Chapter 4, Problem 2PB

1.

To determine

Journalize the given transaction.

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.

Debit: A debit, is an accounting term that refers to the left side of an account. The term debit is be denoted by (Dr). The recording amount on the left side of the account is known as debiting.

Credit: A credit, is an accounting term that refers to the right side of an account. The term credit is denoted as (Cr). The recording amount on the right side of the account is known as crediting.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

• Debit, all the increase in the assets, the expenses and the dividends, all the decrease in liabilities, revenues and the stockholders’ equities.
• Credit, all the increase in the liabilities, the revenues, and the stockholders’ equities, and all decreases in the assets, and the expenses.

Pass the journal entries for the given transactions:

	General Journal			Page - 1
Date	Description	Post	Debit	Credit
2019
June 1	Cash	101	$20,000
	ILCapital	301		$20,000
	(To record the receipt of capital)
June 2	Rent expense	514	$2,000
	Cash	101		$2,000
	(To record the payment of rent, Check 1001)

Table (1)

	General Journal			Page - 2
Date	Description	Post	Debit	Credit
2019
June 5	Office Equipment	141	$9,500
	Accounts payable	202		$9,500
	(To record the purchase of office equipment on account Invoice 5312)
June 6	Photographic Equipment	151	$2,100
	Cash	101		$2,100
	(To record the purchase of photographic equipment for cash, Check 1002)
June 7	Supplies	121	$550
	Cash	101		$550
	(To record the purchase of supplies for cash, Check 1003)
June 10	Office Cleaning Expense	511	$800
	Cash	101		$800
	(To record the payment of office cleaning expense, Check 1004)
June 12	Cash	101	$2,600
	Accounts receivable	111	$2,600
	Fees Income	401		$5,200
	(To record the services provided for cash and on account)
June 15	Cash	101	$1,800
	Supplies	121		$1,800
	(To record the return of damaged supplies for cash refund)
June 18	Office Equipment	141	$2,250
	Cash	101		$500
	Accounts payable	202		$1,750
	(To record the purchase of Equipment on account Invoice 304; and issued Check 1005 for down payment)

Table (2)

	General Journal			Page - 3
Date	Description	Post	Debit	Credit
2019
June 20	Accounts payable	202	$2,500
	Cash	101		$2,500
	(To record the payment for office supplies, Invoice 5312 by Check 1006)
June 26	Accounts receivable	111	$2,500
	Fees income	401		$2,500
	(To record the service provided on account)
June 27	Telephone expense	520	$632
	Cash	101		$632
	(To record the payment of telephone bill, Check 1007)
June 30	Cash	101	$2,300
	Accounts receivable	111		$2,300
	(To record the receipt of fees)
	Utilities expense	523	$750
	Cash	101		$750
	(To record the payment of utility bill, Check 1008)
	Salaries expense	517	$6,550
	Cash	101		$6,550
	(To record the payment of salaries, Checks 1009-1011)

Table (3)

2.

To determine

Post the journal entries in the General Ledger and identify the cash balance after the transaction on June 27^th.

Explanation of Solution

General ledger:

General ledger is a record of all accounts of assets, liabilities, and stockholders’ equity, necessary to prepare financial statements. In the ledger all the entries are recorded in the account order, for which the transactions actually take place.

Post the journal entries in the General Ledger:

GENERAL LEDGER
ACCOUNT: Cash					Account No.: 101
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 1		J1	$ 20,000		$ 20,000
June 2		J1		$ 2,000	$ 18,000
June 6		J2		$ 2,100	$ 15,900
June 7		J2		$ 550	$ 15,350
June 10		J2		$ 800	$ 14,550
June 12		J2	$ 2,600		$ 17,150
June 15		J2	$ 180		$ 17,330
June 18		J2		$ 500	$ 16,830
June 20		J2		$ 2,500	$ 14,330
June 27		J3		$ 632	$ 13,698
June 30		J3	$ 2,300		$ 15,998
June 30		J3		$ 750	$ 15,248
June 30		J3		$ 6,550	$ 8,698
ACCOUNT: Accounts receivable					Account No.: 111
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 12		J1	$ 2,600		$ 2,600
June 26		J3	$ 2,500		$ 5,100
June 30		J3		$ 2,300	$ 2,800

Table (4)

GENERAL LEDGER
ACCOUNT: Supplies					Account No.: 121
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 7		J2	$ 550		$ 550
June 15		J2		$ 180	$ 370
ACCOUNT: Office Equipment					Account No.: 141
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 5		J2	$ 9,500		$ 9,500
June 18		J2	$ 2,250		$ 11,750
ACCOUNT: Photographic Equipment					Account No.: 151
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 6		J2	$ 2,100		$ 2,100
ACCOUNT: Accounts payable					Account No.: 202
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 5		J2		$ 9,500		$ 9,500
June 18		J2		$ 1,750		$ 11,250
June 20		J3	$ 2,500			$ 8,750
ACCOUNT: IL Capital					Account No.: 301
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 1		J1		$ 20,000		$ 20,000
ACCOUNT: IL Drawings					Account No.: 302
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019

Table (5)

GENERAL LEDGER
ACCOUNT: Fees Income					Account No.: 401
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 12		J2		$ 5,200		$ 5,200
June 26		J3		$ 2,500		$ 7,700
ACCOUNT: Office Cleaning Expense					Account No.: 511
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 10		J2	$ 8,000		$ 8,000
ACCOUNT: Rent Expense					Account No.: 514
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 2		J1	$ 2,000		$ 2,000
ACCOUNT: Salaries Expense					Account No.: 517
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 30		J3	$ 6,550		$ 6,550
ACCOUNT: Telephone Expense					Account No.: 520
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 27		J3	$ 632		$ 632
ACCOUNT: Utilities Expense					Account No.: 523
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
June 30		J3	$ 750		$ 750

Table (6)

The cash balance after the transaction on June 27^th was $13,698.