Question

Exercise 3-21A Recording events in the general journal, posting to T-accounts, and preparing a trial balance The following events apply to Davis Dry Cleaners in 2013, its first year of operations: 1. Received $45,000 cash from the issue of common stock. 2. Earned $37,500 of service revenue on account. 3. Incurred $15,000 of operating expenses on account. 4. Received $30,000 cash for performing services. 5. Paid $12,000 cash to purchase land. 6. Collected $33,000 of cash from accounts receivable. 7. Received a $9.000 cash advance for services to be provided in the future. 8. Purchased $1,350 of supplies on account 9. Made an $11,250 payment on accounts payable. 10. Paid a $7,500 cash dividend to the stockholders. 11. Recognized $750 of supplies expense. 12. Recognized $7,500 of revenue for services provided to the customer in Event 7. 13. Recognized S1,350 of accrued interest revenue. Required a. Record the events in the general journal. b. Post the events to T-accounts and determine the ending account balances. c. Test the equality of the debit and credit balances of the T-accounts by preparing a trial balance

Answer 1

Davis Dry Cleaners Journal Enteries Trans. Particulars 1 Cash Common Stock (Common stock issued) Debit in $ Credit in $ 45000 45000 Trial Balance For the period ending 2013 Particulars Debit in $ Credit in $ 86250 Cash 1350 4500 2 37500 Accounts Receivable Service Revenue (Services provided) 600 12000 37500 5100 1500 45000 3 15000 Interest Receivable Accounts Receivable Supplies Land Accounts Payable Unearned Revenue Common Stock Dividend Interest Revenue Service Revenue Operating Expense Supplies Expense Totals Operating Expense Accounts Payable (Expense incurred) 15000 7500 1350 75000 4 30000 Cash Service Revenue (Services provided) 30000 15000 750 127950 127950 5 12000 Land Cash (Land purchased) 12000 6 33000 Cash Accounts Receivable (Cash from debtors) 33000 7 Cash 9000 9000 Unearned Revenue (Advance from client) 8 1350 Supplies Accounts Payable (Supplies on account) 1350 9 11250 Accounts Payable Cash (Creditors paid) 11250 10 7500 Dividend Cash (Dividend paid) 7500 11 750 Supplies Expense Supplies (Supplies used) 750 12 7500 Unearned Revenue Service Revenue (Services provided) 7500 13 1350 Interest Receivable Interest Revenue (Interest accrued) 1350

Common Stock 1 1 45000 5 9 12000 11250 4 Bal. Cash 45000 30000 33000 9000 117000 45000 45000 6 10 7500 45000 7 Bal. 86250 117000 Dividend 10 7500 Bal. 7500 13 7500 7500 Interest Receivable 1350 Bal. 13501 1350 1350 Interest Revenue 13 1350 Bal. Accounts Receivable 37500 6 1350 1350 N 33000 1350 Bal. Service Revenue 4500 37500 37500 2 37500 4 Bal. 75000 12 Supplies 1350 11 30000 7500 75000 8 750 75000 Bal. 600 1350 1350 3 Operating Expense 15000 Bal. 15000 Land 12000 15000 15000 5 Bal. 12000 12000 12000 11 Supplies Expense 750 Bal. 750 Accounts Payable 11250 3 9 15000 750 750 8 1350 Bal. 5100 16350 16350 Unearned Revenue 7500 7 12 9000 Bal. 1500 9000 9000

Eva Event Services Journal Enteries Trans. Particulars 1 Accounts Receivable Service Revenue (Services provided) Debit in $ Credit in $ 130000 130000 Trial Balance For the period ending 2013 Particulars Debit in $ Credit in $ 54000 Cash 56000 1000 2 6200 Operating Expense Accounts Payable (Expense incurred) 48000 25200 6200 Accounts Receivable Accounts Payable Common Stock Retained Earnings Dividend Service Revenue Operating Expense Salaries Expense Totals 16000 130000 3 112000 6200 Cash Accounts Receivable (Cash from debtors) 112000 72000 204200 204200 4 72000 Salaries Expense Cash (Salary paid) 72000 5 30000 Accounts Payable Cash (Creditors paid) 30000 6 16000 Dividend Cash (Dividend paid) 16000

Cash Bal 4 72000 6 60000 112000 Dividend 160000 Bal 16000 Rev. Exp = Net Inc. Cash flow 3 5 30000 16000 Trans. 6 16000 16000 Horizontal Statements Model For the period ending 2013 Assets Liabilities Equity Cash + Accounts Receivable = Accounts Payable + Common Stock + Reta.Earn, Beg. 60000 38000 24800 48000 25200 1 130000 2 6200 3 112000 - 112000 4 -72000 + + + Bal 54000 + + + 130000 130000 OA 172000 172000 Service Revenue + + + 6200 OA 1 130000 + = + + = -6200 0 -72000 OA Bal 130000 130000 + + + 72000 OA Bal 112000 130000 5 -30000 + -30000 + + 0 OA 1 Accounts Receivable 38000 3 130000 Bal 168000 + + + OA 6 Totals - 16000 54000 - 16000 9200 0 51800 56000 168000 Operating Expense 6200 + 56000 1000 + 48000 + 130000 78200 2 Bal 6200 6200 6200 5 Accounts Payable 30000 Bal 1000 2 31000 Bal 24800 6200 31000 4 Salaries Expense 72000 Bal 72000 72000 72000 Common Stock Bal 48000 48000 Bal 48000 48000 Retained Earnings Bal 25200 25200 Bal 25200 25200