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Accounting - Journal Entry and General Ledger Preparation

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For the past several years, Dustin Larkin has operated a part-time consulting business from his home. As of June 1, 2010, Dustin decided to move to rented quarters and to operate the business, which was to be known as Quixote Consulting, on a full-time basis. Quixote Consulting entered into the following transactions during June:

June 1. The following assets were received from Dustin Larkin: cash, $10,000; accounts receivable, $1,500; supplies, $1,250; and office equipment, $7,500. There were no liabilities received.

June 1. Paid three months' rent on a lease rental contract, $4,500.

June 2. Paid the premiums on property and casualty insurance policies, $1,800.

June 4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $3,000.

June 5. Purchased additional office equipment on account from Crawford Company, $1,800.

June 6. Received cash from clients on account, $800.

June 10. Paid cash for a newspaper advertisement, $120.

June 12. Paid Crawford Company for part of the debt incurred on June 5, $800.

June 12. Recorded services provided on account for the period June 1-12, $2,250.

June 14. Paid part-time receptionist for two weeks' salary, $400.

June 17. Recorded cash from cash clients for fees earned during the period June 1-16, $3,175.

June 18. Paid cash for supplies, $750.

June 20. Recorded services provided on account for the period June 13-20, $1,100.

June 24. Recorded cash from cash clients for fees earned for the period June 17-24, $1,850.

June 26. Received cash from clients on account, $1,600.

June 27. Paid part-time receptionist for two weeks' salary, $400.

June 29. Paid telephone bill for June, $130.

June 30. Paid electricity bill for June, $200.

June 30. Recorded cash from cash clients for fees earned for the period June 25-30, $2,050.

June 30. Recorded services provided on account for the remainder of June, $1,000.

June 30. Dustin withdrew $4,500 for personal use.

Instructions:

1. Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited.

11 Cash
12 Accounts Receivable
14 Supplies
15 Prepaid Rent
16 Prepaid Insurance
18 Office Equipment
19 Accumulated Depreciation
21 Accounts Payable
22 Salaries Payable
23 Unearned Fees
31 Dustin Larkin, Capital
32 Dustin Larkin, Drawing
41 Fees Earned
51 Salary Expense
52 Rent Expense
53 Supplies Expense
54 Depreciation Expense
55 Insurance Expense
59 Miscellaneous Expense

2. Post the journal to a ledger of four-column accounts.
3. Prepare a trial balance as of June 30, 2010.

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Solution Summary

Find attached a formatted MS Excel spreadsheet using the Dustin Larkin Exercise to illustrate the necessary journal entries and general ledger preparation for the creation of financial reports.

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Similar Posting

Analyze the effect of business transactions on the basic accounting equation.

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.

Download Journal, General Ledger accounts and Trial Balance.

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