Question

Jimmy Adams , on March 1st 2020, started a new accounting practice called X-Factor Accounting with the aim to provide the book keeping services to small and medium business organization in Lower Mainland. During its first month of operations following transactions have occurred.

March 1st - Adams invested $ 50,000 in cash and office equipment worth $ 12,000.

March 1st - Paid $ 9,000 cash for three months rent for an office, in advance.

March 2nd - Paid $ 1,000 to Max Ads, for online advertisement.

March 3rd - Purchased office equipment woth $ 6,000 and Office Supplies worth $ 1,200 on credit.

March 5th - Completed a job for a client and imemdiately received $6,200 in cash.

March 7th - Purchased computers worth $ 5000 on credit.

March 11th - Paid the amount that was due from March 3rd transaction.

March 15th - Paid $ 3,000 for the annual premium on an insurance policy.

March 21st - Paid $ 300 for repairs of computers.

March 23rd - Completed work for another client for $ 15,850 on credit.

March 25th - Received a telephone bill for $ 500 and is not paid yet.

March 27th - Adams withdrew $ 3,500 cash from business to pay personal expenses.

March 30th - Purchased $ 650 worth office supplies on credit.

March 31st - Paid salries worth $ 5,000 .

March 31st - Received $ 4,500 as partial payment for the work completed on March 23rd.

Prepare the following

a. Record the journal entries in the books of X-Factor Accounting for the month of March 2020.

b. Post the amonts to respective T Accounts

c. Prepare Trial Balance for X-Factor Accounting as of March 31st 2020.   

Answer 1

1.

Date	Particulars	Debit	Credit
March 1	Cash a/c	50000
	Office Equipment a/c	12000
	Adam's Equity a/c		62000
March 1	Prepaid Office Rent a/c	9000
	Cash a/c		9000
March 2	Max ads-Advertisment Expense a/c	1000
	Cash a/c		1000
March 3	Office Equipment a/c	6000
	Office Supplies a/c	1200
	Accouts Payable a/c		7200
March 5	Cash a/c	6200
	Service Revenue a/c		6200
March 7	Computers a/c	5000
	Accounts Payable a/c		5000
March 11	Accounts Payable a/c	7200
	Cash a/c		7200
March 15	Insurance Premium a/c	3000
	Cash a/c		3000
March 21	Repair Expense a/c	300
	Cash a/c		300
March 23	Accounts Receivable a/c	15850
	Service Revenue a/c		15850
March 25	Telephone Expense a/c	500
	Telephone Bill Payable a/c		500
March 27	Adam's Equity a/c	3500
	Cash a/c		3500
March 30	Office Supllies a/c	650
	Accounts Payable a/c		650
March 31	Salaries a/c	5000
	Cash a/c		5000
March 31	Cash a/c	4500
	Accounts Receivable a/c		4500

Cash a/c

Particulars	$	Particulars	$
Adam's Equity a/c	50000	Prepaid Office Rent a/c	9000
Service Revenue a/c	6200	Max Ads-Advertisement Expense a/c	1000
Accounts Receivable a/c	4500	Accounts Payable a/c	7200
		Insurance Premium a/c	3000
		Repair Expense a/c	300
		Adam's Equity a/c	3500
		Salaries a/c	5000
		Balance c/d	31700
	60,700		60,700

Office Equipment a/c

Particulars	$	Particulars	$
Adam's Equity a/c	12000
Accounts Payable a/c	6000	Balance c/d	18000
	18,000		18,000

Adam's Equity a/c

Particulars	$	Particulars	$
Cash a/c	3500	Cash a/c	50000
Balance c/d	58500	Office Equipment a/c	12000
	62,000		62,000

Prepaid Rent a/c

Particulars	$	Particulars	$
Cash a/c	9000
		Balance c/d	9000
	9000		9000

Max Ads-Advertisment Expense

Particulars	$	Particulars	$
Cash a/c	1000
		Balance c/d	1000
	1000		1000

Office supplies

Particulars	$	Particulars	$
Accounts Payable a/c	1200
A/c Payable a/c	650	Balance c/d	1850
	1850		1850

Accounts Payable a/c

Particulars	$	Particulars	$
Cash	7200	Office Equipment a/c	6000
		Office Supplies a/c	1200
		Computers a/c	5000
Balance c/d	5650	Office Supplies	650
	12850		12850

Service Revenue a/c

Particulars	$	Particulars	$
		Cash a/c	6200
Balance c/d	22050	Accounts Receivable a/c	15850
	22050		22050

Computers a/c

Particulars	$	Particulars	$
Accounts Payable a/c	5000
		Balance c/d	5000
	5000		5000

Insurance Premium a/c

Particulars	$	Particulars	$
Cash a/c	3000
		Balance c/d	3000
	3000		3000

Repair Expense a/c

Particulars	$	Particulars	$
Cash a/c	300
		Balance c/d	300
	300		300

Accounts Receivable a/c

Particulars	$	Particulars	$
Service Revenue a/c	15850	Cash a/c	4500
		Balance c/d	11350
	15850		15850

Telephone Expense a/c

Particulars	$	Particulars	$
Telephone Bill Payable a/c	500
		Balance c/d	500
	500		500

Telephone Bill Payable a/c

Particulars	$	Particulars	$
		Telephone Expense a/c	500
Balance c/d	500
	500		500

Salaries a/c

Particulars	$	Particulars	$
Cash a/c	5000
		Balance c/d	5000
	5000		5000

X-Factor Accounting's

Trial Balance as on 31st March 2020

Accounts	Debit	Credit
Cash a/c	31700
Office Equipment a/c	18000
Adam's Equity a/c		58500
Prepaid Rent a/c	9000
Max Ads-Advertisment Expense a/c	1000
Office Supplies a/c	1850
Accounts Payable a/c		5650
Service Revenue a/c		22050
Computers a/c	5000
Insurance Premium a/c	3000
Repair Expense a/c	300
Accounts Receivable a/c	11350
Telephone Expense a/c	500
Telephone Bill Payable a/c		500
Salaries a/c	5000
Total	$86,700	$86,700