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Accounting for Manager Journal Entry example...

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PRACTICE 1. JOURNAL ENTRIES

Problem 01. Company A was incorporated on January 1, 2018 with an initial capital of 5,000 shares of common stock having $20 par value. During the first month of its operations, the company engaged in following transactions:

Date Jan 2 Jan 3 Jan 4 Jan 13 Jan 13 Jan 14 Jan 18 Jan 23 Jan 25 Jan 26 Jan 28 Jan 31 Jan 31 Jan 31 Jan 31

Transaction An amount of $36,000 was paid as advance rent for three months. Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was recognized as a one year note payable with interest rate of 9%. Purchased office supplies costing $17,600 on account. Provided services to its customers and received $28,500 in cash. Paid the accounts payable on the office supplies purchased on January 4. Paid wages to its employees for first two weeks of January, aggregating $19,100. Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay the remaining amount. Received $15,300 from customers for the services provided on January 18. Received $4,000 as an advance payment from customers. Purchased office supplies costing $5,200 on account. Paid wages to its employees for the third and fourth week of January: $19,100. Paid $5,000 as dividends. Received electricity bill of $2,470. Received telephone bill of $1,494. Miscellaneous expenses paid during the month totaled $3,470

Problem 02. Journalise the following transactions and post them into Ledger: 2006 Sept. 1 Started business with Rs. 50,000 out of which paid into Bank Rs. 20,000. ,, 2 Bought furniture for Rs. 5,000 and machinery for Rs. 10,000. ,, 3 Purchased goods for Rs. 14,000. ,, 6 Sold goods for Rs. 8,000. ,, 8 Purchased goods from Malhotra and Co. Rs. 11,000. ,, 10 Paid telephone rent for the year by cheque Rs. 500. ,, 11 Bought one typewriter for Rs. 2,100 from Universal Typewriter Co. on credit. ,, 15 Sold goods to Keshav Ram for Rs. 12,000. ,, 17 Sold goods to Rajesh Kumar for Rs. 2,000 for cash. ,, 19 Amount withdrawn from bank for personal use Rs. 1,500. ,,

PRACTICE 1. JOURNAL ENTRIES 21 Received cash from Keshav Ram Rs. 11,900 discount allowed Rs. 100. ,, 22 Paid into bank Rs. 5,800. ,, 23 Bought 50 shares in X Y & Co. Ltd. at Rs. 60 per share, brokerage paid Rs. 20. ,, 25 Goods worth Rs. 1,000 found defective were returned to Malhotra & Co. and the balance of the amount due to them settled by issuing a cheque in their favour. ,, 28 Sold 20 shares of XY & Co. Ltd. at Rs. 65 per share, brokerage paid Rs. 20. ,, 28 Bought goods worth Rs. 2,100 from Ramesh and supplied them to Suresh at Rs. 3,000. , 30 Suresh returned goods worth Rs. 100, which in turn were sent to Ramesh. ,, 30 Issued a cheque for Rs. 1,000 in favour of the landlord for rent for September. ,, 30 Paid salaries to staff Rs. 1,500 and received from travelling salesman Rs. 2,000 for goods sold by him, after deducting the travelling expenses Rs. 100. ,, 30 Paid for : Charity Rs. 101 Stationery Rs. 450 Postage Rs. 249

Problem 03 From the following information, draw up a Trial Balance in the books of Shri Subhash Chand as on 31 st March,2009: Transactions

Rs.

Capital

1,50,000

Purchases

40,000

Transactions Sales

Rs. 1,05,400

Sundry Creditor

5,000

Cash in Hand

7,000

Rent

2,000

Cash at Bank

8,500

Furniture

16,000

4,800

Bank Loan

10,000

500

Investment

6,000

2,400

Commission paid

1,050

8,000

Opening Stock

3,200

1,60,000

Commission Received

1,200

11,400

Postage & Telegram

750

Electricity exp. Stationery Office Equipment Sundry Debtors Machinery Salaries

PRACTICE 1. JOURNAL ENTRIES

Problem 04. Juan de la Cruz began professional practice as a system analyst on July 1. He plans to prepare a monthly financial statement. During July, the owner completed these transactions (PHP = Philippine Peso, currency of Philippines): July 1. Owner invested PHp 500,000 cash along with computer equipment that had a market value of php. 120,000 two years ago but was now worth Php. 100,000 only. July 2. Paid php. 15,000 cash for the rent of office space for the month. July 4. Purchased php. 12,000 of additional equipment on credit (due within 30 days). July 8. Completed awork for a client and immediately collected the php. 32,000 cash. July 10. Completed work for a client and sent a bill for php. 27,000 to be paid within 30 days. July 12. Purchased additional equipment for php. 8,000 in cash. July 15. Paid an assistant php. 6,200 cash as wages for 15 days. July 18. Collected php. 15,000 on the amount owed by the client. July 25. Paid php. 12,000 cash to settle the liability on the equipment purchased. July 28. Owner withdrew php. 500 cash for personal use. July 30. Completed work for another client who paid only php. 40,000 for 50% of the system design. July 31. Paid salary of assistant php. 700. July 31. Received PLDT bill, php. 1,800 and Meralco bill php. 3,800. Prepare the journal entries, T accounts and trial balance for this business.

Problem 05. G. Bell, a fitness enthusiast, buys an existing exercise center, Body Firm. The following chart of accounts now applies: Assets Revenue 111 Cash 124 Land 126 Building Expenses 128 Equipment 512 Utilities Expense

411 Income from Services

511 Wages Expense

Liabilities 513 Advertising Expense 221 Accounts Payable 514 Repair Expense 223 Mortgage Payable 519 Miscellaneous Expense Owner's Equity 311 G. Bell, Capital 312 G. Bell, Drawing

PRACTICE 1. JOURNAL ENTRIES Apr. 16: Bell deposited $100,000 in a bank account for the purpose of buying Body Firm. 17: Bought the assets of Body Firm for a total price of $188,000. The assets include equipment, $28,000; building, $96,000; and land, $64,000. Made a down payment of $89,000 and signed a mortgage note for the remainder. 17: Bought additional equipment from Fitness Supply Co. on account for $3,550, paying $710 down, with balance due in thirty days. 29: Celebrated the grand opening of Body Firm. Advertising expenses were paid in cash for the following: Advertising in newspaper $314 Announcements mailed to local residents 85 Postage 125 Balloons, ribbons, flowers 126 Food and refreshments 58 30 Received fees for daily use of the facilities, $1,152. 30 Paid wages for the period April 17 through April 30, $833. 30 Received and paid electric bill, $129. 30 Received and paid repair bill, $96. 30 Bell withdrew $600 for personal use.

Instructions 1. Record the transactions in the general journal. 2. Post the transactions to the general ledger. 3. Prepare a trial balance as of April 30.

Problem 06 Mr Robert commenced business on 1st January, 2011 with a capital of $100,000 in cash. On the same date he opened the bank account in ADCB and deposited $20,000. During the month of January 2011 the following transactions took place:

Jan 1 Bought goods for cash 70,000 2 Sold good to Steve Co.(Credit) 38,000 15 Sold goods for cash 9,000 21 Steve co. paid by cheque 35,000 22 Stationery bill paid by chq 2,000 22 Telephone bill by cash 500

PRACTICE 1. JOURNAL ENTRIES

31 Paid rent by cash 2,000 Paid salaries by cash 3,000 Withdrew cash personal use 5,000 Required: Make journal entries for the transactions and post them to ledgers

PRACTICE 1. JOURNAL ENTRIES

The following table shows the journal entries for problem 01..

Date Jan 1 Jan 2 Jan 3

Jan 4 Jan 13 Jan 13 Jan 14

Account Cash Common Stock Prepaid Rent Cash Equipment Cash Notes Payable Office Supplies Accounts Payable Cash

Debit 100,000

100,000 36,000 36,000 80,000 60,000 20,000 17,600 17,600 28,500

Service Revenue Accounts Payable

17,600

28,500

Cash Wages Expense

19,100

17,600

Cash Jan 18

Jan 23

19,100

Cash

32,900

Accounts Receivable Service Revenue Cash

21,200 54,100 15,300

Accounts Receivable Jan 25 Jan 26 Jan 28 Jan 31 Jan 31 Jan 31

15,300

Cash

4,000

Unearned Revenue Office Supplies

5,200

Accounts Payable Wages Expense

19,100

Cash Dividends Cash Electricity Expense Utilities Payable Telephone Expense Utilities Payable

Credit

4,000

5,200

19,100 5,000 5,000 2,470 2,470 1,494 1,494

PRACTICE 1. JOURNAL ENTRIES

Jan 31

Miscellaneous Expense

3,470

Cash

3,470

Example The ledger accounts shown below are derived from the journal entries of Company A.

Asset Accounts

$100,000 28,500 32,900 15,300 4,000

Cash $36,00 0 60,000 17,600 19,100 19,100 5,000 3,470

$20,430 Office Supplies $17,600

Accounts Receivable $21,200 $15,300

$5,900 Prepaid Rent $36,000

5,200 $22,800

$36,000

Equipment $80,000 $80,000 Liability Accounts

Accounts Payable $17,600 $17,600 5,200 $5,200 Utilities Payable

Notes Payable $20,000 $20,000 Unearned Revenue

PRACTICE 1. JOURNAL ENTRIES

$2,470

$4,000

1,494 $3,964

$4,000

Equity Accounts

Common Stock $100,000 $100,000 Revenue, Dividend and Expense Accounts

Service Revenue $28,500 54,100 $82,600 Wages Expense $19,10 0 19,100 $38,20 0 Electricity Expense $2,470 $2,470

Details

Dividend $5,000 $5,000 Miscellaneous Expense $3,470

$3,470 Telephone Expense $1,494 $1,494

Debit

cash

20,430.00

A/R

5,900.00

Office Supplies

22,800.00

Prepaid Rent

36,000.00

Equipment

80,000.00

Credit

A/P

5,200.00

Notes Payable utilities

20,000.00

PRACTICE 1. JOURNAL ENTRIES 3,964.00

Common Stocks

100,000.0 0

Unearned Revenue

4,000.00

Service revenue

82,600.00

dividend

5,000.00

wages Expense

38,200.00

Misc Expense

3,470.00

Electricity Expense

2,470.00

Telephone Expense

1,494.00

Total

215,764.0 0

215,764.0 0...