Explore BrainMass

Explore BrainMass

    Journal entries ,ledger accounts&trial balance

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Please help me to solve the attached problems.

    1- Chambers Brokerage Services Inc. was formed on May 1, 2006. The following transactions
    took place during the first month.
    Transactions on May 1:
    1. Stockholders invested $120,000 cash in the company in exchange for stock.
    2. Hired two employees to work in the warehouse. They will each be paid a salary of $2,000
    per month.
    3. Signed a 2-year rental agreement on a warehouse; paid $36,000 cash in advance for the first
    year. (Hint: The portion of the cost related to May 2006 is an expense for this month.)
    4. Purchased furniture and equipment costing $70,000. A cash payment of $20,000 was made
    immediately; the remainder will be paid in 6 months.
    5. Paid $3,000 cash for a one-year insurance policy on the furniture and equipment.
    (Hint: The portion of the cost related to May 2006 is an expense for this month.)
    Transactions during the remainder of the month:
    6. Purchased basic office supplies for $1,000 cash.
    7. Purchased more office supplies for $3,000 on account.
    8. Total revenues earned were $30,000-$10,000 cash and $20,000 on account.
    9. Paid $800 to suppliers for accounts payable due.
    10. Received $5,000 from customers in payment of accounts receivable.
    11. Received utility bills in the amount of $400, to be paid next month.
    12. Paid the monthly salaries of the two employees, totalling $4,000.
    (a) Prepare journal entries to record each of the events listed.
    (b) Post the journal entries to T accounts.
    (c) Prepare a trial balance as of May 31, 2006.
    (d) Prepare an income statement and a retained earnings statement for Chambers Brokerage
    Services for the month ended May 31, 2006, and a balance sheet as of May 31, 2006.

    2-Selected transactions for H. Burns, Inc., an interior decorating firm, in its first month of
    business, are as follows.
    Jan. 2 Invested $15,000 cash in business in exchange for common stock.
    3 Purchased used car for $4,000 cash for use in business.
    9 Purchased supplies on account for $500.
    11 Billed customers $1,800 for services performed.
    16 Paid $200 cash for advertising.
    20 Received $700 cash from customers billed on January 11.
    2 Paid creditor $300 cash on balance owed.
    28 Declared and paid a $1,000 cash dividend.
    For each transaction indicate the following.
    (a) The basic type of account debited and credited (asset, liability, stockholders' equity).
    (b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
    (c) Whether the specific account is increased or decreased.
    (d) The normal balance of the specific account.
    Use the following format, in which the January 2 transaction is given as an example:

    Account Debited Account Credited
    (a) (b) (c) (d) (a) (b) (c) (d)
    Basic Specific Normal Basic Specific Normal
    Date Type Account Effect Balance Type Account Effect Balance
    Jan. 2 Asset Cash increase Debit Stockholder's Common increase Credit
    Equity Stock

    © BrainMass Inc. brainmass.com June 3, 2020, 10:05 pm ad1c9bdddf


    Solution Summary

    The solution contains answers for two questions :1. preparation of journal entries, ledger accounts , the trial balance, trading and profit and loss account and the balance sheet 2.effect of various accounting transations on various accounts and also the type of those accounts.