Question

Transaction Entries

Creative Designs, a firm providing art services for advertisers, began business on June 1. The following accounts in its general ledger are needed to record the transactions for June: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Common Stock; Dividends; Service Fees Earned; Rent Expense; Utilities Expense; and Salaries Expense.

June	1	Lisa Ryan invested $19,000 cash to begin the business; she received common stock for her investment.
	2	Paid rent for June, $1,650.
	3	Purchased office equipment on account, $7,100.
	6	Purchased art materials and other supplies costing $4,500; paid $2,500 down with the remainder due within 30 days.
	11	Billed clients for services, $8,800.
	17	Collected $3,950 from clients on account.
	19	Paid $3,700 on account to office equipment company (see June 3 transaction).
	25	Lisa Ryan received a $2,700 dividend.
	30	Paid utility bill for June, $1,050.
	30	Paid salaries for June, $3,200.

• Accounting Equation
• Journal Entries

b. Use journal entries to record the following transactions for June in the general journal.

Date		Description	Debit	Credit
June	1	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Owner purchased common stock for cash.
	2	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Paid June rent.
	3	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Purchased office equipment on account.
	6	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Cash	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Purchased supplies; paid down payment with balance due in 30 days.
	11	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Billed clients for services.
	17	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Collections from clients on account.
	19	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Payment on account.
	25	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Dividend paid to shareholders.
	30	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Paid utilities bill for June.
	30	AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		AnswerAccounts PayableAccounts ReceivableCashCommon StockDividendsOffice EquipmentRent ExpenseSalaries ExpenseService Fees EarnedSuppliesUtilities Expense	Answer	Answer
		Paid salaries for June.

Answer 1

Journal Entries:

Date	Account title and Explanation	Debit	Credit
June 1	Cash	$19,000
	Common stock		$19,000
	[Owner purchased common stock for cash]
June 2	Rent expense	$1,650
	Cash		$1,650
	[Paid June rent]
June 3	Office equipment	$7,100
	Accounts payable		$7,100
	[Purchased office equipment on account]
June 6	Supplies	$4,500
	Cash		$2,500
	Accounts payable		$2,000
	[Purchased supplies, paid down payment with balance due in 30 days]
June 11	Accounts receivable	$8,800
	Service revenue		$8,800
	[Billed clients for services]
June 17	Cash	$3,950
	Accounts receivable		$3,950
	[Collections from clients on account]
June 19	Accounts payable	$3,700
	Cash		$3,700
	[Payment on account]
June 25	Dividends	$2,700
	Cash		$2,700
	[Dividend paid to shareholders]
June 30	Utilities expense	$1,050
	Cash		$1,050
	[Paid Utilities expense]
June 30	Salaries expense	$3,200
	Cash		$3,200
	[Paid salaries for June]