Question

I. Prepare a journal entry.

(a) Stockholder invests $15,000 into the business.
(b) Company borrows $15,000 signing a note payable to the bank that is due in three months.
(c) Receives and pays for a $10,000 truck and $5,000 of equipment.
(d) Purchases $600 of supplies on account.
(e) Signs contract for first website design for $10,000.
(f) Pays $200 to the supplier in (d).
(g) Purchases and pays for $400 of supplies.
(i) Orders a $900 computer, to be delivered in 90 days.
Transaction # Accounts titles (names) Debit Credit
II. Post the transactions to ledger accounts and then determine the ending balances of each of the following T-accounts.
Assets Liabilities Stockholders' Equity
Cash Accounts Payable Common Stock
Supplies Notes Payable Retained Earnings
Equipment
3. PREPARING A TRIAL BALANCE AND A CLASSIFIED BALANCE SHEET
Use the ending balances from the T-accounts to prepare a trial balance as of December 31, Year 1.
World Wide Webster
Trial Balance
At December 31, Year 1

Answer 1

1. Journal Entries:

a. Debit Cash $15,000

Credit Common Stock $15,000

To record investment by stockholder

b. Debit Cash $15,000

Credit Note Payable $15,000

To record note payable to the bank in three months.

c. Debit Truck $10,000

Debit Equipment $5,000

Credit Cash $15,000

To record the purchase of truck and equipment.

d. Debit Supplies $600

Credit Accounts Payable $600

To record the purchase of supplies on account.

e. No journal required.

f. Debit Accounts Payable $200

Credit Cash $200

To record the payment on account.

g. Debit Supplies $400

Credit Cash $400

To record the purchase of supplies for cash.

h. or i. No journal entry required.

II. Ledger Accounts:

Cash

Accounts titles Debit Credit

a. Common stock $15,000

b. Note payable 15,000

c. Truck & Equipment $15,000

f. Accounts payable 200

g. Supplies 400

Balance $14,400

Totals $30,000 $30,000

Common Stock

Accounts titles Debit Credit

a. Cash $15,000

Notes Payable

Accounts titles Debit Credit

b. Cash $15,000

Truck

Accounts titles Debit Credit

c. Cash $10,000

Equipment

Accounts titles Debit Credit

c. Cash $5,000

Supplies

Accounts titles Debit Credit

d. Accounts payable $600

g. Cash 400

Balance $1,000

Totals $1,000 $1,000

Accounts Payable

Accounts titles Debit Credit

d. Supplies $600

f. Cash $200

Balance $400

Totals $600 $600

III. Trial Balance

Accounts titles Debit Credit

Cash $14,400

Truck 10,000

Equipment 5,000

Supplies 1,000

Common stock $15,000

Notes payable 15,000

Accounts payable 400

Totals $30,400 $30,400

IV. Classified Balance Sheet

Assets

Current Assets:

Cash $14,400

Supplies 1,000 $15,400

Long-term Assets:

Truck 10,000

Equipment 5,000 $15,000

Total Assets $30,400

Liabilities + Equity:

Accounts payable 400

Notes payable 15,000

Common stock 15,000

Liabilities + Equity $30,400

Step-by-step explanation:

Journal Entries are made to record transactions for the first time in the accounting books. These transactions are then posted to the general ledger where balances are extracted for the Trial Balance. Based on the Trial Balance, the financial statements are prepared to determine the financial performance and position of the business at the end of an accounting year.