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.
Explanation of Solution
Journal Entries:
Date | Particular | PR | Debit ($) | Credit ($) |
A | Cash Office equipment computer equipment Common stock (To receive the investment by exchange the common stock) |
101 163 164 307 |
65000 5750 30000 |
100750 |
B | Land Cash Note payable (To record the land purchase by cash and issue notes payable) |
172 101 250 |
22000 | 5000 17000 |
C | Building Cash (To record the purchase building) |
170 101 |
34500 | 34500 |
D | Prepaid insurance Cash (To record the prepaid insurance in advance) |
108 101 |
5000 | 5000 |
E | Cash Account Receivable (To record the cash from the account receivable |
101 106 |
4600 | 4600 |
F | Computer equipment Cash Notes payable (To record the purchase the drafting equipment) |
164 101 250 |
4500 | 800 3700 |
G | Fees earned (To record the accounts receivable) |
106 402 |
4250 | 4250 |
H | Office equipment Account payable |
163 201 |
950 | 950 |
I | Accounts receivable Fees earned (The company sale service in the credit basis) |
106 402 |
10200 | 10200 |
J | Computer rent expense Accounts payable (To the rent expense) |
602 201 |
580 | 580 |
K | Cash Accounts receivable (To record the money received from the old customer) |
101 106 |
5100 | 5100 |
I | Wages Cash (To record the wages payment) |
601 101 |
1800 | 1800 |
m. | Accounts payable Cash (To record the cash paid to accounts payable) |
201 101 |
950 | 950 |
N | Computer Repair expense Cash (To record the repair expense) |
604 101 |
608 | 608 |
O | Dividend Cash (To record the dividend payment) |
319 101 |
6230 | 6230 |
P | Wages Cash (To record the wages payment) |
601 101 |
1800 | 1800 |
Q | Advertising expense cash (To record the Advertising payment) |
603 101 |
750 | 750 |
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 accounts.
Explanation of Solution
The ledger account
Cash Accounts no. 101
Date | PR | Debit | Credit | Balance |
A | 307 | 65000 | 65000 | |
B | 172 | 5000 | 60000 | |
C | 170 | 34500 | 25500 | |
D | 108 | 5000 | 20500 | |
E | 106 | 4600 | 25100 | |
F | 164 | 800 | 24300 | |
K | 106 | 5100 | 29400 | |
I | 601 | 1800 | 27600 | |
M | 201 | 950 | 26650 | |
N | 604 | 608 | 26042 | |
O | 319 | 6230 | 19812 | |
P | 601 | 1800 | 18012 | |
Q | 603 | 750 | 17262 |
Office Equipment Accounts no. 163
Date | PR | Debit | Credit | Balance |
A | 307 | 5750 | 5750 | |
H | 201 | 950 | 6700 | |
Computer Equipment Accounts no. 164
Date | PR | Debit | Credit | Balance |
A | 307 | 5750 | 5750 | |
F | 101 250 |
800 3700 |
10250 |
Common stock Accounts no. 307
Date | PR | Debit | Credit | Balance |
A | 101 | 65000 | ||
A | 163 | 5750 | ||
A | 164 | 30,000 | 100750 |
Land Accounts no. 172
Date | PR | Debit | Credit | Balance |
B | 101 | 5000 | ||
B | 250 | 17000 | 22000 |
Notes payable Accounts no. 250
Date | PR | Debit | Credit | Balance |
B | 172 | 17000 | 17000 | |
F | 164 | 3700 | 20700 |
Building Accounts no. 170
Date | PR | Debit | Credit | Balance |
B | 101 | 34500 | 34500 |
Prepaid insurance Accounts no. 108
Date | PR | Debit | Credit | Balance |
D | 101 | 5000 | 5000 |
Account Receivable Accounts no. 106
Date | PR | Debit | Credit | Balance |
E | 101 | 4600 | -4600 | |
G | 402 | 4250 | -350 | |
I | 402 | 10200 | 9850 | |
K | 101 | 5100 | 4750 | |
Accounts payable Accounts no.201
Date | PR | Debit | Credit | Balance |
H | 163 | 950 | 950 | |
J | 602 | 580 | 1530 | |
M | 101 | 950 | 580 |
Fees earned Accounts no. 402
Date | PR | Debit | Credit | Balance |
G | 106 | 4250 | 4250 | |
I | 106 | 10200 | 14450 |
Computer rent expense Accounts no. 602
Date | PR | Debit | Credit | Balance |
J | 201 | 580 | 580 | |
Wages Accounts no. 601
Date | PR | Debit | Credit | Balance |
I | 101 | 1800 | 1800 | |
P | 101 | 1800 | 3600 |
Computer Repair Expense
Accounts no. 604
Date | PR | Debit | Credit | Balance |
N | 101 | 608 | 608 | |
Dividend
Accounts no. 319
Date | PR | Debit | Credit | Balance |
O | 101 | 6230 | 6230 |
Advertising expense Accounts no. 603
Date | PR | Debit | Credit | Balance |
Q | 101 | 750 | 750 |
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.
Explanation of Solution
Trial balance:
Particular | Number | Debit | Credit |
Cash | 101 | 17262 | |
Office equipment | 163 | 56700 | |
Computer equipment | 164 | 10250 | |
Common stock | 307 | 100750 | |
Land | 172 | 22000 | |
Notes payable | 250 | 20700 | |
Building | 170 | 34500 | |
Prepaid insurance | 108 | 5000 | |
Account Receivable | 106 | 4750 | |
Account payable | 201 | 580 | |
Fees earned | 402 | 14450 | |
Computer rent expense | 602 | 580 | |
Wages | 601 | 3600 | |
Computer Repair expense | 604 | 608 | |
Dividend | 319 | 6230 | |
Advertising expense | 603 | 750 | |
Total | 136480 | 136480 |
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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