Question

Real estate asset manager performs services for customers and bills the customers. Provide the

journal entry for these transactions?

1. Accounts receivable increase by $5,000; revenues increase by $5,000

Cash increases by $5,000; revenues increase by $5,000.

c. Cash increases by $5,000; accrued liability increase by $5,000.

d. Cash decrease by $5,000; Prepaid Expenses increase by $5,000.

Assignment 2

After several months of planning, Denise Murphy started a property management business for

the for the properties that its owners invest called ABC Property Management (“ABC”). The

following events occurred during its first month:

1. On May 1, Murphy started the firm, investing $3,000 cash and $15,000 of equipment.
2. On May 2, ABC paid $600 cash for furniture for the shop.
3. On May 3, ABC paid $500 cash to rent space in a strip mall for May.
4. On May 4, ABC purchased $1,200 of equipment on credit for the shop (using a long-term note payable).
5. On May 5, ABC opened for business. Cash received from services provided in the first week and a half of business (ended May 15) is $825.
6. On May 15, it provided $100 of property management services on account (invoiced).
7. On May 17, it received a $100 check for services previously rendered on account.
8. On May 17, it paid $125 to an assistant for work during the store opening.
9. Cash received from services provided during the second half of May is $930.
10. On May 31, it paid an $400 installment toward principal on the note payable entered into on May 4.
11. On May 31, it paid $900 cash dividends to Murphy.

1. Prepare journal entries for each of the transactions 1 through 11.

Answer 1

1) Perform to service to customers and bills to customers

So account receivable increase and revenue increase

SO answer is a)

2) Journal entries

Date	account and explanation	debit	credit
May 1	Cash	3000
	Equipment	15000
	Owner's equity		18000
	(To record investment)
May 2	Furniture	600
	Cash		600
	(To record furniture purchase)
May 3	Rent expense	500
	Cash		500
	(To record rent expense)
May 4	Equipment	1200
	notes payable		1200
	(To record equipment purchase)
May 5	Cash	825
	Service revenue		825
	(To record service revenue)
May 15	Account receivable	100
	Service revenue		100
	(To record service revenue)
May 17	Cash	100
	Account receivable		100
	(To record cash received)
May 17	Operating expense	125
	Cash		125
	(To record expense)
	Cash	930
	Service revenue		930
	(To record service revenue)
May 31	Long term notes payable	400
	Cash		400
	(To record installment)
May 31	Cash dividend	900
	Cash		900
	(To record dividend paid)