Question

Recording Transactions in Journal Entries and T-Accounts

On December 1, 2018, R. Lambert formed Lambert Services, which provides career and vocational counseling services to graduating college students. The following transactions took place during December, and company accounts include the following: Cash, Accounts Receivable, Land, Accounts Payable, Notes Payable, Common Stock, Retained Earnings, Counseling Services Revenue, Rent Expense, Advertising Expense, Interest Expense, Salary Expense, and Utilities Expense.
(1) Raised $7,000 cash through common stock issuance.
(2) Paid $750 cash for December rent on its furnished office space.
(3) Received $500 invoice for December advertising expenses.
(4) Borrowed $15,000 cash from bank and signed note payable for that amount.
(5) Received $1,200 cash for counseling services rendered.
(6) Billed clients $6,800 for counseling services rendered.
(7) Paid $2,200 cash for secretary salary.
(8) Paid $370 cash for December utilities.
(9) Declared and paid a $900 cash dividend.
(10) Purchased land for $13,000 cash to use for its own facilities.
(11) Paid $100 cash to bank as December interest expense on note payable.
Required:
A. Prepare journal entries for each of the transactions 1 through 11.
B. Set up T-accounts for each of the accounts used in part a and post the journal entries to those T-accounts.

Answer 1

A. Journal Entries:

1. Debit Cash $7,000

Credit Common Stock $7,000

To record the issuance of stock.

2. Debit Rent Expense $750

Credit Cash $750

To record the payment of rent expense for December.

3. Debit Advertising Expense $500

Credit Account Payable $500

To record the accrued expense.

4. Debit Cash $15,000

Credit Notes Payable $15,000

To record the borrowing of cash from bank with a note payable.

5. Debit Cash $1,200

Credit Counseling Services Revenue $1,200

To record the receipt of cash for counseling services rendered.

6. Debit Accounts Receivable $6,800

Credit Counseling Services Revenue $6,800

To record revenue for counseling services rendered.

7. Debit Salary Expense $2,200

Cash Cash $2,200

To record the payment for secretary salary.

8. Debit Utilities Expense $370

Credit Cash $370

To record the payment of utilities expense for the month.

9. Debit Dividends $900

Credit Cash $900

To record the payment of dividends.

10. Debit Land $13,000

Credit Cash $13,000

To record the purchase of land for cash.

11. Debit Interest Expense $100

Credit Cash $100

To record the payment of interest on Note Payable.

B. T-accounts:

Cash

Account Titles Debit Credit

Common stock $7,000

Rent Expense $750

Note payable 15,000

Counseling Services 1,200

Salary Expense 2,200

Utilities Expense 370

Dividends 900

Land 13,000

Interest Expense 100

Accounts Receivable

Account Titles Debit Credit

Counseling Services $6,800

Land

Account Titles Debit Credit

Cash $13,000

Accounts Payable

Account Titles Debit Credit

Advertising expense $500

Notes Payable

Account Titles Debit Credit

Cash $15,000

Common Stock

Account Titles Debit Credit

Cash $7,000

Retained Earnings

Account Titles Debit Credit

Counseling Services Revenue

Account Titles Debit Credit

Cash $1,200

Rent Expense

Account Titles Debit Credit

Cash $750

Advertising Expense

Account Titles Debit Credit

Accounts Payable $500

Interest Expense

Account Titles Debit Credit

Cash $100

Salary Expense

Account Titles Debit Credit

Cash $2,200

Utilities Expense

Account Titles Debit Credit

Cash $370

Dividends

Account Titles Debit Credit

Cash $900

Step-by-step explanation:

a) Data and Calculations:

Transactions Analysis:

1. Cash $7,000 Common Stock $7,000

2. Rent Expense $750 Cash $750

3. Advertising Expense $500 Advertising Payable $500

4. Cash $15,000 Notes Payable $15,000

5. Cash $1,200 Counseling Services Revenue $1,200

6. Accounts Receivable $6,800 Counseling Services Revenue $6,800

7. Salary Expense $2,200 Cash $2,200

8. Utilities Expense $370 Cash $370

9. Dividends $900 Cash $900

10. Land $13,000 Cash $13,000

11. Interest Expense $100 Cash $100