Question

(1)	Receive €50,000 in exchange for common stock.
(2)	Borrow €10,000 from bank.
(3)	Purchase €2,000 of supplies inventory on credit.
(4)	Receive €15,000 cash from customers for services provided.
(5)	Pay €2,000 cash to supplier in transaction 3.
(6)	Receive order for future services with €3,500 advance payment.
(7)	Pay €5,000 cash dividend to shareholders.
(8)	Pay employees €6,000 cash for compensation earned.
(9)	Pay €500 cash for interest on loan in transaction 2.

a. Prepare journal entries for each of the transaction (1) through (9).

(1)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	€Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		€Answer
(2)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(3)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(4)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(5)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(6)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(7)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(8)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer
(9)	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory	Answer
	AnswerUnearned RevenueInterest ExpenseCashAccounts PayableCommon StockRetained EarningsNotes PayableRevenueWages ExpenseInventory		Answer

b. Set up T-accounts for each of the accounts used in part a. and post the journal entries to the appropriate line in the correct T-accounts. (The T-accounts will not have opening balances.)
After all transactions are recorded, compute the balance for each account in the appropriate column.

Cash (A)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Common Stock (SE)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Inventory (A)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Retained Earnings (SE)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Accounts Payable (L)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Revenue (R)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Unearned Revenue (L)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Wages Expense (E)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Notes Payable (L)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Interest Expense (E)
(1)	Answer	Answer
(2)	Answer	Answer
(3)	Answer	Answer
(4)	Answer	Answer
(5)	Answer	Answer
(6)	Answer	Answer
(7)	Answer	Answer
(8)	Answer	Answer
(9)	Answer	Answer
Bal	Answer	Answer

Feedback

In journal entries, debits increase assets and expenses and decrease liabilities, equity and revenues. Credits increase liabilities, equity and revenues and decrease assets and expenses. For each entry, the debits must equal the credits.

Answer 1

Dear the Following Journal entries shall be passed .

1. Cash Account ..........Dr 50000

To Common Stock Account 50000

(Being Common stock exchanged)

2. Cash Account ..........Dr 10000

To Bank Loan Account 10000

(Being Bank Loan Taken)

3.Purchase Account /Inventory Accounts ..........Dr 2000

To Supplier Account /Accounts Payable 2000

( Being Inventorty purchased from supplier on credit)

4. Cash Account ......Dr 15000

To Revenue Account 15000

(Being received on account of services rendered)

5. Supplier Account / Accounts Payable Account ...Dr 2000

To Cash Account 2000

6. Cash Account ..Dr 3500

To Unearned Revenue 3500

( Being cash received in advance for services to be rendered)

7. Retained Earning Account. ......... Dr 5000

To Cash Account 5000

( Being Paid as dividend)

8. Wages Expenses Account .......Dr 6000

To cash Account 6000

( Being paid to employees on accounts of compensation)

9. Interest Payable Account ........ Dr 500

To cash Account 500

( Being Interest Paid on Bank Loan)

	Balance Sheet
	Transaction	Cash Asset	+	Non Cash Asset	=	Liabilities	+	Capital Contribution	Earned Income
1	Receive €50,000 in exchange for common stock.	50000						50000
2	Borrow €10,000 from bank.	10000				10000
3	Purchase €2,000 of supplies inventory on credit.	2000				2000
4	Receive €15,000 cash from customers for services provided	15000							15000
5	Pay €2,000 cash to supplier in transaction 3	-2000				-2000
6	Receive order for future services with €3,500 advance payment	3500				3500
7	Pay €5,000 cash dividend to shareholders	-5000						-5000
8	Pay employees €6,000 cash for compensation earned	-6000						-6000
9	Pay €500 cash for interest on loan in transaction 2	-500						-500
	Total	67000				13500		38500	15000
	Income Statement
	Transaction	Revenue	-	Expenses	=	Income
1	Receive €50,000 in exchange for common stock.
2	Borrow €10,000 from bank.
3	Purchase €2,000 of supplies inventory on credit.
4	Receive €15,000 cash from customers for services provided	15000				15000
5	Pay €2,000 cash to supplier in transaction 3
6	Receive order for future services with €3,500 advance payment
7	Pay €5,000 cash dividend to shareholders
8	Pay employees €6,000 cash for compensation earned			6000		-6000
9	Pay €500 cash for interest on loan in transaction 2			500		-500
	Toal	15000		6500		8500

	Cash Account
	Common Stock	50000	Accounts Payble	2000
	Bank Loan	10000	Dividend	5000
	Earned Income	15000	Employee Comp.	6000
	Unearnd Income	3500	Interest Exp.	500
			Balance C/d	65000
	Total	78500		78500
	Account Payable
	Cash Account	2000	Inventory	2000
			Balance	0
	Unearned Revenue
			Cash Account	3500
	Balance	3500
	Notes payable/ Bank Loan
			Cash Account	10000
	Balance	10000
	Common Stock
			Cash Account	50000
	Balance	50000
	Retained Earning
	Divided Paid	5000
			Balance	5000
	Wages Exp.
	Cash Account	6000	Balance	6000
	Interest Exp
	Cash Account	500	Balance	500
	Supplier Account
	Inventory	2000	cash Account	2000