E2.

9
On April 1, Adventures Travel Agency began operations. The following transactions were completed during the month. right side (Cr)
Cr
1. Owner invested $24,000 in the business. Asset Liabilities owner's equity
2. Obtained a bank loan for $7,000 by issuing a note payable. cash equipment supplies accounts notes pay accounts Capital drawings revenue expense
receivable payable
3. Paid $11,000 cash to buy equipment. 24000
4. Paid $1,200 cash for April office rent. 7000
5. Paid $1,450 for supplies. 16000
6. Purchased $600 of advertising in the Daily Herald, on account. 12000 -12000
7. Performed services for $18,000: cash of $2,000 was received from customers, and the balance of $16,000 was billed to customers on account.
8. Cash withdrawal of $400 by owner for personal use.
9. Paid the utility bill for the month, $2,000. dr
10. Paid Daily Herald the amount due in transaction 6. cr
11. Paid $40 of interest on the bank loan obtained in transaction (2).
12. Paid employees’ salaries and wages, $6,400.
13. Received $12,000 cash from customers billed in transaction (7).
Instructions: Journalize the transactions. (Omit explanations).
Adventures Travel Agency
journal entry
Debit Credit
amoun amoun
Date account title and explanation Ref t t debit = Dr
April Cash account Dr 24000 Credit = Cr
1 owner's capital account Cr 24000
2 Cash account Dr 7000
notes payable account Cr 7000
3 equipment account Dr 11000
cash account Cr 11000
4 office rent expense account Dr 1200
cash account Cr 1200
5 supplies account Dr 1450
cash account Cr 1450
6 advertising expense account Dr 600
accounts payable account cr 600
7 cash account dr 2000 debit must be equal to credit
accounts receivable account Dr 16000
service revenue Cr 18000
8 drawings account dr 400
cash account Cr 400
9 utilities expense account dr 2000
cash account cr 2000
10 accounts payable account Dr 600
cash account Cr 600
11 interest expense account Dr 40
cash account Cr 40
12 salaries and wages expense account dr 6400
cash account cr 6400
13 cash account Dr 12000
accounts receivable account cr 12000
P2.1A P2.2A
Holz Disc Golf Course was opened on March 1 by Ian Holz. The following events and transactions occurred during March (amounts in thousands).
March- 1: Invested $20,000 cash in the business
-3: Purchased Rainbow Golf Land for $15,000 cash. The price consists of land $12,000, building $2,000, and equipment $1,000. (Make one compound entry).
-5: Paid advertising expenses of $900. land asset + building asset + equipment asset + cash asset -
-6: Paid cash $600 for a one –year insurance policy. advance payment of expense asset prepaid insurance asset + cash asset -
-10: Purchased golf discs and other equipment for $1,050 from Stevenson Company payable in 30 days. equipment asset + accounts payable liability +
-18: Received $1,100 in cash for golf fees (Holz records golf fees as service revenue cash asset + service revenue owner's equity
-19: Sold 150 coupon books for $10 each. Each book contains 4 coupons that enable the holder to pay one round of disc golf.
-25: Withdrew $800 cash for personal use. Drawings Dr cash account cr cash asset + Unearned revenue advance receipt liability
-30: Paid salaries of $250. Salaries expense Dr cash account cr earned revenue service provided obligation satisfied
-30: Paid Stevenson Company in full. accounts payable Dr cash account cr
-31: Received $2,700 cash for golf fees. cash Dr service revenue Cr
Holz Disc Golf uses the following accounts: Cash, Prepaid Insurance, Land, Building, Equipment, Accounts payable, Unearned Service Revenue, Owner’s Capital, Drawings, Service Revenue, Advertising Expense, and Salaries and Wages Ex
Instructions: Journalize the March transactions. Holz disk course
journal entries
Date Accounts title and explanation Ref Debit Credit
1-Mar cash account Dr 20000
owner's capital account Cr 20000
3-Mar land account Dr 12000
building account Dr 2000
equipment account Dr 1000
cash account Cr 15000
5-Mar advertising expense Dr 900
cash account Cr 900
6-Mar prepaid insurance account Dr 600 1 month
cash account Cr 600
10-Mar equipment account Dr 1050
accounts payable account Cr 1050
18-Mar cash account Dr 1100
service revenue Cr 1100
19-Mar cash account Dr 1500
unearned revenue account Cr 1500 unearned revenue liability
25-Mar drawings account Dr 800 prepaid expense asset
cash account Cr 800
30-Mar salaries expense account Dr 250
cash account cr 250
30-Mar accounts payable account dr 1050
cash accout Cr 1050
30-Mar cash account Dr 2700
service revenue Cr 2700

Ledger T accounts
Trial balance
 chapter-2
1. to identify economic events recording process
2. to record the transactions
3. to communicate through financial journal latin word 'jour' day
reports ledger / T accounts
trial balance

journal: journal is the primary book of accounts where transactions are recorded in chronological order under double entry book keeping system.

double entry book keeping system: for every transaction there are two parties involvement. Two accounts are identified for every transaction.
one account is debited for an amount and another account is credited for the same amount. .debit must be equal to the credit.

debit = left side

credit = right side
Asset = liabilities + owner's equity increase 1chapter double entry book keeping system
left side right side summa de arithmatica geometrica proportionate proportionalita
debit credit 1494 10-Nov
asset = debit increase Luca paciolli father of accounting every debit must have a credit
liabilities + owner's equity = credit increase capital + revenues increase credit religious person debito debit and every credit must have a de
drawings + expenses decrease debit mathmatician house tutor credito credit debit must be equal to credit
liabilities >>> decrease >> debit summa de arithmatica geometrica proportionate proportionalita
owner's equity >> decrase >> debit artithmatic geometric
proportion
asset >> decrease >> credit
double entry book keeping system
10 nov, 1494
E2.11
Selected transactions from the journal of Ann Wong, investment broker, are presented below (amounts in ¥ thousands). 1 cash
2 owner's capital
Date Accounts title Ref Debit Credit 3 service revenue
1-Aug Cash 1 5000 4 equipment
Owner’s Capital 2 5000 5 notes payable
(Owner’s invested of cash in business) 6 accounts receivable
10 Cash 2600 Ledge
Service revenue 3 2600 8500
(Received cash for service performed) 2300
12 Equipment 4 5000 Dr 1. Cash Cr 6200
Cash 2300 1-Aug 5000 Aug-12 2300
Notes payable 5 2700 10-Aug 2600
(Purchased equipment for cash and notes payable) 30-Aug 900 31 aug balance 6200
25 Accounts Receivable 6 1700
Service revenue 1700 8500 8500
(Billed clients for services performed) 1 sep beginning balance 6200
30 cash 900
Accounts Receivable 900 Balance = difference between debit side and credit side
(Receipts of cash on account) Debit balance Debit > credit
Instructions: Credit balance Credit > debit
a) Post the transactions to T Accounts zero balance debit = credit
b) Prepare a trial balance at August 31, 2020.

Dr 1. Cash Cr Dr 2. Owner's Capital Cr Dr 3. Service revenue Cr

1-Aug-20 5000 12-Aug 2300 31 aug balance 5000 1-Aug 5000 31 aug balance 4300 10-Aug 2600
10-Aug 2600 25-Aug 1700
30-Aug 900 30-Aug 6200 5000 5000
1 sep begin bal 5000 4300 4300
8500 8500 1-Sep 4300
1 sep balance 6200

Dr 4. Equipment Cr Dr 5. Notes payable Cr Dr 6. Accounts Receivable Cr

1-Aug 5000 31 aug baln 5000 31 aug baln 2700 1-Aug 2700 25-Aug 1700 30-Aug 900
31 aug baln 800
5000 5000 2700 2700 1700 1700
1 sep begin baln 5000 1 sep beg baln 2700 1 sep beg baln 800

trial balance / summary of all accounts here we will transfer the balances of t accounts . We will transfer the debit balance into the debit side of trial balance
Credit balance will be transferred to the credit side of trial balance

Trial balance
Sl no Accounts title debit Credit
1 cash 6200
2 owner's capital 5000 It proves mathmatical accuracy of the accounts
3 service revenue 4300
4 equipment 5000
5 notes payable 2700
6 accounts receivable 800

12000 12000
 1 June, 2020 3 months
Journal Prepaid insurance asset Dr 300
Ledger Cash asset Cr 300
Trial balance 30 June, 2020
Adjusting entries chapter 3 Insurance expense Dr 100
Adjusted trial balance
Financial statements 1. Income statement Prpaid insurance Cr 100
(for an accounting time period) 2. Owner's equity statement
June, 2020 monthly 3. balance sheet asset prepaid insurance 300
4. cash flow statement

Prepaid insurance Dr. 600 Prepaid insurance Dr Prepaid insurance Cr

Cash Cr. 600 600 50
550
On January 31 600 600
Insurance expense Dr. 50 Balance B/d 550
Prepaid insurance Cr. 50
prepaid insurance
28-Feb 550 50
Insurance expense Dr. 50 C/d 500
Prepaid insurance Cr. 50 550 550
Balance b/d
b/d 500
31

depreciation - decrease $1) Taka 85

appreciation - increase

depreciation means allocating the cost of asset over the useful lives of the asset

accumulated Depreciation 50 1st month

50 2nd month
100
50 3rd month
150
P2.2A (LO 1, 2, 3, 4) Vera Ernst is a licensed dentist. During the fi rst month of the operation of her
business, the following events and transactions occurred.
April 1 Invested $20,000 cash in her business. 1 cash account Dr 2 owner's capital Cr
1 Hired a secretary-receptionist at a salary of $700 per week payable monthly. no entry
2 Paid offi ce rent for the month $1,500. 3 office rent exp Dr cash account Cr
3 Purchased dental supplies on account from Dazzle Company $4,000. 4 supplies account Dr accounts payable Cr 5
10 Performed dental services and billed insurance companies $5,100. 6 accounts receivable dr service revenue Cr 7
11 Received $1,000 cash advance from Leah Mataruka for an implant. cash account Dr unearned revenue Cr 8
20 Received $2,100 cash for services performed from Michael Santos. cash account Dr service revenue Cr
30 Paid secretary-receptionist for the month $2,800. 9 salaries expense Dr cash account Cr
30 Paid $2,600 to Dazzle for accounts payable due. accounts payable Dr cash account Cr

Instructions 1 cash account Dr 1. cash account cr

a. Journalize the transactions. 2 owner's capital 1-Apr 20000 2-Apr 1500 6900
b. Post to the ledger accounts. 3 office rent 11-Apr 1000 30-Apr 2800
c. Prepare a trial balance on April 30, 2020. 4 supplies 20-Apr 2100 30-Apr 2600 16200
5 accounts payable 30-Apr 16200
6 accounts receivable 23100 23100
7 service revenue May 1 balance 16200
8 unearned revenue
9 salaries expense

Trial balance
SL NO Account Title Debit Credit
1 cash account 16200
2 owner's capital
3 office rent
4 supplies
5 accounts payable
6 accounts receivable
7 service revenue
8 unearned revenue
9 salaries expense
 journal
Oct-05 supplies account Dr 2500
cash account Cr 2500

t accounts
Dr 1. supplies Cr Dr 2. cash Cr
Oct-05 2500 2500 Oct-05 2500
2500
2500 2500 2500 2500
1 nov baln 2500 1 nov baln 2500

trial balance
31-Oct final accounts
SL Account title Debit credit income statement
1 supplies 2500
2 cash 2500
2500 2500
balance sheet 31-Oct
adjusting entries asset
31-Oct supplies exp Dr 1500 supplies 1000
supplies asset Cr 1500

Dr supplies Cr
31 oct baln 2500 31-Oct 1500
1000
2500 2500
1 nov baln 1000