Jimmy Adams , on March 1st 202
Jimmy Adams , on March 1st 2020, started a new accountingpractice called X-Factor Accounting with the aim to provide thebook keeping services to small and medium business organization inLower Mainland. During its first month of operations followingtransactions have occurred.
March 1st – Adams invested $ 50,000 in cash and officeequipment worth $ 12,000.
March 1st – Paid $ 9,000 cash for three months rent for anoffice, in advance.
March 2nd – Paid $ 1,000 to Max Ads, for onlineadvertisement.
March 3rd – Purchased office equipment woth $ 6,000 and OfficeSupplies worth $ 1,200 on credit.
March 5th – Completed a job for a client and imemdiatelyreceived $6,200 in cash.
March 7th – Purchased computers worth $ 5000 on credit.
March 11th – Paid the amount that was due from March 3rdtransaction.
March 15th – Paid $ 3,000 for the annual premium on aninsurance policy.
March 21st – Paid $ 300 for repairs of computers.
March 23rd – Completed work for another client for $ 15,850 oncredit.
March 25th – Received a telephone bill for $ 500 and is notpaid yet.
March 27th – Adams withdrew $ 3,500 cash from business to paypersonal expenses.
March 30th – Purchased $ 650 worth office supplies oncredit.
March 31st – Paid salries worth $ 5,000 .
March 31st – Received $ 4,500 as partial payment for the workcompleted on March 23rd.
Prepare the following
a. Record the journal entries in the books of X-FactorAccounting for the month of March 2020.
b. Post the amonts to respective T Accounts
c. Prepare Trial Balance for X-Factor Accounting as of March31st 2020.
Answer:
1.
| Date | Particulars | Debit | Credit |
|---|---|---|---|
| March 1 | Cash a/c | 50000 | |
| Office Equipment a/c | 12000 | ||
| Adam’s Equity a/c | 62000 | ||
| March 1 | Prepaid Office Rent a/c | 9000 | |
| Cash a/c | 9000 | ||
| March 2 | Max ads-Advertisment Expense a/c | 1000 | |
| Cash a/c | 1000 | ||
| March 3 | Office Equipment a/c | 6000 | |
| Office Supplies a/c | 1200 | ||
| Accouts Payable a/c | 7200 | ||
| March 5 | Cash a/c | 6200 | |
| Service Revenue a/c | 6200 | ||
| March 7 | Computers a/c | 5000 | |
| Accounts Payable a/c | 5000 | ||
| March 11 | Accounts Payable a/c | 7200 | |
| Cash a/c | 7200 | ||
| March 15 | Insurance Premium a/c | 3000 | |
| Cash a/c | 3000 | ||
| March 21 | Repair Expense a/c | 300 | |
| Cash a/c | 300 | ||
| March 23 | Accounts Receivable a/c | 15850 | |
| Service Revenue a/c | 15850 | ||
| March 25 | Telephone Expense a/c | 500 | |
| Telephone Bill Payable a/c | 500 | ||
| March 27 | Adam’s Equity a/c | 3500 | |
| Cash a/c | 3500 | ||
| March 30 | Office Supllies a/c | 650 | |
| Accounts Payable a/c | 650 | ||
| March 31 | Salaries a/c | 5000 | |
| Cash a/c | 5000 | ||
| March 31 | Cash a/c | 4500 | |
| Accounts Receivable a/c | 4500 |
Cash a/c
| Particulars | $ | Particulars | $ |
|---|---|---|---|
| Adam’s Equity a/c | 50000 | Prepaid Office Rent a/c | 9000 |
| Service Revenue a/c | 6200 | Max Ads-Advertisement Expense a/c | 1000 |
| Accounts Receivable a/c | 4500 | Accounts Payable a/c | 7200 |
| Insurance Premium a/c | 3000 | ||
| Repair Expense a/c | 300 | ||
| Adam’s Equity a/c | 3500 | ||
| Salaries a/c | 5000 | ||
| Balance c/d | 31700 | ||
| 60,700 | 60,700 |
Office Equipmenta/c
| Particulars | $ | Particulars | $ |
| Adam’s Equity a/c | 12000 | ||
| Accounts Payable a/c | 6000 | Balance c/d | 18000 |
| 18,000 | 18,000 |
Adam’s Equitya/c
| Particulars | $ | Particulars | $ |
| Cash a/c | 3500 | Cash a/c | 50000 |
| Balance c/d | 58500 | Office Equipment a/c | 12000 |
| 62,000 | 62,000 |
Prepaid Renta/c
| Particulars | $ | Particulars | $ |
| Cash a/c | 9000 | ||
| Balance c/d | 9000 | ||
| 9000 | 9000 |
Max Ads-AdvertismentExpense
| Particulars | $ | Particulars | $ |
| Cash a/c | 1000 | ||
| Balance c/d | 1000 | ||
| 1000 | 1000 |
Officesupplies
| Particulars | $ | Particulars | $ |
| Accounts Payable a/c | 1200 | ||
| A/c Payable a/c | 650 | Balance c/d | 1850 |
| 1850 | 1850 |
Accounts Payablea/c
| Particulars | $ | Particulars | $ |
| Cash | 7200 | Office Equipment a/c | 6000 |
| Office Supplies a/c | 1200 | ||
| Computers a/c | 5000 | ||
| Balance c/d | 5650 | Office Supplies | 650 |
| 12850 | 12850 |
Service Revenuea/c
| Particulars | $ | Particulars | $ |
| Cash a/c | 6200 | ||
| Balance c/d | 22050 | Accounts Receivable a/c | 15850 |
| 22050 | 22050 |
Computers a/c
| Particulars | $ | Particulars | $ |
| Accounts Payable a/c | 5000 | ||
| Balance c/d | 5000 | ||
| 5000 | 5000 |
Insurance Premium a/c
| Particulars | $ | Particulars | $ |
| Cash a/c | 3000 | ||
| Balance c/d | 3000 | ||
| 3000 | 3000 |
Repair Expensea/c
| Particulars | $ | Particulars | $ |
| Cash a/c | 300 | ||
| Balance c/d | 300 | ||
| 300 | 300 |
Accounts Receivablea/c
| Particulars | $ | Particulars | $ |
| Service Revenue a/c | 15850 | Cash a/c | 4500 |
| Balance c/d | 11350 | ||
| 15850 | 15850 |
Telephone Expensea/c
| Particulars | $ | Particulars | $ |
| Telephone Bill Payable a/c | 500 | ||
| Balance c/d | 500 | ||
| 500 | 500 |
Telephone Bill Payablea/c
| Particulars | $ | Particulars | $ |
| Telephone Expense a/c | 500 | ||
| Balance c/d | 500 | ||
| 500 | 500 |
Salariesa/c
| Particulars | $ | Particulars | $ |
| Cash a/c | 5000 | ||
| Balance c/d | 5000 | ||
| 5000 | 5000 |
X-FactorAccounting’s
Trial Balance as on 31st March2020
| Accounts | Debit | Credit |
|---|---|---|
| Cash a/c | 31700 | |
| Office Equipment a/c | 18000 | |
| Adam’s Equity a/c | 58500 | |
| Prepaid Rent a/c | 9000 | |
| Max Ads-Advertisment Expense a/c | 1000 | |
| Office Supplies a/c | 1850 | |
| Accounts Payable a/c | 5650 | |
| Service Revenue a/c | 22050 | |
| Computers a/c | 5000 | |
| Insurance Premium a/c | 3000 | |
| Repair Expense a/c | 300 | |
| Accounts Receivable a/c | 11350 | |
| Telephone Expense a/c | 500 | |
| Telephone Bill Payable a/c | 500 | |
| Salaries a/c | 5000 | |
| Total | $86,700 | $86,700 |
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