The General Journal and the General Ledger

Transcription

1 3 The General Journal and the General Ledger DEMONSTRATION PROBLEM G. Bell, a fitness enthusiast, buys an existing exercise center, Body Firm. The following chart of accounts now applies: Assets Revenue 111 Cash 411 Income from Services 124 Land 126 Building Expenses 128 Equipment 511 Wages Expense 512 Utilities Expense Liabilities 513 Advertising Expense 221 Accounts Payable 514 Repair Expense 223 Mortgage Payable 519 Miscellaneous Expense Owner's Equity 311 G. Bell, Capital 312 G. Bell, Drawing Apr. 16 Bell deposited $100,000 in a bank account for the purpose of buying Body Firm. 17 Bought the assets of Body Firm for a total price of $188,000. The assets include equipment, $28,000; building, $96,000; and land, $64,000. Made a down payment of $89,000 and signed a mortgage note for the remainder. 17 Bought additional equipment from Fitness Supply Co. on account for $3,550, paying $710 down, with balance due in thirty days. 29 Celebrated the grand opening of Body Firm. Advertising expenses were paid in cash for the following: Advertising in newspaper $314 Announcements mailed to local residents 85 Postage 125 Balloons, ribbons, flowers 126 Food and refreshments Received fees for daily use of the facilities, $1, Paid wages for the period April 17 through April 30, $ Received and paid electric bill, $ Received and paid repair bill, $ Bell withdrew $600 for personal use. Copyright Houghton Mifflin Company. All rights reserved. 1

2 Instructions 1. Record the transactions in the general journal. 2. Post the transactions to the general ledger. 3. Prepare a trial balance as of April 30. Copyright Houghton Mifflin Company. All rights reserved. 2

3 SOLUTION GENERAL JOURNAL PAGE 1 DESCRIPTION Apr. 16 Cash , G. Bell, Capital , Invested cash in the business Equipment , Building , Land , Cash , Mortgage Payable , Bought Body Firm Equipment 128 3, Cash Accounts Payable 221 2, Bought equipment on account from Fitness Supply Co., with balance due in 30 days Advertising Expense Cash Grand opening expenses Cash 111 1, Income from Services 411 1, Received fees Wages Expense Cash Paid wages for period April 17 through April Utilities Expense Cash Paid electric bill Repair Expense Cash Paid repair bill G. Bell, Drawing Cash Withdrawal for personal use Copyright Houghton Mifflin Company. All rights reserved. 3

4 GENERAL LEDGER Cash 111 Apr , , , , , , , , , , , , Land 124 Apr , , Building 126 Apr , , Equipment 128 Apr , , , , Copyright Houghton Mifflin Company. All rights reserved. 4

5 Accounts Payable 221 Apr , , Mortgage Payable 223 Apr , , G. Bell, Capital 311 Apr , , G. Bell, Drawing 312 Apr Income from Services 411 Apr , , Copyright Houghton Mifflin Company. All rights reserved. 5

6 Wages Expense 511 Apr Utilities Expense 512 Apr Adveritising Expense 513 Apr Repair Expense 514 Apr Miscellaneous Expense 519 Copyright Houghton Mifflin Company. All rights reserved. 6

7 NAME Body Firm Trial Balance April 30, Cash 9, Land 64, Building 96, Equipment 31, Accounts Payable 2, Mortgage Payable 99, G. Bell, Capital 100, G. Bell, Drawing Income from Services 1, Wages Expense Utilities Expense Advertising Expense Repair Expense , , Copyright Houghton Mifflin Company. All rights reserved. 7