Chapter 2, Problem 8GLP

To determine

Journal Entry:

Journal entry is a medium of recording the business transactions carried during a particular accounting period.

Four Column Accounts:

The four column accounts keeps track of the balance as transactions takes place. In case of assets and expense accounts, the increase in the expenses and assets are shown in the debit column and vice-versa. When there is increase in liabilities and revenues, it is shown on the credit side and vice-versa.

Trial Balance:

A trial balance is a statement consisting of all the ledger accounts which is prepared at the end of accounting period.

To determine:

1. Prepare journal entries for the transactions which occurred during October and November.

2. Open the ledger accounts and post the journal entries into their concern accounts.

3. Prepare a trial balance for the month ended November.

Answer to Problem 8GLP

Solution:

1. The transactions of October and November are journalized.

2. The ledger accounts of Business Solutions are opened and the journal entries are posted into their respective accounts.

3. The Trial balance as of the end of November shows a total debit and credit balance of $98,659.

Explanation of Solution

Explanation:

1. Journal entries

Date	Accounts	Debit	Credit
Oct.
1	Cash	$45,000
	Computer Equipment	$20,000
	Office Equipment	$8,000
	S. Rey, Capital		$73,000
2	Prepaid Rent	$3,300
	Cash		$3,300
3	Computer Supplies	$1,420
	Accounts Payable		$1,420
5	Prepaid Insurance	$2,220
	Cash		$2,220
6	Accounts Receivable	$4,800
	Computer Service Revenue		$4,800
8	Accounts Payable	$1,420
	Cash		$1,420
10	No Entry
12	Accounts Receivable	$1,400
	Computer Service Revenue		$1,400
15	Cash	$4,800
	Accounts Receivable		$4,800
17	Repairs Expense – Computer	$805
	Cash		$805
20	Advertising Expense	$1,728
	Cash		$1,728
22	Cash	$1,400
	Accounts Receivable		$1,400
28	Accounts Receivable	$5,208
	Computer Service Revenue		$5,208
31	Wages Expense	$875
	Cash		$875
31	S. Rey, Withdrawals	$3,600
	Cash		$3,600
Nov.
1	Mileage Expense	$320
	Cash		$320
2	Cash	$4,633
	Computer Service Revenue		$4,633
5	Computer Supplies	$1,125
	Cash		$1,125
8	Accounts Receivable	$5,668
	Computer Service Revenue		$5,668
13	No Entry Required
18	Cash	$2,208
	Accounts Receivable		$2,208
22	Miscellaneous Expense	$250
	Cash		$250
24	Accounts Receivable	$3,950
	Computer Service Revenue		$3,950
25	No Entry Required
28	Mileage Expense	$384
	Cash		$384
30	Wages Expense	$1,750
	Cash		$1,750
30	S. Rey, Withdrawals	$2,000
	Cash		$2,000

2. Ledger Accounts

Cash Account No. 101
Date	Debit	Credit	Balance
Oct. 1	$45,000		$45,000
2		$3,300	$41,700
5		$2,220	$39,480
8		$1,420	$38,060
15	$4,800		$42,860
17		$805	$42,055
20		$1,728	$40,327
22	$1,400		$41,727
31		$875	$40,852
31		$3,600	$37,252
Nov. 1		$320	$36,932
2	$4,633		$41,565
5		$1,125	$40,440
18	$2,208		$42,648
22		$250	$42,398
28		$384	$42,014
30		$1,750	$40,264
30		$2,000	$38,264

Accounts Receivable Account No. 106
Date	Debit	Credit	Balance
Oct. 6	$4,800		$4,800
12	$1,400		$6,200
15		$4,800	$1,400
22		$1,400	$0
28	$5,208		$5,208
Nov. 8	$5,668		$10,876
18		$2,208	$8,668
24	$3,950		$12,618

Computer Supplies Account No. 126
Date	Debit	Credit	Balance
Oct. 3	$1,420		$1,420
Nov. 5	$1,125		$2,545

Prepaid Insurance Account No. 128
Date	Debit	Credit	Balance
Oct. 5	$2,220		$2,220

Prepaid Rent Account No. 131
Date	Debit	Credit	Balance
Oct. 2	$3,300		$3,300

Office Equipment Account No. 163
Date	Debit	Credit	Balance
Oct. 1	$8,000		$8,000

Computer Equipment Account No. 167
Date	Debit	Credit	Balance
Oct. 1	$20,000		$20,000

Accounts Payable Account No. 201
Date	Debit	Credit	Balance
Oct. 3		$1,420	$1,420
8	$1,420		$0

S. Rey, Capital Account No. 301
Date	Debit	Credit	Balance
Oct. 1		$73,000	$73,000

S. Rey, Withdrawals Account No. 302
Date	Debit	Credit	Balance
Oct. 31	$3,600		$3,600
Nov. 30	$2,000		$5,600

Computer Service Revenue Account No. 403
Date	Debit	Credit	Balance
Oct. 6		$4,800	$4,800
12		$1,400	$6,200
28		$5,208	$11,408
Nov. 2		$4,633	$16,041
8		$5,668	$21,709
24		$3,950	$25,659

Wages Expense Account No. 623
Date	Debit	Credit	Balance
Oct. 31	$875		$875
Nov. 30	$1,750		$2,625

Advertising Expense Account No. 655
Date	Debit	Credit	Balance
Oct. 20	$1,728		$1,728

Mileage Expense Account No. 676
Date	Debit	Credit	Balance
Nov. 1	$320		$320
28	$384		$704

Miscellaneous Expense Account No. 677
Date	Debit	Credit	Balance
Nov. 22	$250		$250

Repairs Expense – Computer Account No. 684
Date	Debit	Credit	Balance
Oct. 17	$805		$805

3. Trial Balance

BUSINESS SOLUTIONS Trial Balance For the Month Ended November 30
Cash	$38,264
Accounts Receivable	$12,618
Computer Supplies	$2,545
Prepaid Insurance	$2,220
Prepaid Rent	$3,300
Office Equipment	$8,000
Computer Equipment	$20,000
Accounts Payable		-
S. Rey, Capital		$73,000
S. Rey, Withdrawals	$5,600
Computer Service Revenue		$25,659
Wages Expense	$2,625
Advertising Expense	$1,728
Mileage Expense	$704
Miscellaneous Expense	$250
Repairs Expense – Computer	$805
Total	$98,659	$98,659

Conclusion

Conclusion:

The trial balance of Business Solutions for the month ended November 30 shows a total balance of $98,659.