Concept explainers
(1)
General journal refers to the entry for each transaction in the books of accounts using the debit and credit method. In the double entry system, each transaction is recorded twice, one account is debited, whereas, the other is credited.
To prepare the journal entries.
Answer to Problem 2PSA
Date | Particular | PR | Debit | Credit |
A | Cash Office equipment Drafting equipment Common stock (To received the assets from owner) |
101 163 164 307 |
100,000 5,000 60,000 |
165,000 |
B | Land Cash Note payable (To record the land purchase by cash and issue notes payable) |
172 101 250 |
49,000 | 6300 42700 |
C | Building Cash (To record the purchase building) |
170 101 |
55,000 | 55,000 |
D | Prepaid insurance Cash (To record the prepaid insurance in advance) |
108 101 |
3000 | 3000 |
E | Cash Account Receivable (To record the cash from the account receivable |
101 106 |
6200 | 6200 |
F | Drafting equipment Cash Notes payable (To record the purchase the drafting equipment) |
164 101 250 |
20,000 | 9500 10500 |
G | Engineering fees earned (To record the accounts receivable) |
106 402 |
14000 | 14000 |
H | Office equipment Account payable |
163 201 |
1150 | 1150 |
I | Accounts receivable Engineering fees earned (The company sale service in the credit basis) |
106 402 |
22000 | 22000 |
J | Equipments rent expense Accounts payable (To the rent expense) |
602 201 |
1333 | 1333 |
K | Cash Accounts receivable (To record the money received from the old customer) |
101 106 |
7000 | 7000 |
I | Wages Cash (To record the wages payment) |
601 101 |
1200 | 1200 |
m. | Accounts payable Cash (To record the cash paid to accounts payable) |
201 101 |
1150 | 1150 |
N | Repair expense Cash (To record the repair expense) |
604 101 |
925 | 925 |
O | Dividend Cash (To record the dividend payment) |
319 101 |
9480 | 9480 |
P | Wages Cash (To record the wages payment) |
601 101 |
1200 | 1200 |
Q | Advertising expense cash (To record the Advertising payment) |
603 101 |
2500 | 2500 |
Explanation of Solution
All transaction should be recorded as per the explanation.
In the
(2)
Ledger is a book of financial statement. All types of journal entries are classified in these books. Ledger shows the accumulated transaction of a related item.
To prepare the ledger of each transaction.
Answer to Problem 2PSA
Cash Accounts no. 101:
Date | PR | Debit | Credit | Balance |
A | 307 | 100,000 | 100,000 | |
B | 172 | 6300 | 93700 | |
C | 170 | 55000 | 38700 | |
D | 108 | 3000 | 35700 | |
E | 106 | 6200 | 41900 | |
F | 164 | 9500 | 32400 | |
K | 106 | 7000 | 39400 | |
I | 601 | 1200 | 38200 | |
M | 201 | 1150 | 37050 | |
N | 604 | 925 | 36125 | |
O | 319 | 9480 | 26645 | |
P | 601 | 1200 | 25445 | |
Q | 603 | 2500 | 22945 |
Office Equipment Accounts no. 163:
Date | PR | Debit | Credit | Balance |
A | 307 | 5000 | 5000 | |
H | 201 | 1150 | 6150 | |
Drafting Equipment Accounts no. 164:
Date | PR | Debit | Credit | Balance |
A | 307 | 60,000 | 60,000 | |
F | 101250 | 950010500 | 80000 |
Common stock Accounts no. 307:
Date | PR | Debit | Credit | Balance |
A | 101 | 100,000 | ||
A | 163 | 5,000 | ||
A | 164 | 60,000 | 165000 |
Land Accounts no. 172:
Date | PR | Debit | Credit | Balance |
B | 101 | 6300 | ||
B | 250 | 42700 | 49000 |
Notes payable Accounts no. 250:
Date | PR | Debit | Credit | Balance |
B | 172 | 42700 | 42700 | |
F | 164 | 10500 | 53200 |
Building Accounts no. 170:
Date | PR | Debit | Credit | Balance |
B | 101 | 55,000 | 55,000 |
Prepaid insurance Accounts no. 108:
Date | PR | Debit | Credit | Balance |
D | 101 | 3000 | 3000 |
Account Receivable Accounts no. 106:
Date | PR | Debit | Credit | Balance |
E | 101 | 6200 | (6200) | |
G | 402 | 14000 | 7800 | |
I | 402 | 22000 | 29800 | |
K | 101 | 7000 | 22800 | |
Accounts payable Accounts no.201:
Date | PR | Debit | Credit | Balance |
H | 163 | 1150 | 1150 | |
J | 602 | 1333 | 2483 | |
M | 101 | 1150 | 1333 |
Engineering fees earned Accounts no. 402:
Date | PR | Debit | Credit | Balance |
G | 106 | 14000 | 14000 | |
I | 106 | 22000 | 36000 |
Equipments rent expense Accounts no. 602:
Date | PR | Debit | Credit | Balance |
J | 201 | 1333 | 1333 | |
Wages Accounts no. 601:
Date | PR | Debit | Credit | Balance |
I | 101 | 1200 | 1200 | |
P | 101 | 1200 | 2400 |
Repair Expense Accounts no. 604:
Date | PR | Debit | Credit | Balance |
N | 101 | 925 | 925 | |
Dividend Accounts no. 319:
Date | PR | Debit | Credit | Balance |
O | 101 | 9480 | 9480 |
Advertising expense Accounts no. 603:
Date | PR | Debit | Credit | Balance |
Q | 101 | 2500 | 2500 |
Explanation of Solution
In the ledger book, each transaction should be recorded separately.
A separate column should be prepared.
(3)
A
Trial balance statements show the end balance of each ledger. They have two columns, one is debited and the other is credited.
To prepare the Trial balance.
Answer to Problem 2PSA
Trial balance:
Particular | Number | Debit | Credit |
Cash | 101 | 22945 | |
Office equipment | 163 | 6150 | |
Drafting equipment | 164 | 80000 | |
Common stock | 307 | 165000 | |
Land | 172 | 49000 | |
Notes payable | 250 | 53200 | |
Building | 170 | 55000 | |
Prepaid insurance | 108 | 3000 | |
Account Receivable | 106 | 22800 | |
Account payable | 201 | 1333 | |
Engineering fees earned | 402 | 36000 | |
Equipments rent expense | 602 | 1333 | |
Wages | 601 | 2400 | |
Repair expense | 604 | 925 | |
Dividend | 319 | 9480 | |
Advertising expense | 603 | 2500 | |
Total | 255533 | 255533 |
Explanation of Solution
There are three types of trail balance:
- Unadjusted trail balance
- Adjusted trail balance
- Closing trial balance.
The abovementioned trial balance is the unadjusted trial balance, because no transaction has been adjusted in it.
This is a simple trial balance which shows the list of accounts with amount.
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Chapter D Solutions
Managerial Accounting
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College