Extra Examples on Recording Financial Transactions PDF

Recording financial transactions Example (1) 1) The owner invested $35000 cash in starting a real state office operating as a sole proprietorship. 2) Purchased $ 400 office supplies on credit. 3) Purchased office equipment for $8000 paying $2000 in cash and signed a 30-day. 4) Provide a...

Recording financial transactions Example (1) 1) The owner invested $35000 cash in starting a real state office operating as a sole proprietorship. 2) Purchased $ 400 office supplies on credit. 3) Purchased office equipment for $8000 paying $2000 in cash and signed a 30-day. 4) Provide a service for $4000 on account. 5) Paid rent expense $700 cash 6) Paid L.E. 200 related to transaction 2 7) Incurred advertising expense on account for$ 600. 8) Paid office salaries for $ 2200 cash. 9) Withdrew $1200 cash for personal expense. 10) Collected $ 3000 for the service provided in transaction 4. Required a. Prepare the journal entries for the previous transactions b. Post to T-Account (General Ledger). c. Prepare the trial balance at Jan , 2021. Solution  1. The journal entries: Date Account Name Dr Cr 1 Cash 35000 Capital 35000 2 Office supplies 400 Account payable 400 3 Office equipment 8000 Cash 2000 Notes payable 6000 4 Account receivable 4000 Service revenue 4000 5 Rent expense 700 Cash 700 6 Accounts payable 200 Cash 200 7 Advertising Exp. 600 Account payable 600 8 Office salaries 2200 Cash 2200 9 Withdraws 1200 Cash 1200 10 Cash 3000 Accounts receivable 3000 The ledger Cash Office Supplies 35000 2000 400 3000 700 200 2200 1200 38000 38000 31700 Balance Notes Payable Accounts receivable 6000 4000 3000 1000 4000 4000 1000 Balance -2-  Capital Service Revenue 35000 4000 Rent expense Accounts payable 700 200 400 600 1000 1000 Balance 800 Withdrawals Advertising exp. 1200 600 Office Salaries Office equipment 2200 8000 The trial balance Account title Dr Cr Cash 31700 Office supplies 400 Office equipment 8000 Accounts receivable 1000 Accounts Payable 800 Notes payable 6000 Capital 35000 Withdrawals 1200 Service revenue 4000 Rent expense 700 Office salaries 2200 Advertising expense 600 Total 45800 45800 Example (2) The following transactions are related to Salma Sole proprietorship : Jan.1. Provided services on account for L.E 1000 Jan.10. Paid wages to a part-timer employee L.E 1300. Jan.15 Received L.E 600 cash for service provided in (Jan.1). Jan.25 Paid the utility expenses L.E 100. Jan.29 The company sold machines of L.E 500 on credit. Jan.30 The owner withdrew L.E 400 cash for personal use. Required a. Prepare the journal entries for the previous transactions b. Post to T-Account (General Ledger). c. Prepare the trial balance at Jan , 2021 for Omar's company Solution Date Account name Dr Cr Jan.1 Accounts Receivable 1000 Service Revenue 1000 Jan.10 Wages Expense 1300 Cash - 1300 Jan.15 Cash 600 Accounts Receivable 600 Jan.25 Utilities Expense 100 Cash 100 Jan.29 Accounts Receivable 500 Machines 500 Jan.30 Withdrawals 400 Cash 400 2. Ledger Account A/R Service Revenue 1000 600 1000 500 Wages Expenses Utilities Expense 1300 100 Machines Withdrawals 500 400 Cash 600 1300 100 400 600 1800 Balance 1200 3. The trial balance Account title Dr Cr Cash 1200 Accounts Receivable 900 Machines 500 Service Revenue 1000 Wages Expense 1300 Utilities Expenses 100 Withdrawals 400 Total 2700 2700 -5-  Example (3) The following transactions are related to Fahd Sole proprietorship : March.10. Purchased a truck of L.E 5000 by signing a 3 months notes March.15. Incurred L.E 2500 Advertising on account. March.20 Performed L.E 600 services on credit.. Required a. Journalize the above transactions b. Post to T-Account (General Ledger). c. Prepare the trial balance at Jan , 2021 for Fahd company Solution 1. Journal Entries Date Account name Dr Cr 1 Truck 5000 Notes Payable 5000 2 Advertising Expenses 2500 Account payable 2500 3 Accounts Receivable 600 Service Revenue 600 2. Ledger Account Truck Notes Payable 5000 5000 Advertising Expenses Accounts Payable 2500 2500 Accounts Receivable Service Revenue 600 600 3. The trial balance Account title Dr Cr Truck 5000 Accounts Receivable 600 Notes Payable 5000 Accounts Payable 2500 Service Revenue 600 Advertising Expenses 2500 Total 8100 8100 -6-