Chapter 2: Problem Set A

Problem 2-1A: Linkworks - Journal Entries, Ledger Posting, and Trial Balance 1. Journal Entries Below are the journal entries for Linkworks based on the transactions listed: 1. Investment by Karla Tanner bash Debit: Cash (101) ......................... $80,000 Debit: Office Equipment (163) ........ $26,000 Credit: Common Stock (307) ........... $106,000 2. Prepaid Rent for 12 months bash Debit: Prepaid Rent (131) .............. $9,000 Credit: Cash (101) ......................... $9,000 3. Credit Purchases of Office Equipment and Supplies bash Debit: Office Equipment (163) ........ $8,000 Debit: Office Supplies (124) ............ $3,600 Credit: Accounts Payable (201) ....... $11,600 4. Completed Services (Cash Received) bash Debit: Cash (101) ......................... $4,000 Credit: Services Revenue (403) ...... $4,000 5. Completed Project (Client to Pay Later) bash Debit: Accounts Receivable (106) ... $6,000 Credit: Services Revenue (403) ...... $6,000 6. Paid Accounts Payable bash Debit: Accounts Payable (201) ........ $11,600 Credit: Cash (101) ......................... $11,600 7. Prepaid Insurance for 12 Months bash Debit: Prepaid Insurance (128) ....... $2,400 Credit: Cash (101) ......................... $2,400 8. Partial Payment from Client for Work Completed bash Debit: Cash (101) ......................... $4,400 Credit: Accounts Receivable (106) ... $4,400 9. Completed Work on Credit bash Debit: Accounts Receivable (106) ... $2,890 Credit: Services Revenue (403) ...... $2,890 10. Paid Cash Dividend bash Debit: Dividends (319) .................. $5,500 Credit: Cash (101) ......................... $5,500 11. Additional Office Supplies on Credit bash Debit: Office Supplies (124) ............ $600 Credit: Accounts Payable (201) ....... $600 12. Paid Utility Bill bash Debit: Utilities Expense (690) .......... $435 Credit: Cash (101) ......................... $435 2. Ledger Posting After posting the journal entries to the appropriate ledger accounts (T-accounts), the balances are as follows: • • • • • • • • • • • Cash (101): $59,465 Accounts Receivable (106): $4,490 Office Supplies (124): $4,200 Prepaid Insurance (128): $2,400 Prepaid Rent (131): $9,000 Office Equipment (163): $34,000 Accounts Payable (201): $600 Common Stock (307): $106,000 Dividends (319): $5,500 Services Revenue (403): $12,890 Utilities Expense (690): $435 3. Trial Balance (April 30) Account Debit Credit Cash (101) $59,465 Accounts Receivable (106) $4,490 Office Supplies (124) $4,200 Prepaid Insurance (128) $2,400 Prepaid Rent (131) $9,000 Office Equipment (163) $34,000 Accounts Payable (201) $600 Common Stock (307) $106,000 Dividends (319) $5,500 Services Revenue (403) $12,890 Utilities Expense (690) $435 Total $119,490 $119,490 Problem 2-2A: Aracel Engineering - Journal Entries, Ledger Posting, and Trial Balance 1. Journal Entries 1. Investment by J. Aracel bash Debit: Cash (101) ......................... $100,000 Debit: Office Equipment (163) ........ $5,000 Debit: Drafting Equipment (164) ..... $60,000 Credit: Common Stock (307) ........... $165,000 2. Purchased Land (Part Cash, Part Note Payable) bash Debit: Land (172) .......................... $49,000 Credit: Cash (101) ......................... $6,300 Credit: Notes Payable (250) ............ $42,700 3. Purchased Portable Building (Paid Cash) bash Debit: Building (170) ....................... $55,000 Credit: Cash (101) ......................... $55,000 4. Paid Insurance Premium (18 months) bash Debit: Prepaid Insurance (108) ....... $3,000 Credit: Cash (101) ......................... $3,000 5. Collected Cash for Services Rendered bash Debit: Cash (101) ......................... $6,200 Credit: Services Revenue (403) ...... $6,200 6. Purchased Drafting Equipment (Part Cash, Part Note) bash Debit: Drafting Equipment (164) ..... $20,000 Credit: Cash (101) ......................... $9,500 Credit: Notes Payable (250) ........... $10,500 7. Completed Services (Credit) bash Debit: Accounts Receivable (106) ... $14,000 Credit: Services Revenue (403) ...... $14,000 8. Purchased Office Equipment on Credit bash Debit: Office Equipment (163) ........ $1,150 Credit: Accounts Payable (201) ....... $1,150 9. Completed Services on Credit bash Debit: Accounts Receivable (106) ... $22,000 Credit: Services Revenue (403) ...... $22,000 10. Purchased TV Advertising on Credit bash Debit: Advertising Expense (603) .... $1,333 Credit: Accounts Payable (201) ....... $1,333 11. Collected Partial Payment from Client bash Debit: Cash (101) ......................... $7,000 Credit: Accounts Receivable (106) ... $7,000 12. Paid Employee Wages bash Debit: Wages Expense (601) ........... $1,200 Credit: Cash (101) ......................... $1,200 13. Paid Accounts Payable bash Debit: Accounts Payable (201) ........ $1,150 Credit: Cash (101) ......................... $1,150 14. Paid for Repairs bash Debit: Repairs Expense (604) .......... $925 Credit: Cash (101) ......................... $925 15. Paid Cash Dividend bash Debit: Dividends (319) ................... $9,480 Credit: Cash (101) ......................... $9,480 16. Paid Additional Employee Wages bash Debit: Wages Expense (601) ........... $1,200 Credit: Cash (101) ......................... $1,200 17. Paid for Web Advertisements bash Debit: Advertising Expense (603) .... $2,500 Credit: Cash (101) ......................... $2,500 2. Trial Balance (End of June) Account Debit Cash (101) $22,945 Accounts Receivable (106) $29,000 Prepaid Insurance (108) $3,000 Office Equipment (163) $6,150 Drafting Equipment (164) $80,000 Building (170) $55,000 Land (172) $49,000 Accounts Payable (201) Notes Payable (250) Common Stock (307) Dividends (319) $9,480 Services Revenue (403) Wages Expense (601) $2,400 Credit $1,333 $53,200 $165,000 $42,200 Account Debit Credit Advertising Expense (603) $3,833 Repairs Expense (604) $925 Total $261,733 $261,733