6. Entry and trial balance preparation. Lee Adkins is a portrait artist. The following schedule represents Lee’s combined chart of accounts and trial balance as of May 31.

 

 

 

Account number          Account name                                                 Debit                            Credit

 

110	Cash		$ 2,700
120	Accounts Receivable		12,100
130	Equipment and Supplies		2,800
140	Studio		45,000
210	Accounts Payable			$2,600
310	Lee Adkins, Capital			57,400
320	Lee Adkins, Drawing		30,000
410	Professional Fee Revenue			39,000
510	Advertising Expense		2,300
520	Salaries Expense		2,100
540	Utilities Expense		2,000
		$99,000		$99,000

 

 

 

The general ledger also revealed account no. 530, Legal and Accounting Expense. The following transactions occurred during June:

 

	6/2		Collected $3,000 on account from customers
	6/7		Sold 25% of the equipment and supplies to a young artist for $700 cash
	6/10		Received a $300 invoice from the accountant for preparing last quarter’s financial Statements.
	6/15		Paid $1,900 to creditors on account.
	6/27		Adkins withdrew $2,000 cash for personal use.
	6/30		Billed a customer $3,000 for a portrait painted this month.

 

a. Record the necessary journal entries for June on page 2 of the company’s general journal. (See Exhibit 2.6)

 

b. Open running balance ledger “T” accounts by entering account titles, account num­bers, and May 31 balances. (See exhibit 2.3 and 2.4)

 

c. Post the journal entries to the “T” accounts.

 

d. Prepare a trial balance as of June 30. (See exhibit 2.9)

 

 

 

 

 

 

 

7. Journal entry preparation. On January 1 of the current year, Peter Houston invested $80,000 cash into his companyMuniServ.The cash was obtained from an owner investment by Peter Houston of $50,000 and a $30,000 bank loan. Shortly thereafter, the company ac­quired selected assets of a bankrupt competitor. The acquisition included land ($10,000), a building ($40,000), and vehicles ($10,000). MuniServ paid $45,000 at the time of the transaction and agreed to remit the remaining balance due of $15,000 (an account payable) by February 15.

 

 

 

            During January, the company had additional cash outlays for the follow­ing items:

 

 

 

Purchases of store equipment	$4,600
Note payment	500
Salaries expense	2,300
Advertising expense	700

 

The January utility bill of $200 was received on January 31 and will be paid next month. MuniServ rendered services to clients on account amounting to $9,400.  All customers have been billed; by month end, $3,700 had been received in settlement of account balances.

 

 

 

 

 

 

 

Instructions

 

a.       Present journal entries that reflect MuniServ’s January transactions, including the $80,000raised from the owner investment and loan. (See exhibit 2.6)

 

b.      Compute the total debits, total credits, and ending balance that would befound in the company’s Cash account. (Post to “T” Accounts, see exhibit 2.3 and 2.4)

 

c.       Determine the amount that would be shown on the January 31 trial balance for Accounts

 

Payable. Is the balance a debit or a credit?