Question

PROBLEM #1:

Journalize the following business transactions in general journal form. Identify each transaction

by number. You may omit explanations of the transactions.

1.

Stockholders invest $25,000 in cash in starting a real estate office operating as a

corporation.

2.

Purchased $500 of supplies on credit.

3.

Purchased equipment for $15,000, paying $3,500 in cash and signed a 30-day, $11,500,

note payable.

4.

Real estate commissions billed to clients amount to $4,000.

5.

Paid $700 in cash for the current month's rent.

6.

Paid $250 cash on account for office supplies purchased in transaction 2.

7.

Received a bill for $800 for advertising for the current month.

8.

Paid $2,500 cash for office salaries.

9.

Paid $1,200 cash dividends to stockholders.

10.

Received a check for $2,000 from a client in payment on account for commissions billed

in transaction 4.

Answer 1

Journal entry :

No	Account and explanation	debit	credit
1	Cash	25000
	Owner's capital		25000
	(To record stockholder's investment)
2	Supplies	500
	Account payable		500
	(To record purchase supplies)
3	Equipment	15000
	Cash		3500
	Notes payable		11500
	(To record purchase equipment)
4	Account receivable	4000
	Service revenue		4000
	(To record account receivable)
5	Rent expense	700
	Cash		700
	(To record rent paid)
6	Account payable	250
	Cash		250
	(To record amount paid)
7	Advertising expense	800
	Advertising payable		800
	(To record advertising expense)
8	Office salaries	2500
	Cash		2500
	(To record salaries paid)
9	Cash dividend	1200
	Cash		1200
	(To record dividend paid)
10	Cash	2000
	Account receivable		2000
	(To record amount received)