Chapter 2, Problem 4BPSB

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 Nuncio Consulting are passed as under-

S. No	Particulars	Account No	Debit ($)	Credit ($)
a.	Cash account	101	35,000
	Office equipment account	163	11,000
	A.Nuncio, capital account	301		46,000
b.	Land account	172	7,500
	Building account	170	40,000
	Cash account	101		15,000
	Notes payable	250		32,500
c.	Office supplies account	108	500
	Accounts payable account	201		500
d.	Automobiles account	164	8,000
	A.Nuncio, capital account	301		8,000
e.	Office equipment account	163	1,200
	Accounts payable account	201		1,200
f.	Salaries expense account	601	1,000
	Cash account	101		1,000
g.	Cash account	101	3,200
	Fees earned account	402		3,200
h.	Utilities expense	602	540
	Cash account	101		540
i.	Accounts payable account	201	500
	Cash account	101		500
j.	Office equipment	163	3,400
	Cash account	101		3,400
k.	Fees earned account	402	4,200
	Cash account	101		4,200
l.	Salaries expense account	601	1,000
	Cash account	101		1,000
m.	Cash account	101	2,200
	Accounts receivable account	106		2,200
n.	A.Nuncio, withdrawals account	302	1,100
	Cash account	101		1,100

2. Ledger accounts in the books of Nuncio Consulting are passed as under-

Cash account
Date	Particulars	Debit ($)	Credit ($)	Account #101 Balance (Dr)
	Opening balance	---
	A.Nuncio, capital account	35,000		35,000
	Land account		7,500	27,500
	Building account		7,500	20,000
	Salaries expense account		1,000	19,000
	Fees earned account	3,200		22,200
	Utilities expense account		540	21,660
	Accounts payable account		500	21,160
	Office equipment account		3,400	17,760
	Salaries expense account		1,000	16,760
	Accounts receivable account	2,200		18,960
	A.Nuncio, withdrawals account		1,100	17,860

Accounts receivable account
Date	Particulars	Debit ($)	Credit ($)	Account #106 Balance (Dr)
	Opening balance	---
	Fees earned account	4,200		4,200
	Cash account		2,200	2,000

Office supplies account
Date	Particulars	Debit ($)	Credit ($)	Account #108 Balance (Dr)
	Opening balance	---
	Accounts payable account	500		500

Office equipment account
Date	Particulars	Debit ($)	Credit ($)	Account #163 Balance (Dr)
	Opening balance	---
	A.Nuncio, capital account	11,000		11,000
	Accounts payable account	1,200		12,200
	Cash account	3,400		15,600

Automobiles account
Date	Particulars	Debit ($)	Credit ($)	Account #164 Balance (Dr)
	Opening balance	---
	A.Nuncio, capital account	8,000		8,000

Building account
Date	Particulars	Debit ($)	Credit ($)	Account #170 Balance (Dr)
	Opening balance	---
	Cash account	7,500		7,500
	Notes payable account	32,500		40,000

Land account
Date	Particulars	Debit ($)	Credit ($)	Account #172 Balance (Dr)
	Opening balance	---
	Cash account	7,500		7,500

Accounts payable account
Date	Particulars	Debit ($)	Credit ($)	Account #201 Balance (Cr)
	Opening balance	---
	Office supplies account		500	500
	Office equipment account		1,200	1,700
	Cash account	500		1,200

Notes payable account
Date	Particulars	Debit ($)	Credit ($)	Account #250 Balance (Cr)
	Opening balance	---
	Building account		32,500	32,500

A.Nuncio, capital account
Date	Particulars	Debit ($)	Credit ($)	Account #301 Balance (Cr)
	Opening balance	---
	Cash account		35,000	35,000
	Office equipment account		11,000	46,000
	Automobiles account		8,000	54,000

A.Nuncio, withdrawals account
Date	Particulars	Debit ($)	Credit ($)	Account #302Balance (Dr)
	Opening balance	---
	Cash account	1,100		1,100

Fees earned account
Date	Particulars	Debit ($)	Credit ($)	Account #402 Balance (Cr)
	Opening balance	---
	Cash account		3,200	3,200
	Accounts receivable account		4,200	7,400

Salaries expense account
Date	Particulars	Debit ($)	Credit ($)	Account #601 Balance (Dr)
	Opening balance	---
	Cash account	1,000		1,000
	Cash account	1,000		2,000

Utilities expense account
Date	Particulars	Debit ($)	Credit ($)	Account #690 Balance (Dr)
	Opening balance	---
	Accounts payable account	540		540

3. Trial balance of Nuncio Consulting as on June, 30

S. No	Ledger No	Ledger Name	Debit ($)	Credit ($)
1	101	Cash	17,860
2	106	Accounts receivable	2,000
3	108	Office supplies	500
4	163	Office equipment	15,600
5	164	Automobiles	8,000
6	170	Building	40,000
7	172	Land	7,500
8	201	Accounts payable		1,200
9	250	Notes payable		32,500
10	301	A.Nuncio, capital account		54,000
11	302	A.Nuncio, withdrawals account	1,100
12	402	Fees earned account		7,400
13	601	Salaries expense account	2,000
14	602	Utilities expense account	540
TOTAL	95,100	95,100

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