Chapter 3, Problem 3.10AP

(a) 

To determine

T- Accounts:

T-accounts are referred as T-account because its format represents the letter “T”. The T-accounts consists of the following:

• The title of accounts.
• The debit side (Dr) and,
• The credit side (Cr).

To Enter:  The beginning balancesin the general ledger as of April 30, 2017.

Explanation of Solution

The beginning balancesare entered in the general ledger using T- Accounts as on April 30, 2017 as follows:

Cash
Apr.   30	$5,000
Bal.	$ 5,000

Table (1)

Supplies
Apr.    30	$    500
Bal.	$    500

Table (2)

Equipment
Apr.    30	$  24,000
Bal.	$  24,000

Table (3)

Accounts Payable
		Apr.   30	$2,100
		Bal.	$  2,100

Table (4)

Notes Payable
		Apr.   30	$10,000
		Bal.	$10,000

Table (5)

Unearned Service Revenue
		Apr.   30	$  1,000
		Bal.	$  1,000

Table (6)

Common Stock
		Apr.   30	$ 5,000
		Bal.	$ 5,000

Table (7)

Retained earnings
		Apr.   30	$11,400
		Bal.	$11,400

Table (8)

(b)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

To journalize: The business transactions as given for Incorporation P.

Explanation of Solution

Prepare journal entries of all the given transactions for Incorporation P as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
May 1	Rent Expenses	1,000
	Cash		1,000
	(To record the payment of rent)
May 4	Accounts Payable	1,100
	Cash		1,100
	(To record the payment of account payable at April 30)
May 7	Cash	1,500
	Unearned Service revenue		1,500
	(To record the cash received in advance for the services yet to be provided)
May 8	Cash	1,200
	Service Revenue		1,200
	(To record the cash received for the services performed)
May 14	Salaries Expenses	1,200
	Cash		1,200
	(To record the payment of salaries to employees)
May 15	Cash	800
	Service Revenue		800
	(To record the collection of cash for the services performed)
May 15	Unearned Service revenue	700
	Service Revenue		700
	(To record the recognition of service revenue from the unearned service revenue account)
May 21	Accounts Payable	1,000
	Cash		1,000
	(To record the payment of cash on account from the remaining balance due on April 30)
May 22	Cash	1,000
	Service Revenue		1,000
	(To record the cash received for the services performed)
May 22	Supplies	700
	Accounts Payable		700
	(To record the purchase of supplies on account)
May 25	Advertising Expenses	500
	Accounts Payable		500
	(To record the advertising expenses, due to be paid on June 13)
May 25	Utilities Expenses	400
	Cash		400
	(To record the payment of utilities expenses)
May 29	Cash	1,700
	Service Revenue		1,700
	(To record the cash received for the services performed)
May 29	Unearned Service revenue	600
	Service Revenue		600
	( To record the recognition of service revenue from the unearned service revenue account)
May 31	Interest Expenses	50
	Cash		50
	(To record the payment of interest on notes payable)
May 31	Salaries Expenses	1,200
	Cash		1,200
	(To record the salaries paid to the employees)
May 31	Income Tax Expenses	150
	Cash		150
	(To record the payment of income tax)

Table(1)

(c)

To determine

Trial balance:

A trial balance is the summary of all the ledger accounts. The trial balance is prepared to check the total balance of the debit with the total of the balance of the credit column, which must be equal. The trial balance is usually prepared to check accuracy of ledger balances. In trial balance the debit balances are listed in the left column, and credit balances are listed in the right column.

 To Post: The journal entries to the respective general ledger accounts.

Explanation of Solution

The posting of the journal entries to the general ledger accounts are as follows:

Cash
Apr.     30	$ 5,000	May.  1	$1,000
May.      7	$ 1,500	4	$1,100
8	$ 1,200	14	$1,200
15	$    800	21	$1,000
22	$  1,000	25	$   400
29	$  1,700	31	$     50
		31	$1,200
		31	$   150
Total	11,200	Total	6,100
Bal.	$ 5,100

Table (1)

Supplies
Apr.    30	$    500
Bal.	$    500

Table (2)

Equipment
Apr.    30	$24,000
Bal.	$24,000

Table (3)

Accounts Payable
		Apr.   30	$2,100
May     4	$1,100	May  22	$   700
May   21	$1,000	25	$   500
Total	$2,100	Total	$3,300
		Bal.	$1,200

Table (4)

Notes Payable
		Apr.   30	$10,000
		Bal.	$10,000

Table (5)

Unearned Service Revenue
		Apr.   30	$  1,000
May     15	$  700	May   7	$  1,500
May    29	$  600
Total	$  1,300	Total	$2,500
		Bal.	$1,200

Table (6)

Common Stock
		Apr.   30	$ 5,000
		Bal.	$ 5,000

Table (7)

Retained earnings
		Apr.   30	$11,400
		Bal.	$11,400

Table (8)

Service Revenue
		May.  8	$1,200
		15	$   800
		15	$   700
		22	$1,000
		29	$1,700
		29	$   600
		Bal.	$6,000

Table (9)

Salaries and wages expenses
May     14	$  1,200
May    31	$  1,200
Bal.	$  2,400

Table (10)

Rent Expense
May.  1	$1,000
Bal.	$1,000

Table (11)

Supplies Expense
May.  22	$     700
Bal.	$    700

Table (12)

Advertising Expense
May.  25	$   500
Bal.	$  500

Table (13)

Utilities Expense
May.  25	$   400
Bal.	$  400

Table (14)

Interest Expense
May.  31	$   50
Bal.	$    50

Table (15)

Income tax Expense
May.  31	$   150
Bal.	$   150

Table (16)

(d)

To determine

 To Prepare: The trial balance of Incorporation P as on May 31, 2017.

Explanation of Solution

Preparethe trial balance of Incorporation P as on May 31, 2017 as follows:

Table-1

Conclusion

The debit column and credit column of the trial balance are agreed, both having balance of $34,800.