Question

Ayala Architects incorporated as licensed architects on April 1, 2017. During tne first month of the operation of the business, these events and transactions occurred:

Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the corporation.
Hired a secretary-receptionist at a salary of $375 per week, payable monthly.
2 Paid office rent for the month $900.
3 Purchased architectural supplies on account from Burmingham Company $1, 300.
10 Completed blueprints on a carport and billed client $1, 900 for services.
11 Received $700 cash advance from M. Jason to design a new home.
20 Received $2, 800 cash for services completed and delivered to S. Melvin.
30 Paid secretary-receptionist for the month $ 1, 500.
30 Paid $300 to Burmingham Company for accounts payable due.
The company uses these accounts: Cash, Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue, Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expense.
Instructions:
(a) Journalize the transactions, including explanations
(b) Post to the ledger T-accounts.
(c) Prepare a trial balance on April 30, 2017.

Answer 1

To handle Ayala Architects' transaction records, you will journalize transactions, post to T-accounts, and prepare a trial balance as of April 30, 2017, following the principles of double-entry bookkeeping.

Step-by-step explanation:

Journalizing Transactions and Preparing a Trial Balance

To answer your question, we'll go through three main steps. First, we'll journalize the transactions; second, we'll post them to the ledger using T-accounts; and third, we'll prepare a trial balance. Bear in mind that we'll use double-entry bookkeeping, which means every transaction will affect at least two accounts.

1. Journalize the transactions for Ayala Architects:
2. Apr 1: Debit Cash $18,000, Credit Common Stock $18,000 (Stockholders' investment)
3. Apr 2: Debit Rent Expense $900, Credit Cash $900 (Office rent payment)
4. Apr 3: Debit Supplies $1,300, Credit Accounts Payable $1,300 (Purchased supplies on account)
5. Apr 10: Debit Accounts Receivable $1,900, Credit Service Revenue $1,900 (Billed client for services)
6. Apr 11: Debit Cash $700, Credit Unearned Service Revenue $700 (Received advance from client)
7. Apr 20: Debit Cash $2,800, Credit Service Revenue $2,800 (Received cash for services completed)
8. Apr 30: Debit Salaries and Wages Expense $1,500, Credit Cash $1,500 (Paid secretary-receptionist)
9. Apr 30: Debit Accounts Payable $300, Credit Cash $300 (Paid part of the account payable)
10. Post these transactions to
11. T-accounts
12. .
13. Prepare the trial balance as of April 30, 2017. Total debits and total credits should equal, verifying the books are in balance.

Note that the example provided in the instruction uses different figures, but the concepts of journalizing transactions, posting to ledgers, and preparing a trial balance apply equally to Ayala Architects' numbers.

Answer 2

Ayala Architects

a) Journal Entries:

Apr. 1: Debit Cash $18,000

Credit Common Stock $18,000

To record the issuance of common shares for cash.

Apr. 2: Debit Rent Expense $900

Credit Cash $900

To record the payment of rent for the month.

Apr. 3: Debit Supplies $1,300

Credit Accounts payable (Burmingham Company) $1,300

To record the purchase of supplies on account.

Apr. 10: Debit Accounts receivable $1,900

Credit Service Revenue $1,900

To record the sale of services on account.

Apr. 11: Debit Cash $700

Credit Unearned Service Revenue $700

To record receipt of cash in advance for services.

Apr. 20: Debit Cash $2,800

Credit Service Revenue $2,800

To record the receipt of cash for services rendered.

Apr. 30: Debit Salaries and Wages Expense $1,500

Credit Cash $1,500

To record payment of salaries for the month. ($375 * 4 weeks)

Apr. 30: Debit Accounts payable (Burmingham Company) $300

Credit Cash $300

To record payment on account.

b) T-accounts

Cash

Account Titles Debit Credit

Common stock $18,000

Rent $900

Unearned revenue 700

Service revenue 2,800

Salaries and wages 1,500

Accounts payable 300

Balance 18,800

Accounts Receivable

Account Titles Debit Credit

Service Revenue $1,900

Supplies

Account Titles Debit Credit

Accounts payable $1,300

Accounts Payable

Account Titles Debit Credit

Supplies $1,300

Cash $300

Balance 1,000

Unearned Service Revenue

Account Titles Debit Credit

Cash $700

Common Stock

Account Titles Debit Credit

Cash $18,000

Service Revenue

Account Titles Debit Credit

Accounts receivable $1,900

Cash 2,800

Balance $4,700

Salaries and Wages Expense

Account Titles Debit Credit

Cash $1,500

Rent Expense

Account Titles Debit Credit

Cash $900

c) Trial Balance

As of April 30, 2017:

Account Titles Debit Credit

Cash $18,800

Accounts receivable 1,900

Supplies 1,300

Accounts payable $1,000

Unearned Service Revenue 700

Common Stock 18,000

Service Revenue 4,700

Salaries and wages exp. 1,500

Rent Expense 900

Totals $24,400 $24,400

Step-by-step explanation:

a) Data and Analysis:

Apr. 1: Cash $18,000 Common Stock $18,000

Apr. 2: Rent Expense $900 Cash $900

Apr. 3: Supplies $1,300 Accounts payable (Burmingham Company) $1,300

Apr. 10: Accounts receivable $1,900 Service Revenue $1,900

Apr. 11: Cash $700 Unearned Service Revenue $700

Apr. 20: Cash $2,800 Service Revenue $2,800

Apr. 30: Salaries and Wages Expense $1,500 Cash $1,500 ($375 * 4 weeks)

Apr. 30: Accounts payable (Burmingham Company) $300 Cash $300