Question

In: Accounting

You are operating your accounting firm. Your first client had the following transactions in April 20x7:...

You are operating your accounting firm. Your first client had the following transactions in April 20x7: Borrowed $10,000 from the bank. Purchased $2,250 of computer equipment for cash. Paid $750 cash for this month’s rent. Purchased $1,500 of office supplies on credit. It is expected that these supplies will last for 3 months. Billed $500 to customers for services rendered during April. Paid cash for the $1,500 balance owed to the vendor from Transaction 4. Collected $450 cash of the amount billed to the customer in Transaction 5 Sold one-half of the equipment purchased in Transaction 2 for $1,125 in cash, with no gain or loss recognized on the sale. 9. Paid $1,000 of the principal from the loan in transaction 1, along with $50 in interest. Required: Use the four steps in the accounting cycle to analyze business transactions, a) Identifying transactions from source documents, b) Analyzing transactions using the accounting equation, c) Recording the journal entry and d) Posting the entry to the ledger to complete the following: Prepare journal entries for each of the above transactions. Post the journal entries to T–accounts and total the accounts. From the T–accounts, prepare an unadjusted trial balance. List expenses in alphabetical order. Use the following chart of accounts names and template: Cash, Capital Stock, Equipment, Accounts Payable, Rent, Supplies, Accounts Receivable, Revenue.

Solutions

Expert Solution

Journal entries, T-accounts and Trial Balance are as prepared below:

Date Particulars L.F Amount ($) Amount ($)
1 Cash 10,000
Loan Payable 10,000
(for amount borrowed)
2 Equipment 2,250
Cash 2,250
(For equipment purchased)
3 Rent Expense 750
Cash 750
(For rent paid)
4 Supplies 1,500
Accounts Payable 1,500
(for supplies purchased)
5 Account Receivable 500
Revenue 500
(For customers billed)
6 Account Payable 1,500
Cash 1,500
(For paid to accounts payable)
7 Cash 450
Account Receivable 450
(For cash collected from accounts receivable)
8 Cash 1,125
Equipment 1,125
(For half equipment sold)
9 Loan Payable 1,000
Interest Expense 50
Cash 1,050
(For loan 1st instalment paid)
Cash
Particulars Amount Particulars Amount
1 10,000 2 2,250
7 450 3 750
8 1,125 6 1,500
9 1,050
11,575 5,550
Closing Balance 6,025
Account Receivable
Particulars Amount Particulars Amount
5 500 7 450
500 450
Closing Balance 50
Supplies
Particulars Amount Particulars Amount
4 1,500
1,500 0
Closing Balance 1,500
Equipment
Particulars Amount Particulars Amount
2 2,250 8 1,125
2,250 1,125
Closing Balance 1,125
Interest Expense
Particulars Amount Particulars Amount
9 50
Closing Balance 50
Accounts Payable
Particulars Amount Particulars Amount
6 1,500 4 1,500
1,500 1,500
Closing Balance 0
Loan Payable
Particulars Amount Particulars Amount
9 1,000 1 10,000
1,000 10,000
Closing Balance 9,000
Revenue
Particulars Amount Particulars Amount
5 500
Closing Balance 500
Rent Expense
Particulars Amount Particulars Amount
3 750
Closing Balance 750
Unadjusted Trial Balance
Apr-30
Debit Credit
Cash 6,025
Account Receivable 50
Supplies 1,500
Equipment 1,125
Accounts Payable 0
Loan Payable 9,000
Revenue 500
Rent Expense 750
Interest Expense 50
Total 9,500 9,500

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