
Concept explainers
a and b.
Record the journal
a and b.

Explanation of Solution
Record the journal entries and post the transactions in general ledger.
Date | Account title and explanation | Debit | Credit |
June 1 | Cash | 7,500 | |
Common stock | 7,500 | ||
(To record the issuance of common stock in exchange of cash) | |||
June 2 | Equipment | 2,750 | |
Cash | 750 | ||
Accounts payable | 2,000 | ||
(To record the purchase of equipment) | |||
June 3 | Prepaid rent | 3,450 | |
Cash | 3,450 | ||
(To record the payment of 6 month rent) | |||
June 4 | Prepaid insurance | 876 | |
Cash | 876 | ||
(To record the payment of 1 year insurance policy) | |||
June 5 | Advertising expense | 225 | |
Cash | 225 | ||
(To record the payment for advertising expense) | |||
June 6 | 2,200 | ||
Karate fees earned | 2,200 | ||
(To record the fees earned on account) | |||
June 7 | Cash | 555 | |
Unearned Karate fees | 555 | ||
(To record the receipt of advance) | |||
June 8 | Cash | 1,800 | |
Accounts receivable | 1,800 | ||
(To record the collection of cash on account) | |||
June 9 | Repairs expense | 275 | |
Cash | 275 | ||
(To record the repairs expense) | |||
June 10 | Accounts receivable | 2,000 | |
Karate fees earned | 2,000 | ||
(To record the fees earned on account) | |||
June 11 | Wages expense | 650 | |
Cash | 650 | ||
(To record the wages expense) |
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.
Prepare an unadjusted
c.

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 June 30.
Unadjusted Trial Balance | ||
Cash | 3,629 | |
Accounts receivable | 2,400 | |
Prepaid rent | 3,450 | |
Prepaid insurance | 876 | |
Equipment | 2,750 | |
Accounts payable | 2,000 | |
Unearned Karate fees | 555 | |
Common stock | 7,500 | |
Karate fees earned | 4,200 | |
Repairs expense | 275 | |
Advertising expense | 225 | |
Wages expense | 650 | |
Totals | 14,255 | 14,255 |
Table (2)
d.
Record the
d.

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
Record the adjusting entries.
Date | Account title and explanation | Debit | Credit |
June 30 | Depreciation expense-Equipment | 50 | |
| 50 | ||
(To record the depreciation on Equipment) | |||
June 30 | Utilities expense | 120 | |
Utilities payable | 120 | ||
(To record the estimated utilities expense) | |||
June 30 | Rent expense (3,450/6) | 575 | |
Prepaid rent | 575 | ||
(To record the rent expense of the month) | |||
June 30 | Insurance expense (876/12) | 73 | |
Prepaid insurance | 73 | ||
(To record the insurance expense of the month) | |||
June 30 | Unearned Karate fees | 185 | |
Karate fees earned | 185 | ||
(To record the unearned fees earned) |
Table (3)
Post the adjusting entries to the respective accounts.
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Chapter 3 Solutions
Financial Accounting for Undergraduates
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