Chapter 2, Problem 2.31AP

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

Timothy Monroe opened a law office on January 1, 2017. During the first month of operations, the business completed the following transactions:

Jan. 1	Monroe contributed $62,000 cash to the business, Timothy Monroe, Attorney. The business issued common stock to Monroe.
3	Purchased office supplies, $500, and furniture, $2,000, on account.
4	Performed legal services for a client and received $1,600 cash.
7	Purchased a building with a market value of $70,000, and land with a market value of $29,000. The business paid $35,000 cash and signed a note payable to the bank for the remaining amount.
11	Prepared legal documents for a client on account, $300.
15	Paid assistant’s semimonthly salary, $1,180.
16	Paid for the office supplies purchased on January 3 on account.
18	Received $2,000 cash for helping a client sell real estate.
19	Defended a client in court and billed the client for $1,400.
25	Received a bill for utilities, $550. The bill will be paid next month.
29	Received cash on account, $700.
30	Paid $840 cash for a 12-month insurance policy starting on February 1.
30	Paid assistant’s semimonthly salary, $1,180.
31	Paid monthly rent expense, $1,300.
31	Paid cash dividends of $2,900.

Requirements

1. Record each transaction in the journal, using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Building; Land; Accounts Payable; Utilities Payable; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanation s are not required.

2. Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Furniture, 141; Building, 151; Land, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.

3. Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal references, and posting references. Assume the journal entries were recorded on page 1 of the journal.

4. Prepare the trial balance of Timothy Monroe, Attorney, at January 3 1, 2017.