Question

In: Accounting

There are three business ownership types: (1) proprietorship, (2) partnership, and (3) corporation. Many of their...

There are three business ownership types: (1) proprietorship, (2) partnership, and (3) corporation. Many of their accounting transactions are similar. However, there are some business events that require special transaction handling in accounting entries.

For this part of the assessment, use the Assessment 4, Part 3 Template to identify and prepare entries for the corporate ownership business type.

Imagine you are an accountant for J. Malone's Law Firm, Inc. The accounts and transactions of the firm are listed below. Analyze each transaction. Identify the account or accounts to be debited and credited and, using the provided template, prepare a journal entry for each in the proper format.

Here is an example to record the owner's investment to start the business:

Cash: $54,000.

Common stock: $54,000.

Use the following account titles for this scenario:

Assets

Cash.

Accounts receivable.

Prepaid rent.

Office equipment.

Automobiles.

Liabilities

Accounts payable.

Interest payable.

Note payable.

Owner's Equity

Common stock.

Expenses

Automobile expense.

Rent expense.

Utilities expense.

Salaries expense.

Interest expense.

Telephone expense.

Revenues

Service revenue.

Transactions

Justin Malone:

Invested $54,000 in cash to start the business.

Paid $3,000 for 3 month's rent.

Bought a used automobile for the firm for $16,000 in cash.

Performed services for $3,000 in cash.

Paid $400 for automobile repairs.

Performed legal services for $3,750 on credit.

Borrowed $25,000 from the local bank to help expand his business.

Purchased office chairs for $2,100 on credit.

Received $1,800 from credit clients.

Paid $1,000 on account to reduce the amount owed for the office chairs (purchased in item 8).

Issued a check for $560 to pay the monthly utility bill.

Purchased office equipment for $8,400. Paid half in cash; the remainder to be paid in 30 days.

Issued a check for $5,680 to pay salaries.

Performed legal services for $1,850 in cash.

Performed legal services for $2,600 on credit.

Collected $1,600 on accounts receivable from charge clients.

One month's worth of rent (paid in item 2) has expired.

One month's interest $145 accrued on the note payable (from item 7).

Solutions

Expert Solution

J. Malone's Law Firm, Inc.
Journal entries
Date Account Debit Credit Calculation
1 Cash $     54,000
Common Stock $     54,000
2 Prepaid Rent $        3,000
Cash $        3,000
3 Automobiles $     16,000
Cash $     16,000
4 Cash $        3,000
Service revenue $        3,000
5 Automobile expense $           400
Cash $           400
6 Accounts Receivable $        3,750
Service revenue $        3,750
7 Cash $     25,000
Notes Payable $     25,000
8 Office equipment $        2,100
Accounts Payable $        2,100
9 Cash $        1,800
Accounts Receivable $        1,800
10 Accounts Payable $        1,000
Cash $        1,000
11 Utilities expense $           560
Cash $           560
12 Office equipment $        8,400
Cash $        4,200
Accounts Payable $        4,200
13 Salaries expense $        5,680
Cash $        5,680
14 Cash $        1,850
Service revenue $        1,850
15 Accounts Receivable $        2,600
Service revenue $        2,600
16 Cash $        1,600
Accounts Receivable $        1,600
17 Rent expense $        1,000 =3,000/3
Prepaid Rent $        1,000
18 Interest expense $           145
Interest Payable $           145

Related Solutions

Define the following types of business ownership. Sole Proprietorship Partnership Corporation Limited Liability Company For each...
Define the following types of business ownership. Sole Proprietorship Partnership Corporation Limited Liability Company For each type of ownership listed in #1 above, list the pros (advantages) and cons (disadvantages). Be sure to pay close attention to owner liability and tax treatment for each type of business ownership.
Explain the forms of business organization: 1- Sole proprietorship: 2- partnership: 3- corporation:
Explain the forms of business organization: 1- Sole proprietorship: 2- partnership: 3- corporation:
Compare the three types of legal structure: proprietorship, partnership and corporation.
Compare the three types of legal structure: proprietorship, partnership and corporation.
ASSIGNMENT: Please respond to the following: Define the following types of business ownership. Sole Proprietorship Partnership...
ASSIGNMENT: Please respond to the following: Define the following types of business ownership. Sole Proprietorship Partnership Corporation Limited Liability Company For each of the types of business ownership listed in #1 above, list the pros (advantages) and cons (disadvantages). Be sure to pay close attention to liability and tax treatment for each type of business ownership. If you were starting a new business, which of the five types of business ownership listed in #1 above would you choose? Why? Before...
Define the three basic business organization structures (sole proprietorship; partnership; and corporation) and discuss advantages and...
Define the three basic business organization structures (sole proprietorship; partnership; and corporation) and discuss advantages and disadvantages as to taxation, protection from legal liability and access to capital. Specifically comment on how each structure is taxed.
1. The advantages of a corporation compared to a sole proprietorship or partnership include: 2. Preferred...
1. The advantages of a corporation compared to a sole proprietorship or partnership include: 2. Preferred stock is called preferred because it usually has two preferences over common stock. These preferences relate to: 3. When a company issues 34,000 shares of $5 par value common stock for $50 per share, the journal entry for this issuance would include: 4. Environmental Designs issues 5,000 shares of its $1 par value common stock at $10 per share. (1) Record the issuance of...
The three main forms of legal business structures are; a sole proprietorship, a partnership, and a...
The three main forms of legal business structures are; a sole proprietorship, a partnership, and a corporation. Discuss the advantages and disadvantages of each form. no plagiarism and also 200 words and no images thanks
The three main forms of legal business structures are; a sole proprietorship, a partnership, and a...
The three main forms of legal business structures are; a sole proprietorship, a partnership, and a corporation. Discuss the advantages and disadvantages of each form.
Define Sole Proprietorship, Partnership, Corporation. List the pros and cons of these business characteristics.
Define Sole Proprietorship, Partnership, Corporation. List the pros and cons of these business characteristics.
sole proprietorship, partnership and the corporation. Compare and contrast the three forms including the plusses and...
sole proprietorship, partnership and the corporation. Compare and contrast the three forms including the plusses and minus’ of each form.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT