Chapter 3, Problem 1AP

a and b.

To determine

Record the journal entries and post the transactions in general ledger.

Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Record the journal entries and post the transactions in general ledger.

Date	Account title and explanation	Debit	Credit
April 1	Cash	11,500
	Common stock		11,500
	(To record the issuance of common stock in exchange of cash)
April 2	Trucks	6,100
	Cash		6,100
	(To record the purchase of Truck)
April 3	Equipment	3,100
	Cash		1,000
	Accounts payable		2,100
	(To record the purchase of equipment)
April 4	Prepaid insurance	2,880
	Cash		2,880
	(To record the payment of 2 year insurance policy)
April 5	Supplies	1,200
	Accounts payable		1,200
	(To record the purchase of supplies on account)
April 6	Cash	1,800
	Unearned roofing fees		1,800
	(To record the receipt of advance)
April 7	Accounts receivable	5,500
	Roofing fees earned		5,500
	(To record the fees earned on account)
April 8	Cash	4,900
	Accounts receivable		4,900
	(To record the collection of cash on account)
April 9	Fuel expense	75
	Cash		75
	(To record the fuel expense used in the month of April)
April 10	Advertising expense	100
	Cash		100
	(To record the payment for advertising expense)
April 11	Wages expense	2,500
	Cash		2,500
	(To record the wages payment)
April 12	Accounts receivable	4,000
	Roofing fees earned		4,000
	(To record the fees earned on account)

Table (1)

General ledger:

General ledger is a ledger which is used to summarize all the entries of the subsidiary ledger. The general ledger is used to record the correcting, adjusting and closing entries.

Post the transactions in general ledger.

c.

To determine

Prepare an unadjusted trial balance as of April 30.

Explanation of Solution

Unadjusted trial balance:

Unadjusted trial balance is a statement which contains complete list of accounts with their unadjusted balances, after journal entries are made but before all relevant adjustments have been made. This statement is prepared at the end of every financial period.

Prepare an unadjusted trial balance as of April 30.

Unadjusted Trial Balance
Account title	Debit	Credit
Cash	5,545
Accounts receivable	4,600
Supplies	1,200
Prepaid insurance	2,880
Trucks	6,100
Equipment	3,100
Accounts payable		3,300
Unearned roofing fees		1,800
Common stock		11,500
Roofing fees earned		9,500
Fuel expense	75
Advertising expense	100
Wages expense	2,500
Totals	26,100	26,100

Table (2)

d.

To determine

Record the adjusting entries and post the transactions in general ledger.

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Record the adjusting entries.

Date	Account title and explanation	Debit	Credit
April 30	Supplies expense (1,200-400)	800
	Supplies		800
	(To record the amount of supplies expensed)
April 30	Depreciation expense -Trucks	125
	Accumulated Depreciation -Trucks		125
	(To record the depreciation on Trucks)
April 30	Depreciation expense-Equipment	35
	Accumulated Depreciation -Equipment		35
	(To record the depreciation on Equipment)
April 30	Unearned roofing fees	450
	Roofing fees earned ($1,800×1/4)		450
	(To record the fees earned on account)
April 30	Insurance expense (2,880/24)	120
	Prepaid insurance		120
	(To record the insurance expense of the month)

Table (3)

Post the adjusting entries to the respective accounts.