Concept explainers
(a)
Journal:
Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.
Income statement:
An income statement is one of the financial statements which shows the revenues, and expenses of the company. The income statement is prepared to ascertain the net income/loss of the company, by deducting the expenses from the revenues.
Statement of retained earnings:
This is an equity statement which shows the changes in the stockholders’ equity over a period of time.
Classified balance sheet:
This is the financial statement of a company which shows the grouping of similar assets and liabilities under subheadings.
Closing entries:
Closing entries are those
Post-closing
Once the closing entries are journalized, and posted by the company, then the next step is to prepare another trial balance known as post-closing trial balance. The post-closing trial balance contains a list of all the permanent accounts, and its balances.
To Journalize: The transaction of Company L for the month of March.
(a)
Explanation of Solution
Journalize the transaction of Company L for the month of March.
Date | Account Title and Description | Debit ($) | Credit ($) | |
March. 1 | Cash | 15,000 | ||
Common stock | 15,000 | |||
(To record the issuance of common stock) | ||||
March.1 | Cash | 6,000 | ||
Notes payable | 6,000 | |||
(To record the amount borrowed by signing a note) | ||||
March. 1 | Equipment | 8,000 | ||
Cash | 8,000 | |||
(To record the purchase of equipment) | ||||
March. 3 | Prepaid rent | 1,500 | ||
Cash | 1,500 | |||
(To record the payment of rent in advance) | ||||
March. 3 | Prepaid insurance | 2,400 | ||
Cash | 2,400 | |||
(To record the payment of insurance in advance for 6 months) | ||||
March. 6 | Supplies | 2,000 | ||
Accounts payable | 2,000 | |||
(To record the purchase of supplies on account) | ||||
March. 14 | Accounts receivable | 3,700 | ||
Service revenue | 3,700 | |||
(To record the services performed on account) | ||||
March. 18 | Accounts payable | 500 | ||
Cash | 500 | |||
(To record the payment of cash owed for cleaning supplies) | ||||
March. 20 | Salaries and Wages expense | 1,750 | ||
Cash | 1,750 | |||
(To record the payment of salaries for employees) | ||||
March. 21 | Cash | 1,600 | ||
Accounts receivable | 1,600 | |||
(To record the cash received for the service performed on March 14) | ||||
March. 28 | Accounts receivable | 4,200 | ||
Service Revenue | 4,200 | |||
(To record the services performed on account) | ||||
March. 31 | Maintenance and repairs expenses | 350 | ||
Cash | 350 | |||
(To record the payment made for maintenance and repair expenses) | ||||
March. 31 | Cash | 900 | ||
Dividends | 900 | |||
(To record the payment of dividends) | ||||
(b)
T-Accounts:
T-accounts are referred as T-account because its format represents the letter “T”. The T-accounts consists of the following:
- The title of accounts.
- The debit side (Dr) and,
- The credit side (Cr).
To Post: The journal entries to the respective general ledger accounts.
(b)
Explanation of Solution
The posting of the journal entries to the general ledger accounts are as follows:
Cash | |||
Mar. 1 | $ 15,000 | Mar. 1 | $ 8,000 |
1 | $ 6,000 | 2 | $ 1,500 |
21 | $ 1,600 | 3 | $ 2,400 |
18 | $ 500 | ||
20 | $ 1,750 | ||
31 | $ 350 | ||
31 | $ 900 | ||
Total | $ 22,600 | Total | $15,400 |
Bal. | $ 7,200 |
Table (1)
Accounts receivable | |||
Mar. 14 | $ 3,700 | Mar. 21 | $ 1,600 |
28 | $ 4,200 | ||
$ 7,900 | $ 1,600 | ||
Bal. | $ 6,300 |
Table (2)
Supplies | |||
Mar. 6 | $ 2,000 | ||
Bal. | $ 2,000 |
Table (3)
Prepaid Rent | |||
Mar. 2 | $ 1,500 | ||
Bal. | $ 1,500 |
Table (4)
Prepaid Insurance | |||
Mar. 3 | $ 2,400 | ||
Bal. | $ 2,400 |
Table (5)
Equipment | |||
Mar. 1 | $ 8,000 | ||
Bal. | $ 8,000 |
Table (6)
Notes Payable | |||
Mar. 1 | $ 6,000 | ||
Bal. | $ 6,000 |
Table (7)
Accounts Payable | |||
Mar. 18 | $ 500 | Mar. 6 | $ 2,000 |
Bal. | $ 1,500 |
Table (8)
Common Stock | |||
Mar. 1 | $15,000 | ||
Bal. | $15,000 |
Table (9)
Dividends | |||
Mar. 1 | $ 900 | ||
Bal. | $ 900 |
Table (10)
Service Revenue | |||
Mar. 14 | $ 3,700 | ||
28 | $ 4,200 | ||
Bal. | $ 7,900 |
Table (11)
Salaries and Wages Expenses | |||
Mar. 20 | $ 1,750 | ||
Bal. | $ 1,750 |
Table (12)
Maintenance and repairs expenses | |||
Mar. 31 | $ 350 | ||
Bal. | $ 350 |
Table (13)
(c)
Trial balance:
A trial balance is the summary of all the ledger accounts. The trial balance is prepared to check the total balance of the debit column with the total of the balance of the credit column, which must be equal. The trial balance is usually prepared to check accuracy of ledger balances, and before the preparation of financial statements.
To prepare: The trial balance of Company L at March, 31.
(c)
Explanation of Solution
Prepare a trial balance of Company L for the month ended March, 31 as follows:
Company L Trial Balance March, 31, 2017 | ||
Particulars | Debit $ | Credit $ |
Cash | 7,200 | |
Accounts receivable | 6,300 | |
Supplies | 2,000 | |
Equipment | 8,000 | |
Prepaid rent | 1,500 | |
Prepaid insurance | 2,400 | |
Accounts payable | 1,500 | |
Notes payable | 6,000 | |
Common stock | 15,000 | |
Service revenue | 7,900 | |
Maintenance and repairs expenses | 350 | |
Salaries and wages expense | 1,750 | |
Dividends | 900 | |
Total | 30,400 | 30,400 |
Table (14)
(d)
An adjusting entry is prepared when the trial balance is not up-to-date, and complete, and they are usually prepared at the end of the accounting period. This adjusting entry is essential for preparing the financial statements of the business
To Journalize: Theadjusting entries of Company L for March, 31.
(d)
Explanation of Solution
The adjusting entries of Company L for March, 31, 2017 are as follows:
(1)
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March, 31 | Accounts receivable | 200 | |
Service revenue | 200 | ||
(To record the service performed which is not recorded and not collected) |
Description:
- Accounts receivable is an asset account. There is an increase in the asset, and hence it is debited. Service revenue is a component of
stockholder’s equity account. There is an increase in service revenue, and hence, it is credited.
(2)
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March, 31 |
| 250 | |
| 250 | ||
(To record the depreciation and the accumulated depreciation) |
Description:
- Depreciation expense is an expense account. There is an increase in the expenses, and hence it is debited. Accumulated Depreciation is a contra-asset account. There is a decrease in assets, and hence, it is credited.
(3)
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March, 31 | Insurance Expense (1) | 400 | |
Prepaid Insurance | 400 | ||
(To record the insurance expenses for December) |
Working notes:
Description:
- Insurance expense is an expense account. There is an increase in the expenses, and hence it is debited. (Increase in insurance expense decreases stockholders’ equity account). Prepaid insurance is an asset account. There is a decrease in asset, and hence, it is credited.
(4)
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March, 31 | Supplies expense (2) | 1,720 | |
Supplies | 1,720 | ||
(To record the supplies expenses) |
Working notes:
Description:
- Supplies expense is an expense account. There is an increase in the expenses, and hence it is debited. (Increase in Supplies expense decreases stockholders’ equity account). Supply is an asset account. There is a decrease in asset, and hence, it is credited.
(5)
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March, 31 | Salaries and wages expense | 1,080 | |
Salaries and wages payable | 1,080 | ||
(To record the accrued salaries payable) |
Description:
- Salaries and wages expense is an expense account. There is an increase in the salaries and wages expenses, and hence it is debited. (Increase in salaries and wages expense decreases stockholders’ equity account). Salaries and wages payable is a liability account. There is an increase in liability, and hence, it is credited.
(6)
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March, 31 | Rent Expense (3 ) | 400 | |
Prepaid Rent | 400 | ||
(To record the rent expenses for March) |
Working notes:
Description:
- Rent expense is an expense account. There is an increase in the expenses, and hence it is debited. (Increase in rent expense decreases stockholders’ equity account). Prepaid rent is an asset account. There is a decrease in asset, and hence, it is credited.
(7)
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March, 31 | Interest expense (4) | 30 | |
Interest payable | 30 | ||
(To record the interest accrued on notes payable) |
Working notes:
Description:
- Interest expense is an expense account. There is an increase in the expenses, and hence it is debited. (Increase in interest expense decreases stockholders’ equity account). Interest payable is a liability account. There is an increase in liability, and hence, it is credited.
(e)
To post: The adjusting entries to the ledger accounts.
(e)
Explanation of Solution
Post the adjusting entries to the respective ledger accounts as follows:
Service revenue | |||
Mar. 31 | $ 7,900 | ||
31 | $ 200 | ||
Bal. | $ 8,100 |
Table (15)
Accounts receivable | |||
Mar. 31 | $ 6,300 | ||
31 | $ 200 | ||
Bal. | $ 6,500 |
Table (16)
Accumulated Depreciation – Equipment | |||
Mar. 31 | $ 250 | ||
Bal. | $ 250 |
Table (17)
Depreciation Expense | |||
Mar. 31 | $ 250 | ||
Bal. | $ 250 |
Table (18)
Insurance Expense | |||
Mar. 31 | $ 400 | ||
Bal. | $ 400 |
Table (19)
Prepaid Insurance | |||
Mar. 3 | $ 2,400 | Mar. 31 | $ 400 |
Bal. | $ 2,000 |
Table (20)
Supplies Expense | |||
Mar. 31 | $ 1,720 | ||
Bal. | $ 1,720 |
Table (21)
Supplies | |||
Mar. 6 | $ 2,000 | Mar. 31 | $ 1,720 |
Bal. | $ 280 |
Table (22)
Salaries and Wages Payable | |||
Mar. 31 | $ 1,080 | ||
Bal. | $ 1,080 |
Table (23)
Salaries and Wages Expense | |||
Mar. 20 | $ 1,750 | ||
31 | $ 1,080 | ||
Bal. | $ 2,830 |
Table (24)
Rent Expense | |||
Mar. 31 | $ 500 | ||
Bal. | $ 500 |
Table (25)
Prepaid Rent | |||
Mar. 2 | $ 1,500 | Mar. 31 | $ 500 |
Bal. | $ 1,000 |
Table (26)
Interest Expense | |||
Mar. 31 | $ 30 | ||
Bal. | $ 30 |
Table (27)
Maintenance and Repairs Expense | |||
Mar. 31 | $ 350 | ||
Bal. | $ 350 |
Table (28)
Interest Payable | |||
Mar. 31 | $ 30 | ||
Bal. | $ 30 |
Table (29)
(f)
Adjusted trial balance:
The unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts before making adjusting journal entries.
To prepare: An adjusted trial balance of Company L at March, 31.
(f)
Explanation of Solution
Prepare an adjusted trial balance of Company L for the month ended March, 31 as follows:
Company L Adjusted Trial Balance March, 31, 2017 | ||
Particulars | Debit $ | Credit $ |
Cash | 7,200 | |
Accounts receivable | 6,500 | |
Supplies | 280 | |
Equipment | 8,000 | |
Prepaid rent | 1,000 | |
Prepaid insurance | 2,000 | |
Accumulated depreciation – Equipment | 250 | |
Accounts payable | 1,500 | |
Notes payable | 6,000 | |
Salaries and wages payable | 1,080 | |
Interest payable | 30 | |
Common stock | 15,000 | |
Service revenue | 8,100 | |
Maintenance and repairs expenses | 350 | |
Salaries and wages expense | 2,830 | |
Depreciation expense | 250 | |
Rent expenses | 500 | |
Insurance expense | 400 | |
Supplies expense | 1,720 | |
Interest expense | 30 | |
Dividends | 900 | |
Total | 31,960 | 31,960 |
Table (30)
(g)
To Prepare: The income statement for the month of March.
The retained earnings statement for the month of March.
The classified balance sheet of Company L as on March 31, 2017.
(g)
Explanation of Solution
The income statement for the month of March, 31 2017 is computed in the table below:
L Company | ||
Income Statement | ||
As on March 31 , 2017 | ||
Particulars | $ | $ |
Revenue: | ||
Service Revenue | 8,100 | |
Less: Expenses | ||
Salaries Expenses | 2,830 | |
Supplies Expenses | 1,720 | |
Rent Expenses | 500 | |
Insurance Expenses | 400 | |
Maintenance and repairs Expenses | 350 | |
Depreciation Expenses | 250 | |
Interest Expenses | 30 | |
Total Expenses | 6,080 | |
Net income | 2,020 |
Table (31)
The retained earnings statement for the month of March, 2017 is computed in the table below:
L Company | ||
Retained earnings statement | ||
For the month ended March 31, 2017 | ||
Particulars | $ | |
Retained earnings at March, 1 | 0 | |
Add: Net income | 2,020 | |
2,020 | ||
Less: Dividends | 900 | |
Retained earnings at March, 31 | 1,120 |
Table (32)
Prepare a classified balance sheet of Company L for the month ended March 31, 2017.
L Company | ||
Classified Balance sheet Statement | ||
As at March 31, 2017 | ||
Assets | $ | $ |
Current assets: | ||
Cash | 7,200 | |
Accounts receivable | 6,500 | |
Supplies | 280 | |
Prepaid rent | 1,000 | |
Prepaid insurance | 2,000 | |
Total of current assets | 16,980 | |
Other assets: | ||
Equipment | 8,000 | |
Less: Accumulated depreciation -Equipment | 250 | |
Total of other assets | 7,750 | |
Total assets | $24,730 | |
Liabilities and Stockholders' equity | $ | $ |
Liabilities: | ||
Accounts payable | 6,000 | |
Notes payable | 1,500 | |
Interest payable | 30 | |
Salaries and wages payable | 1,080 | |
Total liabilities | 8,610 | |
Stockholders' equity: | ||
Common stock | 15,000 | |
Retained earnings | 1,120 | |
Total stockholders' equity | 16,120 | |
Total liabilities and stockholders' equity | 24,730 |
Table (33)
The retained earnings for the month of March, 2017 are $1,120.
The classified balance sheet for the month ended November, 30 2017 are agreed, both the assets account and the liabilities account shows a balance of $24,730
(h)
To prepare: The closing entries of Company L,
(h)
Explanation of Solution
The closing entries of Company L for March 31, 2017 are as follows:
- 1. Closing entry for revenue account.
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March 31 | Service revenue | 8,100 | |
Income summary | 8,100 | ||
(To record the closure of revenues account ) |
Description:
Service revenue account has a normal credit balance of $8,100 in total, now to close this account, the service revenue account, and the rent revenue account must be debited with $8,100 and, income summary account must be credited with $8,100.
- In this closing entry, the service revenue account, and the rent revenue account balance is being transferred to the income summary account, to bring the revenues account balance to zero.
- Thereby, the income summary account balance gets increased by $8,100 and, the revenue account balance gets decreased by $8,100.
- 2. Closing entry for expenses account.
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March 31 | Income summary | 6,080 | |
Salaries and wages Expense | 2,830 | ||
Rent Expense | 500 | ||
Depreciation Expense | 250 | ||
Supplies Expense | 1,720 | ||
Insurance Expense | 400 | ||
Maintenance and repairs Expense | 350 | ||
Interest Expense | 30 | ||
(To record the closure of expense account to income summary) |
Description:
All expenses accounts have a normal debit balance, the total of expenses are $6,080 have to be closed by transferring these account balances to the income summary account. All expenses account must be credited, and the income summary account must be debited with $ 6,080.
- In this closing entry, all the expenses account balances are transferred to the income summary account, to bring the expenses account balances to zero.
- Thereby, both the income summary account, and the expenses account balances get decreased by $6,080.
- 3. Closing entry for income summary account.
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March 31 | Income summary (1) | 2,020 | |
Retained earnings | 2,020 | ||
(To record the closure of net income from income summary to retained earnings) |
Working note:
Determine the balance amount in the income summary.
Description:
Determined amount balance of income summary is $2,020, which has to be closed by debiting the income summary account with $2,020, and crediting the retained earnings account with $2,020.
- In this closing entry, the income summary account balance is being transferred to the retained earnings account, to bring the income summary account balance to zero.
- Thereby, the income summary account gets decreased, and the retained earnings account balance gets increased by $2,020.
- 4. Closing entry for dividend account.
Date | Accounts title and Description |
Debit ($) |
Credit ($) |
March 31 | Retained earnings | 900 | |
Dividends | 900 | ||
(To record the closure of dividend to retained earnings) |
Description:
Dividends account has a normal debit balance of $900, now to close this account, retained earnings account must be debited with $900 and, dividend account must be credited with $900.
- In this closing entry, the dividend account balance is being transferred to the retained earnings account, to bring the dividend account balance to zero.
- Thereby, the retained earnings account balance gets increased by $900 and, the dividend account balance gets decreased by $900.
- Post the closing entries to the respective ledger accounts as follows:
Service revenue | |||
Mar. 31 | $ 8,100 | Mar. 31 | $ 7,900 |
31 | $ 200 | ||
Bal. | $ 0 |
Table (34)
Depreciation Expense | |||
Mar. 31 | $ 250 | Mar. 31 | $ 250 |
Bal. | $ 0 |
Table (35)
Insurance Expense | |||
Mar. 31 | $ 400 | Mar. 31 | $ 400 |
Bal. | $ 0 |
Table (36)
Supplies Expense | |||
Mar. 31 | $ 1,720 | Mar. 31 | $ 1,720 |
Bal. | $ 0 |
Table (37)
Salaries and Wages Expense | |||
Mar. 20 | $ 1,750 | Mar. 31 | $ 2,830 |
31 | $ 1,080 | ||
Bal. | $ 0 |
Table (38)
Rent Expense | |||
Mar. 31 | $ 500 | Mar. 31 | $ 500 |
Bal. | $ 0 |
Table (39)
Interest Expense | |||
Mar. 31 | $ 30 | Mar. 31 | $ 30 |
Bal. | $ 0 |
Table (40)
Maintenance and Repairs Expense | |||
Mar. 31 | $ 350 | Mar. 31 | $ 350 |
Bal. | $ 0 |
Table (41)
Dividends | |||
Mar. 31 | $ 900 | Mar. 31 | $ 900 |
Bal. | $ 0 |
Table (42)
Retained earnings | |||
Mar. 31 | $ 900 | Mar. 31 | $ 2,020 |
Bal. | $ 1,120 |
Table (43)
Income Summary | |||
Mar. 31 | $ 6,080 | Mar. 31 | $ 8,100 |
31 | $ 2,020 | ||
Bal. | $ 0 |
Table (44)
(i)
To prepare: A post–closing trial balance of Company L at March 31.
(i)
Explanation of Solution
Prepare a post–closing trial balance of Company L for the month ended March, 31 as follows:
Company L Post–closing Trial Balance March, 31, 2017 | ||
Particulars | Debit $ | Credit $ |
Cash | 7,200 | |
Accounts receivable | 6,500 | |
Supplies | 280 | |
Equipment | 8,000 | |
Prepaid rent | 1,000 | |
Prepaid insurance | 2,000 | |
Accumulated depreciation – Equipment | 250 | |
Accounts payable | 1,500 | |
Notes payable | 6,000 | |
Salaries and wages payable | 1,080 | |
Interest payable | 30 | |
Common stock | 15,000 | |
Retained earnings | 1,120 | |
Total | 24,980 | 24,980 |
Table (45)
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Chapter 4 Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
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- Martinez Co. borrowed $54,000 on March 1 of the current year by signing a 60-day, 7%, interest-bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to journalize the payment should include a a. debit to Interest Payable for $630 b. debit to Interest Expense for $630 c. credit to Cash for $54,000 d. credit to Cash for $57,780arrow_forwardOn November 7, Mura Company borrows $190,000 cash by signing a 90-day, 7%, $190,000 note payable. 1. Compute the accrued interest payable on December 31. 2. & 3. Prepare the journal entries to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Compute the accrued interest payable on December 31. Note: Use 360 days a year. Do not round your intermediate calculations. Total through maturity Year end interest accrual Interest recognized February 5. Principal x Rate (%) × Time - Interest % % %arrow_forwardOn November 7, Mura Company borrows $270,000 cash by signing a 90-day, 7%, $270,000 note payable. 1. Compute the accrued interest payable on December 31. 2. & 3. Prepare the journal entries to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Compute the accrued interest payable on December 31. Note: Use 360 days a year. Do not round your intermediate calculations. Principal x × Rate (%) × Time = Interest Check my wearrow_forward
- On November 7, Mura Company borrows $240,000 cash by signing a 90-day, 11%, $240,000 note payable. 1. Compute the accrued interest payable on December 31. 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Compute the accrued interest payable on December 31. (Use 360 days a year. Do not round your intermediate calculations.) Total through maturity Year end interest accrual Interest recognized February 5 Principal $ 240,000 $ = Interest 3,960arrow_forwardOn November 7, Mura Company borrows $160,000 cash by signing a 90-day, 8%, $160,000 note payable. 1. Compute the accrued interest payable on December 31. 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Compute the accrued interest payable on December 31. (Use 360 days a year. Do not round your intermediate calculations.) Principal x Rate (%) x Time = Interest Total through maturity % Year end interest accrual % Interest recognized February 5. %arrow_forwardEgnab Inc. had the following transactions during the current fiscal year ending December 31 . August 01. They borrowed $100,000 from Valley Bank, signing a 90-days, 7.50% Note Payable. October 15. Egnab Inc. purchased a truck from Trusty Cars for $29,500. Trusty Cars agreed to accept, as full payment, a 5.00%, two months Note for the invoice amount. November 1 Egnab Inc. paid Valley Bank the Note Payable plus the accrued interest. November 15. Egnab Inc. purchased merchandise (inventory) from Easy Food Corp. for $13,900. Easy Food Corp. accepted a 120-days, 6.50% Note as full settlement of the purchase. December 15. The Note Payable to Trusty Cars matured today and Egnab Inc. paid the accrued interest as well as 70.00% of the Note Payable. For the remaining amount, a new Note was issued for 45-days with 9.00% Interest. (show your calculations and round to 2 decimal places, please) (a) Prepare Journal Entries to record the above transactions. Use a 360-day year in making the Interest…arrow_forward
- Yi Min started an engineering firm called Min Engineering. He began operations and completed seventransactions in May, which included his initial investment of $18,000 cash. After those seven transactions,the ledger included the following accounts with normal balances. Cash . . . . . . . . . . . . . . . . . . $37,600Office supplies. . . . . . . . . . 890Prepaid insurance. . . . . . . 4,600Office equipment. . . . . . . $12,900Accounts payable. . . . . . . 12,900Y. Min, Capital. . . . . . . . . . 18,000Y. Min, Withdrawals . . . . . . . . . . . $ 3,370Engineering fees earned. . . . . . . 36,000Rent expense. . . . . . . . . . . . . . . . 7,540 Required 1. Prepare a trial balance for this business as of the end of May. 2. The following seven transactions produced the account balances shown above. a. Y. Min invested $18,000 cash in the business. b. Paid $7,540 cash for monthly rent expense for May. c. Paid $4,600 cash in advance for the annual insurance premium beginning the next period. d.…arrow_forwardOn November 7, Mura Company borrows $160,000 cash by signing a 90-day, 8%, $160,000 note payable. 1. Compute the accrued interest payable on December 31. 2. & 3. Prepare the journal entries to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Prepare the journal entries to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Note: Use 360 days a year. Do not round your intermediate calculations. View transaction list No 1 2 View journal entry worksheet Date December 31 February 05 Interest expense Interest payable Notes payable Interest payable Interest expense Cash General Journal D < Req 1 Reg 2 and 3 Debit 160,000 Credit Qarrow_forwardOn January 1, 2018, a business borrowed $18,000 on a five-year, 5% note payable. At December 31, 2018, the business should record A. interest payable of $900. B. note receivable of $18,000. C. cash payment of $18,000. D. nothing. ( The note is already on teh books.arrow_forward
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