Question

Problem 3-4- Journalizing Transactions, Posting to the Ledger, and

Preparing a Trial Balance
John Swifty organized a corporation to provide plumbing services. The company, called
Swifty Plumbing, Inc., began operations in April 20x5. Transactions during the month of
April were as follows:
April 1
April 5
April 7
April 9
April 10
April 14
April 16
April 28
April 1 The corporation issued 40,000 shares of capital stock to John Swifty in
exchange for $80,000 cash.
April 5 Purchased a truck for $44,000. Made a $12,000 cash down payment and
issued a note payable for the remaining balance.
April 7 Paid West Office Park $1,800 to rent office space for the month.
April 9 Billed customers $12,000 for plumbing services for the first half of April.
April 10 Paid $6,400 in salaries earned by employees during the first half of April.
April 14 Paid Fred's Auto $1,200 for maintenance and repair services on the company
truck.
April 16 Collected $4,200 of the amounts billed to customers on April 9.
April 28 Billed customers $14,400 for services performed during the second half of the
month.
April 30 Paid $6,400 in salaries earned by employees during the second half of themonth.
April 30 Received a $1,200 bill from Pete's Petroleum for fuel purchased and used in
April. The entire amount is due by May 20.
April 30 Declared a $1,000 dividend payable on May 20.
Instructions
(a) Prepare journal entries to record the above transactions. Select the appropriate
account titles from the following chart of accounts:
Cash
Accounts Receivable
Retained Earnings
Dividends

Answer 1

April transactions for Swifty Plumbing, Inc. include issuing capital stock, purchasing a truck, paying expenses, billing customers, collecting payments, and declaring dividends. Journal entries accurately record financial activities.

Journal Entries:

April 1:

- Debit: Cash $80,000

- Credit: Capital Stock $80,000

April 5:

- Debit: Truck $44,000

- Credit: Cash (down payment) $12,000

- Credit: Note Payable (remaining balance) $32,000

April 7:

- Debit: Rent Expense $1,800

- Credit: Cash $1,800

April 9:

- Debit: Accounts Receivable $12,000

- Credit: Service Revenue $12,000

April 10:

- Debit: Salaries Expense $6,400

- Credit: Cash $6,400

April 14:

- Debit: Maintenance and Repairs Expense $1,200

- Credit: Cash $1,200

April 16:

- Debit: Cash $4,200

- Credit: Accounts Receivable $4,200

April 28:

- Debit: Accounts Receivable $14,400

- Credit: Service Revenue $14,400

April 30:

- Debit: Salaries Expense $6,400

- Credit: Cash $6,400

- Debit: Fuel Expense $1,200

- Credit: Accounts Payable (Pete's Petroleum) $1,200

- Debit: Dividends $1,000

- Credit: Dividends Payable $1,000

These entries reflect the financial transactions during April for Swifty Plumbing, Inc. The journal entries are essential for accurately tracking and recording the company's financial activities.