Question

Halogen Laminated Products Company began business on January 1, 2021. During January, the following transactions occurred:

Jan.		1		Issued common stock in exchange for $104,000 cash.
		2		Purchased inventory on account for $39,000 (the perpetual inventory system is used).
		4		Paid an insurance company $2,880 for a one-year insurance policy. Prepaid insurance was debited for the entire amount.
		10		Sold merchandise on account for $12,400. The cost of the merchandise was $7,400.
		15		Borrowed $34,000 from a local bank and signed a note. Principal and interest at 10% is to be repaid in six months.
		20		Paid employees $6,400 salaries for the first half of the month.
		22		Sold merchandise for $10,400 cash. The cost of the merchandise was $6,400.
		24		Paid $15,400 to suppliers for the merchandise purchased on January 2.
		26		Collected $6,200 on account from customers.
		28		Paid $1,100 to the local utility company for January gas and electricity.
		30		Paid $4,400 rent for the building. $2,200 was for January rent, and $2,200 for February rent. Prepaid rent and rent expense were debited for their appropriate amounts.

Required:
1. Prepare general journal entries to record each transaction.
2. Post the transactions into the appropriate T-accounts.
3. Prepare an unadjusted trial balance as of January 30, 2021.

Answer 1

Solution 1:-

Dr.		Cr.
Date	Particulars	Amount ($)	Amount ($)
Jan1	Cash A/c Dr.	1,04,000
	To Capital A/c		1,04,000
	(For common stock issued in exchange on cash)
Jan 2	Inventory A/c Dr.	39,000
	To vendor A/c		39,000
	(For Inventory purchased on account)
Jan 4	Prepaid Insurance A/c Dr.	2,880
	To Insurance A/c		2,880
	(For insurance Premium paid for 1 year)
Jan 10	Customer Dr.	12,400
	To Sales A/c		12,400
	(For merchandise sold for $12,400)
Jan15	Bank A/c Dr.	34,000
	To Note Payable A/c		34,000
	(for loan borrowed from a local bank)
Jan20	Salaries A/c Dr.	6,400
	To Cash A/c		6,400
	(for salaries paid for first half of month)
Jan 22	Cash A/c Dr.	10,400
	To Sales A/c		10,400
	(For merchandise sold in cash )
Jan24	Vendor A/c Dr.	15,400
	To Cash A/c		15,400
	(For payment made to supplier)
Jan26	Cash A/c Dr.	6,200
	To Customers		6,200
	(for cash received on account)
Jan28	Gas and Electricity A/c Dr.	1100
	To cash A/c		1100
	(For amount paid to local utility co. for gas and electricity)
Jan30	Rent A/c Dr.	2200
	Prepaid Rent A/c Dr.	2200
	To Cash A/c		4400
	(for rent paid and prepaid rent paid)

Solution 2:

Cash A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To capital A/c	1,04,000	By Salaries A/c	6,400
To Sales A/c	10,400	By Vendor A/c	15,400
To Customer	6,200	By Gas and Electricity A/c	1100
To Balance C/D	93,300	By rent A/c	2200
		By Prepaid Rent A/c	2200

Capital A/c

Dr.			Cr.
Particulars	Amount	Particulars	Amount
To Balance C/D	1,04,000	By Cash A/c	1,04,000

Inventory A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To vendor A/c	39,000	By Balance C/D	39,000

Vendor A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Cash A/c	15,400	By Inventory A/c	39,000
To Balance C/D	23,600

Prepaid Insurance A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Insurance A/c	2,880	By Balance C/d	2,880

Insurance A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Balance C/d	2,880	By Prepaid Insurance A/c	2,880

Customer A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Sales A/c	12,400	By Cash A/c	6,200
		By Balance c/d	6,200

Sales A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Balance B/d	22,800	By Customer A/c	12,400
		By Cash A/c	10,400

Gas and Electricity A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Cash A/c	1,100	By Balance C/d	1,100

Rent A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Cash A/c	2200	By Balance C/D	2,200

Prepaid Rent A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To cash A/c	2200	By Balance C/d	2,200

Salaries A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Cash A/c	6,400	By Balance C/d	6,400

Bank A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Note Payable A/c	34,000	By Balance C/d	34,000

Note Payable A/c

Dr.		Cr.
Particulars	Amount	Particulars	Amount
To Balance B/d	34,000	By Bank A/c	34,000

Solution 3:

Unadjusted Trial Balance

Dr.			Cr.
Particulars	Amount	Particulars	Amount
Cash A/c	93,300	Capital A/c	1,04,000
Inventory A/c	39,000	Vendor A/c	23,600
Prepaid Insurance A/c	2,880	Sales A/c	22,800
Insurance A/c	2,880	Note Payable A/c	34,000
Customers A/c	6,200
Gas and Electricity A/c	1,100
Rent A/c	2,200
Prepaid Rent A/c	2,200
Salaries A/c	6,400
Bank A/c	34,000