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Answers to Practice Problem 2

Journalizing Transactions

  1. Transactions are recorded in a place called a journal by first listing the accounts to be debited and then listing the accounts to be credited.
    • Note: Accounts to be credited are indented, as below.
General Journal
DateAccountsDebitCredit
April 1Cash$150,000
-
-
Common stock
-
$150,000
-
-
-
-
April 2Prepaid rent$48,000
-
-
Cash
-
$48,000
-
-
-
-
April 2Office building$80,000
-
-
Cash
-
$20,000
-
Accounts payable
-
$60,000
-
-
-
-
April 3Office supplies$1,500
-
-
Accounts payable
-
$1,500
-
-
-
-
April 3Cash$4,000
-
-
Unearned fees
-
$4,000
-
-
-
-
April 8Cash$16,000
-
-
Fees earned
-
$16,000
-
-
-
-
April 14Wages expense$7,000
-
-
Cash
-
$7,000
-
-
-
-
April 16Accounts payable$60,000
-
-
Cash
-
$60,000
-
-
-
-
April 28Accounts receivable$11,300
-
-
Fees earned
-
$11,300
-
-
-
-
April 28Dividends$1,500
-
-
Cash
-
$1,500

Ledger Accounts (T-Accounts)

  1. The next step in the accounting cycle is to post the information from the journal to the appropriate ledger accounts (T-Accounts) so that we can determine the balance of each account.

*The number in parentheses represents the transaction number.

 

Unadjusted Trial Balance

Spring Garden Lawn Care, Incorporated
Trial Balance
as of April 30, 20XX
AccountsDebitCredit
Cash$33,500
-
Accounts receivable$11,300
-
Office supplies$1,500
-
Prepaid rent$48,000
-
Office building$80,000
-
Accounts payable
-
$1,500
Unearned fees
-
$4,000
Capital stock
-
$150,000
Dividends$1,500
-
Fees earned
-
$27,300
Wages expense$7,000
-
Total$182,800$182,800
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