Chapter 2, Problem 2PSB

1.

Summary Introduction

Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.

To prepare: The general journal entries for the following transaction.

Explanation of Solution

Journal entries of KT for the month of April are shown below.

Date	Particular	PR	Dr.$	Cr.$
a.	Cash	101	65,000
	Office equipment	163	5750
	Computer equipment	164	30,000
	To Common stock	307		100,750
	(Owner’s investment)
b.	Land	172	22,000
	Cash	101		5000
	Note payable	250		17,000
	(To record land purchase)
c.	Building	170	34,500
	Cash	101		34,500
	(building purchased on cash)
d.	Prepaid Insurance	108	5000
	Cash	101		5000
	(Insurance premium paid)
e.	Cash		4600
	Fees earned			4600
	(received cash for service provided)
f.	Computer equipment	164	4500
	Cash	101		800
	Note payable	250		3700
	(purchase of computer equipment by paying cash and signing notes payable)
g.	Account receivable	106	4250
	Fees earned	402		4250
	(service provided on credit)
h.	Office equipment	163	950
	Account payable	201		950
	(purchase of office equipment on credits)
i.	Account receivable	106	10,200
	Fees earned	402		10,200
	(service provided on credit)
j.	Equipment rental expense	602	580
	Account payable			580
	(equipment rental cost is due)
		101	5100
k.	Cash	106		5100
	Account receivable
	(cash received from client )
l.	Wages expense	601	1800
	cash	101		1800
	(cash paid for wages)
m.	Account payable	201	950
	cash	101		950
	(cash paid that was due)
n.	Repair Expense	604	608
	Cash	106		608
	(paid cash for repair equipment)
o.	Dividends	319	6230
	Cash	101		6230
	(dividend paid on cash)
p.	Wages	601	1800
	Cash	101		1800
	(wages paid by cash)
q.	Advertisement	603	750
	Cash	101		750
	(paid cash for advertisement)

2.

Summary Introduction

Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.

To prepare: T account for the following transactions.

Answer to Problem 2PSB

Balance of T account for cash $17,262, account receivable $9350, office equipment$6700, Building $434500, office supplies $500, note payable $20700, Account payable $580, utilities $540, Common stock $100750, dividend $6230, fees earned $19050, wages expense$3600, Land $22000, computer equipment 34500, equipment rental expense 580, repair expense $608 and advertisement expense $750

Explanation of Solution

Cash Account No.101
Date	PR	Debit $	Credit $	Balance$
a.		65,000		65,000
b.			5000	60,000
c.			34,500	25,500
d.			5000	20,500
e.		4600		25,100
f.			800	24,300
k.		5100		29,400
l.			1800	27,600
m.			950	26,650
n			608	26,042
o.			6230	19,812
p.			1800	18,012
q.			750	17,262

Accounts Receivable				Account no. 106
Date	PR	Debit ($)	Credit($)	Balance($)
g.		4250		4,250
i.		10200		14,450
k.			5100	9,350

Prepaid insurance				Account no.108
Date	PR	Debit	Credit	Balance
d.		5000		5000

Office equipment				Account no. 163
Date	PR	Debit	Credit	Balance
a.		5750		5750
h		950		6700

Computer equipment				Account no. 164
Date	PR	Debit	Credit	Balance
a.		30,000		30,000
f.		4500		34,500

Building				Account no. 170
Date	PR	Debit	Credit	Balance
c.		34,500		34,500

land				Account no. 201
Date	PR	Debit	Credit	Balance
c.		22000		22,000

Account payable				Account no. 201
Date	PR	Debit	Credit	Balance
h.			950	950
j.			580	1530
		950		580

Note payable				Account no. 307
Date	PR	Debit	Credit	Balance
a.			17000	17,000
d.			3700	20,700

Common stock				Account no. 307
Date	PR	Debit	Credit	Balance
h.			100,750	100,750

Dividend				Account no. 319
Date	PR	Debit	Credit	Balance
o.		6230		6230

Fees Earned				Account no. 402
Date	PR	Debit	Credit	Balance
e.			4600	4600
G			4250	8850

Equipment rental				Account no. 172
Date	PR	Debit	Credit	Balance
b.		580		580

Wages Expense				Account no. 601
Date	PR	Debit	Credit	Balance
l.		1800		1800
p.		1800		3600

Repair expense				Account no. 604
Date	PR	Debit	Credit	Balance
n.		608		608

Advertisement expense				Account no. 106
Date	PR	Debit	Credit	Balance
q.		750		750

3.

Summary Introduction

Introduction: Journal entry is a technique of booking and recording financial transactions on any company. Ledger is used to record all economic transactions of the account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.

To prepare: Trail balance.

Answer to Problem 2PSB

Total of trail balance is $141,080.

Explanation of Solution

NTrail balance
Particular	Dr.	Cr.
Cash	17,262
Account receivable	9,350
Prepaid insurance	5,000
Office equipment	6,700
Computer equipment	34,500
Building	34,500
Land	22,000
Account payable		580
Notes payable		20,700
Common stock		100,750
Dividends	6230
Fees earned		19,050
Equipment on rental	580
Wages Expense	3600
repair expense	608
Advertisement Expense	750
Total	141,080	141,080