble capital account	15,000		15,000
04-Sep	Accounts payable account	8,000		23,000

Accounts payable account
Date	Particulars	Debit ($)	Credit ($)	Account #201 Balance (Cr)
01-Sep	Opening Balance	---
04-Sep	Office equipment account		8,000	8,000
04-Sep	Office supplies account		2,400	10,400
13-Sep	Cash account	10,400		0
29-Sep	Office supplies account		550	550

H. Humble capital account
Date	Particulars	Debit ($)	Credit ($)	Account #301 Balance (Cr)
01-Sep	Opening Balance	---
01-Sep	Cash account		38,000	38,000
01-Sep	Office equipment account		15,000	53,000

H. Humble withdrawals account
Date	Particulars	Debit ($)	Credit ($)	Account #302 Balance (Dr)
01-Sep	Opening Balance	---
28-Sep	Cash account	5,300		5,300

Services Revenue account
Date	Particulars	Debit ($)	Credit ($)	Account #401 Balance (Cr)
01-Sep	Opening Balance	---
08-Sep	Cash account		3,280	3,280
12-Sep	Accounts receivable account		15,400	18,680
24-Sep	Accounts receivable account		2,100	20,780

Utilities expense account
Date	Particulars	Debit ($)	Credit ($)	Account #690 Balance (Dr)
01-Sep	Opening Balance	---
30-Sep	Cash account	860		860

3. Trial balance of Humble Management Services as on September, 30

S. No	Ledger No	Ledger Name	Debit ($)	Credit ($)
1	101	Cash	21,520
2	106	Accounts receivable	9,800
3	124	Office supplies	2,950
4	128	Prepaid insurance	1,900
5	131	Prepaid rent	9,000
6	163	Office equipment	23,000
7	201	Accounts payable		550
8	301	H. Humble, capital		53,000
9	302	H. Humble, withdrawals	5,300
10	401	Services revenue		20,780
11	690	Utilities expense	860
TOTAL	74,330	74,330

The journal entries are thus passed and the ledger accounts and trial balance are thus prepared.