unit 2 – solution to pr2-3a
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TRANSCRIPT
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
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
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
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
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
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
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
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
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
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