Question

Use the following account descriptions for journal entries.

Chart of Accounts
Account Type Account Number Account Title Normal Balance
Assets
111 Cash Debit
115 Accounts Receivable Debit
117 Supplies Debit
119 Prepaid Insurance Debit
144 Equipment Debit

Liabilities
212 Accounts Payable Credit


Stockholders Equity
311 Common Stock Credit
313 Dividends Debit

Revenue
411 Service Revenue Credit

Expenses
510 Insurance Expense Debit
511 Rent Expense Debit
512 Advertising Expense Debit
514 Supplies Expense Debit
517 Utility Expense Debit

During its first month of operation, the Plumbing Repair Company, which, specializes in plumbing repair services, completed the following transactions.

[
Date Transaction Description
September 1 Started a plumbing repair business by making a $100,000 deposit in a company bank account, in exchange for 20,000 shares of $5 par value common stock.
September 1 Purchased insurance for the year and paid $3,000 cash.
September 2 Paid monthly rent with $3,500 cash on a warehouse to store the plumbing equipment.
September 5 Purchased plumbing equipment for $25,000, making a $5,000 down payment and placing $20,000 on account.
September 6 Purchased supplies for $2,000 on account.
September 7 Paid $750 cash for advertising in local newspapers.
September 10 Received $15,000 in cash for plumbing services provided.
September 12 Paid $5,000 for plumbing equipment previously purchased on account on September 5th.
September 15 Provided plumbing services on account for $2,500.
September 23 Received $22,000 in cash for plumbing services provided.
September 25 Received $1,500 cash for plumbing services performed on account on September 15th.
September 28 Paid $500 cash for a utility bill.
September 30 Paid cash dividends of $1,000.
September 30 One month's insurance expired.
September 30 The inventory of supplies showed a balance of $1,200 on hand at the end of the month.

Answer 1

Journal Entries for Plumbing Repair Company:

September 1:

Account: Cash (111) Debit $100,000

Account: Common Stock (311) Credit $100,000

(To record the initial deposit of $100,000 in exchange for 20,000 shares of $5 par value common stock)

September 1:

Account: Prepaid Insurance (119) Debit $3,000

Account: Cash (111) Credit $3,000

(To record the purchase of insurance for the year, paid in cash)

September 2:

Account: Rent Expense (511) Debit $3,500

Account: Cash (111) Credit $3,500

(To record the payment of monthly rent for the warehouse)

September 5:

Account: Equipment (144) Debit $25,000

Account: Cash (111) Credit $5,000

Account: Accounts Payable (212) Credit $20,000

(To record the purchase of plumbing equipment, with a down payment of $5,000 and the remaining amount placed on account)

September 6:

Account: Supplies (117) Debit $2,000

Account: Accounts Payable (212) Credit $2,000

(To record the purchase of supplies on account)

September 7:

Account: Advertising Expense (512) Debit $750

Account: Cash (111) Credit $750

(To record the payment of advertising expenses in cash)

September 10:

Account: Cash (111) Debit $15,000

Account: Service Revenue (411) Credit $15,000

(To record the cash received for plumbing services provided)

September 12:

Account: Accounts Payable (212) Debit $5,000

Account: Cash (111) Credit $5,000

(To record the payment for plumbing equipment previously purchased on account)

September 15:

Account: Accounts Receivable (115) Debit $2,500

Account: Service Revenue (411) Credit $2,500

(To record the plumbing services provided on account)

September 23:

Account: Cash (111) Debit $22,000

Account: Service Revenue (411) Credit $22,000

(To record the cash received for plumbing services provided)

September 25:

Account: Cash (111) Debit $1,500

Account: Accounts Receivable (115) Credit $1,500

(To record the cash received for plumbing services performed on account)

September 28:

Account: Utility Expense (517) Debit $500

Account: Cash (111) Credit $500

(To record the payment of a utility bill in cash)

September 30:

Account: Dividends (313) Debit $1,000

Account: Cash (111) Credit $1,000

(To record the payment of cash dividends)

September 30:

Account: Insurance Expense (510) Debit $250

Account: Prepaid Insurance (119) Credit $250

(To record the expiration of one month's insurance)

September 30:

Account: Supplies Expense (514) Debit $1,200

Account: Supplies (117) Credit $1,200

(To record the adjustment for supplies on hand at the end of the month)