Question

B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:

February 3: Purchased supplies for $22,500 in cash.

February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.

February 12: Received a bill from Dubai News for advertising amounted to $1,650.

February 14: Paid $24,000 salaries in cash.

February 16: Paid $6,000 utilities expense in cash.

February 17: Provided services to customers for $195,000 in cash.

February 19: Paid $150,000 for equipment purchased on February 9.

February 28: The owner withdrew $7,500 cash for personal use.

Required:

1. Prepare journal entries to record the above transactions.
2. 2- Post to the appropriate ledger accounts.

Answer 1

Date	Particulars	Debit $	Credit $
Feb. 1, 2020	Cash A/c	3,000,000
	To Capital A/c		3,000,000
	The business started by depositing cash into as a capital
Feb. 3, 2020	Supplies A/c	22500
	To Cash A/c		22500
	Purchased supplies by paying in cash
Feb. 9, 2020	Equipment A/c	255000
	To Cash A/c		105000
	To A/P A/c		150000
	equipment purchased on cash as well on credit
Feb. 12, 2020	Advertisement A/c	1650
	To A/P A/c		1650
	bill received for the advertisement
Feb. 14, 2020	Salaries A/c	24,000
	To Cash A/c		24,000
	paid salaries in cash
Feb. 16, 2020	Utilities Expense A/c	6,000
	To Cash A/c		6,000
	Paid for utility expense in cash
Feb. 17, 2020	Cash A/c	195000
	To Services Revenue A/c		195000
	cash received for services
Feb. 19, 2020	A/P A/c	150000
	To Cash A/c		150000
	paid the remaining amount of equipment
Feb. 28, 2020	Drawings A/c	7500
	To Bank A/c		7500
	cash withdrawn from the bank for personal use

Cash A/c

Particulars	Amount $	Particulars	Amount $
To Services Revenue A/c	195000	By A/P A/c	150000
To Capital A/c	30,00,000	By Supplies A/c	22500
		By Equipment A/c	105000
		By Salaries A/c	24000
		By Utility expenses A/c	6000
		By Balance C/d	2887500
Total	3195000	Total	3195000

Bank A/c

Particulars	Amount $	Particulars	Amount $
To Overdraft A/c	7500	By Drawings	7500
Total	7500	Total	7500

Equipment A/c

Particulars	Amount $	Particulars	Amount $
To Cash A/c	105000	By Balance C/d	105000
Total	105000	Total	105000

A/P A/c

Particulars	Amount $	Particulars	Amount $
To Cash A/c	150000	By Equipment A/c	150000
To Balance C/d	1650	By Advertisement A/c	1650
Total	151650	Total	151650

Supplies A/c

Particulars	Amount $	Particulars	Amount $
To Cash A/c	22500	By Balance C/d	22500
Total	22500	Total	22500

Advertisement A/c

Particulars	Amount $	Particulars	Amount $
To A/P A/c	1650	By Balance C/d	1650
Total	1650	Total	1650

Salaries A/c

Particulars	Amount $	Particulars	Amount $
To Cash A/c	24000	By Balance C/d	24000
Total	24000	Total	24000

Utility Expenses A/c

Particulars	Amount $	Particulars	Amount $
To Cash A/c	6000	By Balance C/d	6000
Total	6000	Total	6000

Services Revenue A/c

Particulars	Amount $	Particulars	Amount $
By Balance C/d	195000	By Cash A/c	195000
Total	195000	Total	195000

Drawings A/c

Particulars	Amount $	Particulars	Amount $
To Bank A/c	7500	By Balance C/d	7500
Total	7500	Total	7500

Capital A/c

Particulars	Amount $	Particulars	Amount $
To Balance C/d	30,00,000	By Cash A/c	30,00,000
Total	30,00,000	Total	30,00,000