Chapter 2, Problem 4PSB

Nuncio Consulting complete the following transactions during June.

1. Armand Nuncio, the owner, invested $35,000 cash along with office equipment valued at $11,000 in the new company in exchange for common stock.
2. The company purchased land valued at $7,500 and a building valued at $40,000. The purchase is paid with $15,000 cash and a long−term note payable for $32,500.
3. The company purchased $500 of office supplies on credit.
4. Nuncio invested his personal automobile in the company in exchange for more common stock. The automobile has a value of $8,000 and is to be used exclusively in the business.
5. The company purchased $1,200 of additional office equipment on credit.
6. The company paid $1,000 cash salary to an assistant.
7. The company provided services to a client and collected $3,200 cash.
8. The company paid $540 cash for this month’s utilities.
9. The company paid $500 cash to settle the payable created in transaction c.
10. The company purchased $3,400 of new office equipment by paying $3,400 cash.
11. The company completed $4,200 of services for a client, who must pay within 30 days.
12. The company paid $1,000 cash salary to an assistant.
13. The company received $2,200 cash in partial payment on the receivable created in transaction k.
14. The company paid $1,000 cash in dividends.

Required

1. Prepare general journal entries to record these transactions (use account titles listed in part 2).
2. Open the following ledger accounts−their account numbers are in parentheses (use the balance column format:) Cash (101); Accounts Receivable (106); Office Equipment (163); Automobiles (164); Building (170); Land (172); Account Payable (201); Notes Payable (250); Common Stock (307); Dividends (319); Fees Earned (402); Salaries Expense (601); and Utilities Expense (602). Post the journal entries from part 1 to the ledger accounts and enter the balance after each posting.
3. Prepare a trial balance as of the end of June.

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	35,000
	Computer equipment	163	11,000
	To Common stock	307		46,000
	(Owner’s investment)
b.	Land	172	7,500
	Building	170	40,000
	Cash	101		15,000
	Note payable	250		32,500
	(To record land and building purchase)
c.	Office supplies	108	500
	Accounts payable	201		500
	(To record office supplies purchase)
d.	Automobile	164	8,000
	Common stock	307		8,000
	(To record automobile invested by owner)
e.	Office equipment	163	1,200
	Account payable	201		1,200
	(to record office equipment purchase)
f.	Salaries Expense	601	1000
	Cash	101		1000
	(To record salaries paid)
g.	Cash	101	3200
	Fees earned	402		3200
	(To record fees earned)
h.	Utilities Expense	602	540
	Cash	101		540
	(to record utilities expense)
i.	Account payable	201	500
	Cash	101		500
	(To record cash paid to accounts payable)
j.	Office equipment	163	3400
	Cash	101		3400
	(to record office equipment purchase)
k.	Account receivable	106	4200
	Fees Earned	402		4200
	(to record fees earned)
l.	Salaries Expense	601	1000
	Cash	101		1000
	(to record salaries paid)
m.	Cash	101	2200
	Accounts Receivable	106		2200
	(to record cash received from account receivable)
n.	Dividends	319	1100
	Cash	101		1100
	(to record dividend paid)

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 4PSB

Balance of T account for cash $17,860, account receivable$2000, automobile $8000, office equipment$2000, Building $40,000, office supplies $500, note payable $32,500, Account payable $1200, utilities $540, Common stock $54,000, dividend $1100, fees earned 7400, salaries expense$ 2000, Land $7500

Explanation of Solution

Cash Account No.101
Date	PR	Debit($)	Credit($)	Balance($)
a.		35,000
b.			15,000
f.			1000
g.		3200
h.			540
i.			500
j.			3400
l.			1000
m.		2200
M			1100	17860

Automobile				Account no. 124
Date	PR	Debit	Credit	Balance
d.		8000		8000

Account receivable				Account no.106
Date	PR	Debit	Credit	Balance
k.		4200	2200	2000

Office equipment				Account no. 163
Date	PR	Debit	Credit	Balance
a.		11,000
e.		1200
j.		3400		15,600

Building				Account no. 170
Date	PR	Debit	Credit	Balance
b.		40000		40,000

Office supplies				Account no. 124
Date	PR	Debit	Credit	Balance
b.		500		500

Account payable				Account no. 201
Date	PR	Debit	Credit	Balance
c.			500
i.		500
e.			1200	1200

Note payable				Account no. 170
Date	PR	Debit	Credit	Balance
b.		32,500		32,500

Common Stock				Account no. 307
Date	PR	Debit	Credit	Balance
a.			46,000	46,000
d.			8000	54,000

Utilities				Account no. 307
Date	PR	Debit	Credit	Balance
h.		540		540

Service Expense				Account no. 601
Date	PR	Debit	Credit	Balance
f.		1000
l.		1000		1000

Dividend				Account no. 319
Date	PR	Debit	Credit	Balance
n.		1100		1100

Fees Earned				Account no. 402
Date	PR	Debit	Credit	Balance
g.			3200	3200
k.			4200	7400

Land				Account no. 172
Date	PR	Debit	Credit	Balance
b.		7500		7500

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 4PSB

Total of trail balance is $95100.

Explanation of Solution

NTrail balance
Particular	Dr. ($)	Cr. ($)
Cash	17,860
Account receivable	2000
Office supplies	500
Automobile	8000
Office equipment	15,600
Building	40,000
Land	7500
Account payable		1200
Notes payable		32,500
Common stock		54,000
Fees earned		7400
Dividends	1100
Salaries Expense	2000
Utilities expense	540
Total	95,100	95,100