Preparation of Journal entries and Trial Balance
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Business is booming for Dan Brown's home inspection business. He has been so busy the first month of business that he hasn't had time to keep up with his bookkeeping and has asked for your help. He has provided you with the detail regarding the following transactions:
Date
Transaction
Dec 4
First week of inspections. Inspected 3 homes.
Charged clients a total of $900. Received payment
From all clients at time of inspection.
Dec 7
Filled company truck with gasoline - paid cash, $43
Dec 11
Inspected 7 homes this week. Charged clients a
total of $2,100. Received payment of $1,500, billed
the remainder to clients.
Dec 15
Filled company truck with gasoline - paid cash, $43
Dec 18
Inspected 10 homes this week. Charged clients a
total of $3,000. Received payment of $2,400, billed
the remainder to clients.
Dec 18
Paid $350 for office supplies.
Dec 22
Purchased additional tools on company credit card, $475.
Dec 25
Inspected 6 homes this week. Charged clients a
total of $1,800. Received payment of $600, billed
the remainder to clients.
Dec 28
Paid $500 on company credit card bill. ($100 was interest)
Dec 30
Paid truck payment, $250 ($85 was interest).
Dec 30
Dan withdrew $2,000 from the business for personal use.
Dec 30
Received payment from clients, $1,800.
Individually:
1. Post the September, October, and November transactions (from previous task) in the ledger accounts.
2. Journalize the December transactions
3. Post the December transactions in the ledger accounts
4. Prepare a Trial Balance for December.
Group Portion:
* In a 1000-1250 word memo to Dan, discuss the business's performance for the first year of operation. Has his business been successful so far? Why/why not? What can he do to improve the performance of his business?
Use the following chart of accounts.
Account Number
Account Title
100
Cash
110
Accounts Receivable
120
Prepaid Insurance
130
Office Supplies
140
Books
150
Tools
160
Truck
210
Credit Card Payable
220
Truck Loan Payable
300
Dan Brown, Capital
310
Dan Brown, Drawing
400
Inspection Revenue
610
Training Expense
620
License Expense
630
Advertising Expense
640
Interest Expense
650
Gasoline Expense
Click below for templates for the General Journal, General Ledger accounts and Trial Balance.
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Solution Summary
The solution contains the preparation of journal entries and trial balance and analyse the effect of various business transactions on the accounting equation.
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