Question

On July 1, 2010, ABC co. had a cash balance of $10 000.During July the following summary transactions were completed.

1.Received $1,200 cash from customers on account.

2.Received $2,400 cash for services performed in July.

3.Purchased store equipment on account $3,000.

4.Paid cash $ 2000 for a one – year insurance policy.

5.Purchased supplies on account $1,200.

6.Paid creditors $4,400 on account.

7.Performed services on account and billed customers for services provided $1,500.

8.Signed a contract with Alex company to buy furniture of $2 000 next month.

9.Received $800 from customers for future service.

10.Paid salaries of $ 5 000.

11.Rent of $400 was unpaid at July 31.

Required:

(a) Journalize the transactions.

(b) Post to the cash ledger account.

Answer 1

Requirement a: Prepare the following journal entries

Item	Account Title and Explanation	Debit	Credit
1.	Cash	$1,200
	Accounts Receivable		$1,200
	To record cash collected on account
2.	Cash	$2,400
	Service Revenue		$2,400
	To record service revenue
3.	Equipment	$3,000
	Accounts Payable		$3,000
	To record store equipment purchased on account
4.	Prepaid Insurance	$2,000
	Cash		$2,000
	To record one year insurance policy purchased
5.	Supplies	$1,200
	Accounts Payable		$1,200
	To record supplies purchased on account
6.	Accounts Payable	$4,400
	Cash		$4,400
	To record cash paid on account
7.	Accounts Receivable	$1,500
	Service Revenue		$1,500
	To record services performed on account
8.	No journal entry is required
9.	Cash	$800
	Unearned Service Revenue		$800
	To record cash received for future services
10.	Salaries Expense	$5,000
	Cash		$5,000
	To record salaries paid
11.	Rent Expense	$400
	Rent Payable		$400
	To record accrued rent expense for the month

Requirement b: Post the above transactions to cash ledger as follows