Question

1. Sold 200 shares for $15 each (par value) 2. Purchase supplies on account for $200 3. Set up an investment account for $600 (interest - %10 per year) 4. Received a deposit from a customer paying in advance $350 (work will be done later) 5. Purchase equipment for $1500 with cash (R.V. = 300. Useful life = 4 years) 6. Purchased inventory (100 units) for $10 each on account. 7. Prepaid insurance for the year with cash $400. 8. Prepaid rent for the next 6 months with cash $300 9. Borrowed $2000 and signed a notes payable for 5 years (interest = 8% per year)

Answer 1

Date	Particulars	Debit	Credit
1	Cash A/c	$3,000
	Common Stock		$3,000
	(Sold 200 Share @15 per share)
2	Supplies A/C	$200
	Accounts payable A/c		$200
	(Purchase supplies )
3	Investment A/c	$600
	Cash A/c		$600
	(Invest $600 @10% per year)
4	Cash A/C	$350
	Cash Advance A/c		$350
	(Received cash advance from customer)
5	Equipment A/c	$1,500
	Cash A/c		$1,500
	(Purchase equipment in cash)
6	Purchase A/c	$1,000
	Accounts Payable A/c		$1,000
	(Purchase Inventory )
7	Prepaid Insurance A/c	$400
	Cash A/c		$400
	(Paid prepaid insurance in cash)
8	Prepaid Rent A/c	$300
	Cash A/c		$300
	(Paid prepaid rent for 6 months in cash)
9	Cash A/c	$2,000
	Note Payable		$2,000
	(Borrow and sign note payable)

In the above journal entries rules used : Expenses/assets increase debit , decrease credit and income/liabilities increase credit , decrease debit .

Heads of Accounts	Category
Cash	Asset
Common Stock	Liability
Supplies	Expenses
Accounts Payable	Liability
Investment	Asset
Cash Advance	Asset
Equipment	Asset
Purchase	Expenses
Prepaid Insurance	Asset
Prepaid Rent	Asset
Note Payable	Liability

T- Accounts

Cash A/c
	$		$
Common Stock	$3,000	Investment A/c	$600
Cash Advance A/c	$350	Equipment A/c	$1,500
Note Payable	$2,000	Prepaid Insurance A/c	$400
		Prepaid Rent A/c	$300
		Balance C/d	$2,550
Total	$5,350	Total	$5,350
Balance b/d	$2,550
Common Stock
Balance c/d	$3,000	Cash A/c	$3,000
Total	$3,000	Total	$3,000
		Balance b/d	$3,000
Supplies A/C
Accounts payable A/c	$300	Balance c/d	$300
Total	$300	Total	$300
Balance b/d	$300
Accounts Payable A/c
Balance c/d	$1,200	Supplies A/C	$200
		Purchase A/c	$1,000
Total	$1,200	Total	$1,200
		Balance b/d	$1,200
Investment A/c
Cash A/C	$600	Balance c/d	$600
Total	$600	Total	$600
Balance b/d	$600
Cash Advance A/c
Balance c/d	$350	Cash A/C	$350
Total	$350	Total	$350
Balance b/d	$350
Equipment A/c
Cash A/c	$1,500	Balance c/d	$1,500
Total	$1,500	Total	$1,500
Balance b/d	$1,500
Purchase A/c
Accounts Payable A/c	$1,000	Balance c/d	$1,000
Total	$1,000	Total	$1,000
Balance b/d	$1,000
Prepaid Insurance A/c
Cash A/c	$400	Balance c/d	$400
Total	$400	Total	$400
Balance b/d	$400
Prepaid Rent A/c
Cash A/c	$300	Balance c/d	$300
Total	$300	Total	$300
Balance b/d	$300
Note Payable A/c
Balance c/d	$2,000	Cash A/c	$2,000
Total	$2,000	Total	$2,000
Balance b/d	$2,000

Trail Balance

For Preparation trail balance we have to enter the debit balance (refer balance b/d in left side ) in debit side of trail balance and credit balance (refer balance d/b of right side) in credit and total of both side should be same

Hence ,

Trail Balance
Heads of Accounts	Debit	Credit
Cash	$2,550
Common Stock		$3,000
Supplies	$200
Accounts Payable		$1,200
Investment	$600
Cash Advance		$350
Equipment	$1,500
Purchase	$1,000
Prepaid Insurance	$400
Prepaid Rent	$300
Note Payable		$2,000
Total	$6,550	$6,550