Question

Transaction Entries Thoro Clean, a firm providing house-cleaning services, began business on April 1. The following accounts in its general ledger are needed to record the transactions for April: Cash; Accounts Receivable; Supplies; Prepaid Van Lease; Equipment; Accounts Payable; Notes Payable; Common Stock; Retained Earnings; Dividends; Cleaning Fees Earned; Wage Expense; Advertising Expense; and Fuel Expense.

a. Using the accounting equation, record each of the transactions in columnar format.

b. Use journal entries to record the following transactions for April in the general journal.

April

1 -Randy Storm invested $11,500 cash to begin the business; he received common stock for his investment.

2- Paid six months’ lease on a van, $2,850.

3 -Borrowed $10,000 from a bank and signed a note payable agreeing to repay the $10,000 in one year plus 10 percent interest.

3- Purchased $5,500 of cleaning equipment; paid $3,500 down with the remainder due within 30 days.

4 -Purchased cleaning supplies for $4,300 cash.

7 - Paid $350 for newspaper advertisements to run during April.

21- Billed customers for services, $3,500.

23 -Paid $1,500 on account to cleaning equipment firm (see April 3 transaction).

28- Collected $2,300 from customers on account.

29 -Randy Storm received a $1,000 cash dividend.

30 -Paid wages for April, $1,750.

30 -Paid service station for gasoline used during April, $255

Answer 1

a. Accounting Equation :

Assets = Liabilities + Stockholders' Equity

Date	Assets					Liabilities		Stockholders' Equity
	Cash +	Accounts Receivable +	Supplies +	Prepaid Van Lease +	Equipment =	Accounts Payable +	Notes Payable	Common Stock	Retained Earnings	Revenues -	Expenses =	Net Income
April 1	11,500							11,500
April 2	(2,850)			2,850
April 3	10,000						10,000
April 3	(3,500)				5,500	2,000
April 4	(4,300)		4,300
April 7	(350)								(350)		350
April 21		3,500							3,500	3,500
April 23	(1,500)					(1,500)
April 28	2,300	(2,300)
April 29	(1,000)								(1,000)
April 30	(1,750)								(1,750)		1,750
April 30	(255)								(255)		255
Balances	8,295	1,200	4,300	2,850	5,500	500	10,000	11,500	145	3,500	2,355	1,145

b. In the books of Thoro Clean :

Date	Account Titles	Debit	Credit
		$	$
April 1	Cash	11,500
	Common Stock		11,500
April 2	Prepaid Van Lease	2,850
	Cash		2,850
April 3	Cash	10,000
	Notes Payable		10,000
April 3	Equipment	5,500
	Cash		3,500
	Accounts Payable		2,000
April 4	Supplies	4,300
	Cash		4,300
April 7	Advertising Expense	350
	Cash		350
April 21	Accounts Receivable	3,500
	Cleaning Fees Earned		3,500
April 23	Accounts Payable	1,500
	Cash		1,500
April 28	Cash	2,300
	Accounts Receivable		2,300
April 29	Dividends	1,000
	Cash		1,000
April 30	Wage Expense	1,750
	Cash		1,750
April 30	Fuel Expense	255
	Cash		255