Prepare journal entries to record each of transaction

[admin]

The following information relates to Lee Real Estate Agency during the first month of operations. May 1, 2018, the owner, Jack Lee, invests $40,000 in cash in starting a real estate office operation as a sole proprietorship.

Transactions during the remainder of the month are as follow:

Date Transactions

May 3: Purchased $500 of supplies on credit.

May 6: Purchased equipment for $9,000, paying $4,000 in cash and signed a 30-d $5,000, note payable.

May 11: Real estate commissions billed to clients amount to $4,000

May 13: Paid $800 in cash for the current month’s rent.

May 18: Paid $200 cash on account for supplies purchased on May 6.

May 21: Received a bill for $600 for advertising for the current month.

May 26: Paid $2,500 in cash for office salaries and wages.

May 27: Li withdrew $1,800 from the business for living expenses.

May 31: Received a check for $2,500 from a client in payment on account for commission billed on May 11.

REQUIRED:

Prepare journal entries to record each of transaction
Post the journal entries to ledger accounts
Prepare a trial balance as at May 31, 2018

• This topic was modified 4 years, 7 months ago by admin.

[john Smith]

Sure, let’s record the transactions and prepare the journal entries:

1. May 1: Owner invests $40,000 in cash. Journal Entry:

   rust

   Cash 40,000 Owner'sEquity (Capital) 40,000

2. May 3: Purchased supplies on credit for $500. Journal Entry:

   scss

   Supplies (Asset) 500 Accounts Payable 500

3. May 6: Purchased equipment for $9,000, paying $4,000 in cash, and signed a 30-day $5,000 note payable. Journal Entry for cash payment:

   scss

   Equipment (Asset) 4,000 Cash 4,000

   Journal Entry for the note payable:

   scss

   Equipment (Asset) 5,000 Notes Payable 5,000

4. May 11: Billed clients $4,000 for real estate commissions. Journal Entry:

   Accounts Receivable 4,000 Commission Revenue 4,000

5. May 13: Paid $800 in cash for the current month’s rent. Journal Entry:

   <button>Copy code</button>

   Rent Expense 800 Cash 800

6. May 18: Paid $200 cash on account for supplies purchased on May 6. Journal Entry:

   Accounts Payable 200 Cash 200

7. May 21: Received a bill for $600 for advertising for the current month. Journal Entry:

   <button>Copy code</button>

   Advertising Expense 600 Accounts Payable 600

8. May 26: Paid $2,500 in cash for office salaries and wages. Journal Entry:

   <button>Copy code</button>

   Salaries and Wages Expense 2,500 Cash 2,500

9. May 27: Owner withdrew $1,800 from the business for living expenses. Journal Entry:

   rust<button>Copy code</button>

   Owner'sWithdrawals (Drawings) 1,800 Cash 1,800

10. May 31: Received a check for $2,500 from a client in payment on account for commission billed on May 11. Journal Entry:

    <button>Copy code</button>

    Cash 2,500 Accounts Receivable 2,500

Next, we’ll post the journal entries to ledger accounts:

Ledger Accounts:

1. Cash

   python<button>Copy code</button>

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 1 | Owner's Investment | 40,000 | | 40,000 May 27 | Owner's Withdrawals | | 1,800 | 38,200 May 13 | Rent Expense | | 800 | 37,400 May 18 | Accounts Payable (Supplies) | | 200 | 37,200 May 26 | Salaries and Wages Expense | | 2,500 | 34,700 May 31 | Accounts Receivable (Client) | 2,500 | | 37,200 May 3 | Accounts Payable (Supplies) | | 500 | 36,700 May 21 | Accounts Payable (Advertising) | | 600 | 36,100 May 6 | Equipment | 4,000 | | 40,100 May 6 | Notes Payable (Equipment) | 5,000 | | 45,100

2. Supplies

   markdown

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 3 | Purchased Supplies on Credit | 500 | | 500 May 18 | Payment for Supplies | | 200 | 300

3. Equipment

   markdown

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 6 | Equipment Purchase | 4,000 | | 4,000

4. Notes Payable

   markdown

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 6 | Equipment Purchase | 5,000 | | 5,000

5. Accounts Payable

   markdown

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 3 | Purchased Supplies on Credit | | 500 | 500 May 18 | Payment for Supplies | 200 | | 300 May 21 | Advertising Bill | 600 | | 900

6. Commission Revenue

   markdown

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 11 | Commission Billed to Clients | | 4,000 | 4,000

7. Rent Expense

   markdown

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 13 | Rent Payment | 800 | | 800

8. Advertising Expense

   markdown

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 21 | Advertising Bill | 600 | | 600

9. Salaries and Wages Expense

   markdown

   Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 26 | Office Salaries and Wages | 2,500 | | 2,500

10. Owner’s Withdrawals (Drawings)

    markdown

    Date | Description | Debit | Credit | Balance --------------------------------------------------------------------------------- May 27 | Owner's Withdrawals | 1,800 | | 1,800

Next, let’s prepare the trial balance as of May 31, 2018:

Trial Balance as of May 31, 2018:

markdown

Account Debit Credit ----------------------------------------------------- Cash 37,200 Supplies 300 Equipment 4,000 Notes Payable 5,000 Accounts Payable 900 Commission Revenue 4,000 Rent Expense 800 Advertising Expense 600

[Author]

Posts