Question

Question 5: Transaction analysis and recording                                                        

Transactions for Melbourne Consultants Ltd for the month of Jan 2020 are presented below:

Jan 2.        Shareholders invested $180,000 cash in exchange for shares in the business.

Jan 2.        Paid office rent of $4,800 for the month

Jan 3.        Purchased vehicle costing $22,000 for cash.

Jan 6.        Purchased equipment costing $10,000. $7,000 was paid in cash and the remainder on credit.

Jan 14.      Purchased office supplies on account for $325.

Jan 15.      Paid $2,500 for a one-year insurance policy.

Jan 20.      Received $5,000 cash for consulting services performed.

Jan 23.      Received $3,000 advance from a client for services that will perform next month.

Jan 28.      Paid receptionist $4,200 salary for the month.

Jan 31.      Paid dividends to shareholders of $700 which has been declared in October 2019.

Required

Journalise each transaction. Narrations are required

Answer 1

Solution:

Date	Account Titles and Explanation	Debit	Credit
Jan.2	Cash	$        180,000
	Common Stock		$         180,000
	(To record Common Stock Issued)
Jan. 2	Rent Expenses	$             4,800
	Cash		$              4,800
	(To record rent expenses)
Jan. 3	Vehicle	$          22,000
	Cash		$            22,000
	( To record vehicle purchase )
Jan. 6	Equipment	$          10,000
	Accounts payable		$              3,000
	Cash		$              7,000
	(To record equipment purchase)
Jan. 14	Office Supplies	$                325
	Accounts payable		$                  325
	(To record supplies purchase)
Jan. 15	Pepaid Insurance	$             2,500
	Cash		$              2,500
	(To record prepaid insurance)
Jan. 20	Cash	$             5,000
	Service Revenue		$              5,000
	(To record service revenue)
Jan. 23	Cash	$             3,000
	Unearned Service revenue		$              3,000
	(To record unearned service revenue)
Jan. 28	Salary Expense	$             4,200
	Cash		$              4,200
	(To record salary expenses)
Jan. 31	Dividend Payable	$                700
	Cash		$                  700
	[To record dividend paid]