2nd Edition

ISBN: 9780134730370

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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Textbook Question

Chapter 4, Problem 4.3P

Journal Entries; Post to the General Ledger; Prepare a Trial Balance. Herman and

Sons’ Law Offices opened on January 1, 2018 During the first year of business, the company had the following transactions

January 2: The owners invested $250,000 (the par value of the stock) into the business and acquired 25,000 shares of common stock in return.
January 15: Herman and Sons’ bought an office building in the amount of $80,000. The company took out a long-term note from the bank to finance the purchase.
February 12: Herman and Sons’ billed clients for $60,000 of services performed.
March 1: Herman and Sons’ took out a two-year insurance policy, which it paid cash for in the amount of $22,000.
March 10: Herman collected $20,000 from clients toward the outstanding accounts receivable balance.
May 13: Herman received cash payments totaling $210,000 for legal services—$40,000 was for services previously billed to customers on February 12 and the remainder was for services provided in May not yet recorded.
June 10: Herman purchased office supplies in the amount of $35,000, all on credit.
July 15: Herman paid wages of $16,000 in cash to office staff workers.
August 8: Herman paid off the $35,000 balance owed to a supplier for the purchase made on June 10.
September 3: Herman and Sons’ purchased $25,000 of office supplies in cash.
September 20: The company paid $11,000 cash for utilities.
October 1: Herman and Sons’ paid wages in the amount of $24,000 to office workers.
December 1: Herman and Sons’ received cash payments from clients in the amount of $320,000 for services to be performed in the upcoming months.
December 31: Herman declared and paid a $10,000 dividend.

The chart of accounts used by Herman and Son’s Law Office is as follows:

Chart of Accounts
Group	Account #	Account Title
100: Assets	101	Cash
	102	Accounts Receivable
	103	Office Supplies
	104	Prepaid Insurance
	110	Building
	112	Accumulated Depreciation—Building

Chart of Accounts
Group	Account #	Account Title
200: Liabilities	201	Accounts Payable
	202	Unearned Service Revenue
	203	Wages Payable
	210	Interest Payable
	220	Notes Payable
300: Stockholders’ Equity	301	Common Stock
	310	Retained Earnings
	320	Dividends

400: Revenues	401	Service Revenue
500: Expenses	501	Wage Expense
	502	Utilities Expense
	503	Selling Expense
	504	Administrative Expense
	505	Insurance Expense
	506	Supplies Expense
	510	Depreciation Expense—Building
	520	Interest Expense
600: Other	601	Income Summary

Required

a. Journalize the transactions for the year. Omit explanations.
b. Post the journal entries to the general ledger.
c. Prepare an unadjusted trial balance as of December 31.

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Chapter 4, Problem 4.2P

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