unit 2 – solution to pr2-3a

11
UNIT 2 – SOLUTION TO PR2-3A

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Page 1: Unit 2 – Solution to PR2-3A

UNIT 2 – SOLUTION TO PR2-3A

Page 2: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES

Entry 1: Kathleen transferred cash from a personal bank account to an account to be used for the business, $17,000.

Step 1 (Account – Type) Step 2 Step 3

Cash – Asset Increase Debit

Capital – Owner’s Equity Increase Credit

Journal EntryCash 17,000 Kathleen Alvarez, Capital 17,000

Page 3: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES, CONT.

Entry 2: Paid rent for period of April 2 to end of month, $3,400.

Step 1 (Account – Type) Step 2 Step 3

Cash – Asset Decrease Credit

Rent Expense - Expense Increase Debit

Journal EntryRent Expense 3,400 Cash 3,400

Page 4: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES, CONT.

Entry 3: Purchased office equipment on account, $10,000.

Step 1 (Account – Type) Step 2 Step 3

Equipment – Asset Increase Debit

Accounts Payable – Liability Increase Credit

Journal EntryEquipment 10,000 Accounts Payable 10,000

Page 5: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES, CONT.

Entry 4: Purchased a used truck for $21,000, paying $2,000 cash and giving a note payable for the remainder. Step 1 (Account – Type) Step 2 Step 3

Truck – Asset Increase Debit

Cash – Asset Decrease Credit

Note Payable – Liability Increase Credit

Journal EntryTruck 21,000 Cash 2,000 Note Payable 19,000

Page 6: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES, CONT.

Entry 5: Purchased supplies for cash, $1,800

Step 1 (Account – Type) Step 2 Step 3

Supplies – Asset Increase Debit

Cash – Asset Decrease Credit

Journal EntrySupplies 1,800 Cash 1,800

Page 7: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES, CONT.

Entry 6: Received cash for jobs completed, $13,000. Step 1 (Account – Type) Step 2 Step 3

Cash – Asset Increase Debit

Fees Earned – Revenue Increase Credit

Journal EntryCash 13,000 Fees Earned 13,000

Page 8: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES, CONT.

Entry 7: Paid annual premiums on property and casualty insurance, $1,800. Step 1 (Account – Type) Step 2 Step 3

Cash – Asset Decrease Credit

Prepaid Insurance – Asset Increase Debit

Journal EntryPrepaid Insurance 1,800 Cash 1,800

Page 9: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES, CONT.

Entry 8: Recorded jobs completed on account and sent invoices to customers, $9,000.

Step 1 (Account – Type) Step 2 Step 3

Accounts Receivable – Asset Increase Debit

Fees Earned – Revenue Increase Credit

Journal EntryAccounts Receivable 9,000 Fees Earned 9,000

Page 10: Unit 2 – Solution to PR2-3A

JOURNALIZE ENTRIES, CONT.

Entry 9: Received an invoice for truck expenses, to be paid in April, $1,000.

Step 1 (Account – Type) Step 2 Step 3

Truck Expense – Expense Increase Debit

Accounts Payable – Liability Increase Credit

Journal EntryTruck Expense 1,000 Accounts Payable 1,000

Page 11: Unit 2 – Solution to PR2-3A

OTHER COMMENTS

• Continue with remainder of entries• Post each transaction to the general ledger under

each account• Prepare an unadjusted trial balance – a listing of

all general ledger accounts with their current total balance• Trial Balance accounts are listed/grouped by

Account Type in the following order: Assets, Liabilities, Owners Equity, Revenues, Expenses• Contact me – [email protected] with questions