Chapter 4, Problem 4PB

To determine

Journalize the given transaction, post them to the respective ledger accounts and identify the activities for account 202 for the month.

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
December 3	Cash	101	$25,000
	CW Capital	301		$25,000
	(To record the receipt of capital)

Table (1)

	General Journal			Page - 2
Date	Description	Post	Debit	Credit
2019
December 4	Computer	131	$25,000
	Cash	101		$25,000
	(To record the purchase of computer on cash)
December 5	Furnitures and fixtures	151	$7,500
	Accounts payable	202		$7,500
	(To record the purchase of furniture and fixtures on account)
December 6	Office Equipment	141	$2,800
	Cash	101		$2,800
	(To record the purchase of equipment on cash)
December 10	Accounts receivable	111	$3,200
	Fees Income	401		$3,200
	(To record the service provided on account)
December 11	Office supplies	121	$1,050
	Cash	101		$1,050
	(To record the purchase of supplies in cash)
December 15	Accounts payable	202	$7,500
	Cash	101		$7,500
	(To record the payment of invoice for furniture purchased)

Table (2)

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
December 3		J1	$ 25,000		$ 25,000
December 4		J2		$ 2,500	$ 22,500
December 6		J2		$ 2,800	$ 19,700
December 11		J2		$ 1,050	$ 18,650
December 15		J2		$ 7,500	$ 11,150
ACCOUNT: Accounts receivable					Account No.: 111
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
December 10		J2	$ 3,200		$ 3,200
ACCOUNT: Office Supplies					Account No.: 121
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
December 11		J2	$ 1,050		$ 1,050
ACCOUNT: Computers					Account No.: 131
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
December 4		J2	$ 2,500		$ 2,500
ACCOUNT: Office Equipment					Account No.: 141
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
December 6		J2	$ 2,800		$ 2,800
ACCOUNT:  Furnitures and fixtures					Account No.: 151
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
December 5		J2	$ 7,500		$ 7,500

Table (3)

GENERAL LEDGER
ACCOUNT: Accounts payable					Account No.: 202
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
December 5		J2		$ 7,500		$ 7,500
December 15		J2	$ 7,500			$ 0
ACCOUNT: CW Capital					Account No.: 301
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
December 3		J1		$ 25,000		$ 25,000
ACCOUNT: Fees Income					Account No.: 401
Date	Description	Post. Ref.	Debit	Credit	Balance
					Debit	Credit
2019
December 10		J2		$ 3,200		$ 3,200

Table (4)

The Account 202 is the Accounts payable Account. It was credited for the purchase on December 5^th for $7,500 and it was debited on December 15^th for $7,500, and there is no balance in the account on the end of the month.