Question

Denzel Brooks opens a Web consulting business called Venture Consultants and completes the following transactions in March.

March 1-Brooks invested $150,000 cash along with $22,000 in office equipment in the company.
March 2-The company prepaid $6,000 cash for six months rent for and office. (Hint: Debit Prepaid Rent for $6,000.)
March 3-The company made credit purchases of office equipment for $3,000 and office supplies for $1,200. Payment due within 10 days.
March 6-The company completed services for a client and immediately received $4,000 cash.
March 9-The company completed a $7,500 project for a client who must pay within 30 days.
March 12-The company paid $4,200 cash to settle the accounts payable created on March 3.
March 19-The company paid $5,000 cash for the premium on a 12 month insurance policy. (Hint: Debit Prepaid Insurance for $5,000.)
March 22-The company received $3,500 cash as partial payment for the work completed on March 9.
March 25-The company completed work for another client for $3,280 on credit.
March 29-Brooks withdrew $5,100 cash from the company for personal use.
March 30-The company purchased $600 of additional office supplies on credit.
March 31-The company paid $500 cash for this months utility bill.

Required:
a. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307); Dividends (319); Services Revenue (403); and Utilities Expense (690).

b. Post the journal entries from part 1 to the ledger accounts.
c. Prepare a trial balance as of April 30.

Answer 1

a. Journal Entries

March 1

Cash $150,000 (debit)

Office Equipment $22,000 (credit)

Capital $ 172,000

March 2

Prepaid Rent $6,000 (debit)

Cash $6,000 (credit)

March 3

Office equipment $3,000 (debit)

Office supplies $1,200 (debit)

Accounts Payable $4,200 (credit)

March 6

Cash $4,000 (debit)

Service Revenue $4,000 (credit)

March 9

Accounts Receivable $7,500 (debit)

Service Revenue $7,500 (credit)

March 12

Accounts Payable $4,200 (debit)

Cash $4,200 (credit)

March 19

Prepaid Insurance $5,000 (debit)

Cash $5,000 (credit)

March 22

Cash $3,500 (debit)

Accounts Receivable $3,500 (credit)

March 25

Accounts Receivable $3,280 (debit)

Service Revenue $3,280 (credit)

March 29

Drawings $5,100 (debit)

Cash $5,100 (credit)

March 30

Office Supplies $600 (debit)

Accounts Payable $600 (credit)

March 31

Utilities Expenses $500 (debit)

Cash $500 (credit)

b.Ledger Account Balances

Cash ($150,000 - $500 - $5,100 + $3,500 - $5,000 - $4,200 + $4,000 - $6,000) = $136,700

Office Equipment ($22,000 + $3,000) = $25,000

Capital = $ 172,000

Prepaid Rent = $6,000

Office supplies ($1,200 + $600) = $1,800

Accounts Payable ($4,200 + $600 - $4,200) = $600

Service Revenue ($4,000 + $3,280 + $7,500) = $14,780

Accounts Receivable ($7,500 - $3,500 + $3,280) = $7,280

Prepaid Insurance = $5,000

Utilities Expenses = $500

c. Trial Balance

Debit Credit

Cash $136,700

Office Equipment $25,000

Capital $ 172,000

Prepaid Rent $6,000

Office supplies $1,800

Accounts Payable $600

Service Revenue $14,780

Accounts Receivable $7,280

Prepaid Insurance $5,000

Utilities Expenses $500

Totals $187,380 $187,380

Step-by-step explanation:

The above show the journals recorded, posting to ledger accounts and determination of account balances and trial balance as at April 30.