Chapter D, Problem 2PSA

To determine

(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	Accounts receivable 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 Journal entry, each transaction is recorded twice, one account is debited, whereas, the other is credited.

To determine

(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.

To determine

(3)

A trial balance is a list of ledger accounts.

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:

1. Unadjusted trail balance
2. Adjusted trail balance
3. 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.