Chapter 3, Problem 3.18E

(a) 

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.

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).

Trial balance:

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

To journalize: The issuance of common stock, the security consultant hired, the rent paid for building, the equipment purchased party for cash and party on account, The payment for advertisement, The bill received for repairing equipment, The service provided on account, The purchase of supply on account, The payment of due for the purchase of equipment, The utility bill received and paid, The cash received for the service rendered, The salaries and wages paid to employees.

Explanation of Solution

Journalize the issuance of common stock in exchange of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  1	Cash	66,000
	Common stock		66,000
	(To record the issuance of common stock )

Journalize the security consultant hired to work from October 15.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  2	No entry is required.

Journalize the payment of rent paid for the building.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  4	Rent expenses	2,000
	Cash		2,000
	(To record the rent paid for the building)

Journalize the purchase of equipment party for cash and party on account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  7	Equipment	18,000
	Cash		4,000
	Accounts Payable		14,000
	(To record the purchase of equipment partly on cash and partly on account)

Journalize the payment of advertisement.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  8	Advertising expense	500
	Cash		500
	(To record the payment for advertisement)

Journalize the bill received for the repair of equipments.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  10	Repair expenses	390
	Account payable		390
	(To record the repair expenses of equipment on account)

Journalize the service provided for an event on account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  12	Accounts receivable	3,200
	Service Revenue		3,200
	(To record the service rendered on account)

Journalize the supplies purchased on account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  16	Supplies	410
	Accounts payable		410
	(To record the purchase of supplies on account)

Journalize the payment of due for the purchase of equipment on October 7.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  21	Accounts payable	14,000
	Cash		14,000
	(To record the payment of balance due on equipment, purchased on October 7)

Journalize the payment of utility bill received.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  24	Utilities expense	148
	Cash		148
	(To record the payment of utilities bill received)

Journalize the cash received from customer for the service performed on October 12.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  27	Cash	3,200
	Accounts Receivable		3,200
	(To record the receipt of cash for the service rendered on October 12 )

Journalize the payment of salaries and wages to the employees.

Date	Account Title and Explanation	Debit ($)	Credit ($)
October  31	Salaries and Wages Expenses	5,100
	Cash		5,100
	(To record the salaries and wages paid to employees )

(b)

To determine

To Post: The transaction to T-accounts.

Explanation of Solution

The T-accounts for the following transaction are as follows:

(1)

Prepare T-accounts for the Cash account:

Cash
Oct.        1	$66,000	Oct.      4	$2,000
27	$ 3,200	7	$4,000
		8	$500
		21	$14,000
		24	$148
		31	$5,100
Total	69,200	Total	25748
Bal.	$ 43,452

Table (1)

 (2)

Prepare T-accounts for the Common Stock account:

Common Stock Account
		Oct.1	$66,000
		Bal.	$66,000

Table (2)

(3)

Prepare T-accounts for the Rent Expenses account:

Rent Expenses Account
Oct. 4	$2,000
Bal.	$ 2,000

Table (3)

(4)

Prepare T-accounts for the Equipment account:

Equipment Account
Oct.  7	$  4,000
7	$14,000
Bal.	$ 18,000

Table (4)

(5)

Prepare T-accounts for the Accounts Payable account:

Accounts Payable Account
Oct.      21	$14,000	Oct.      7	$14,000
		10	$     390
		16	$     410
Total	14,000	Total	14,800
		Bal.	$     800

Table (5)

(6)

Prepare T-accounts for the Advertising Expenses account:

Advertising Expenses Account
Oct. 8	$  500
Bal.	$  500

Table (6)

(7)

Prepare T-accounts for the Supplies account:

Supplies
Oct. 16	$  410
Bal.	$  410

Table (7)

(8)

Prepare T-accounts for the Repairs Expenses account:

Repair Expenses Account
Oct. 10	$  390
Bal.	$  390

Table (8)

(9)

Prepare T-accounts for the Utilities Expenses account:

Utilities Expenses Account
Oct. 24	$  148
Bal.	$  148

Table (9)

(10)

Prepare T-accounts for the Accounts Receivables account:

Accounts Receivable
Oct. 12	$  3,200	Oct. 27	$3,200
Bal.	$  0

Table (10)

(11)

Prepare T-accounts for the Salaries and Wages Expenses account:

Salaries and wages expenses
Oct. 31	$  5,100
Bal.	$  5,100

Table (11)

(12)

Prepare T-accounts for the Service Revenue account:

Service Revenue Account
		Oct.12	$3,200
		Bal.	$3,200

Table (12)

(c)

To determine

To Prepare: The trial balance.

Answer to Problem 3.18E

The trial balance of B’s Corporation is as follows:

Table (1)

Explanation of Solution

The total of the debit side should be equal to the total of the credit side of the trial balance. The accounts payable account, common stock account, and service revenue account are placed in the credit column because; it shows a normal credit balance. Similarly, cash account, supplies account, equipment account, advertisement expense account, salaries and wages account, and rent expense account are placed in the debit column because it shows a normal debit balance.