Question

On July 31 2017, the general ledger of Cullumber Legal Services Inc., showed the following balances:cash $4000Accounts Receivable $1500Supplies $500Equipment $5000Accounts Payable: $4,100Common Stock $3500Retained Earnings $3400During August, the following transactions occurred:August 3rd: Collected $1200 of accounts receivable due from customersAugust 5: recieved $1300 cash from issuing common stock to new investorsAugust 6: paid $2700 on accounts payableAugust 7: performed legal services of $6500, of which $3000 was collected in cash and the remainder was due on account.August 12: Purchased additional equipment for $1200, paying $400 on cash and the balance on accountAugust 14: Paid salaries $3500, rent $900, and advertising expenses $275 for month of AugustAugust 18: collected blanace for the services performed on August 7August 20: Paid dividends of $500 to stockholdersAugust 24: Billed a client $1,000 for services performedAugust 26: received $2000 from Laurentian Bank, the money was borrowed on a bank note payable that is due in 6 monthsAugust 27: Agreed to perform legal services for a client in September for $4500. The client will pay the amount owing after the services have been performedAugust 28: received the utility bill for the month of august in the amount of $275; it is not due until September 15.August 31: paid income tax for the month of $500.Part 1: Using T-accounts enter the beginning balances to the ledger.Part 2: Journalize the August transactionsPart 3: Post the August journal entries to he ledgerPart 4: Prepare a trial balance on August 31 2017.

Answer 1

Answer:

For Part 1, 3 and 4 Please see the attached images.

For Part 2 Please see the solution below.

Explanation:

Part - 1:

Please see the attached picture.

Part - 2:

August 3rd:

Debit: Cash $1,200

Credit: Accounts Receivable $1,200

To record collection of cash from debtors.

August 5:

Debit: Cash $1,300

Credit: Common Stock $1,300

To record receiving cash from issuing common stocks.

August 6:

Debit: Accounts Payable $2,700

Credit: Cash $2,700

To record payment to creditors.

August 7:

Debit: Cash $3,000

Debit: Accounts Receivable $3,500

Credit: Services $6,500

To record earnings from services on cash and on accounts.

August 12:

Debit: Equipment $1,200

Credit: Cash $400

Credit: Accounts Payable $800

To record purchase of equipment on cash and on accounts.

August 14:

Debit: Salaries Expense $3,500

Credit: Cash $3,500

To record payment of salaries.

Debit: Rent Expense $900

Credit: Cash $900

To record payment of Rent.

Debit: Advertising expense $275

Credit: Cash $275

To record payment of advertising expenses.

August 18:

Debit: Cash $3,500

Credit: Accounts Receivable $3,500

To record cash collection from debtors.

August 20:

Debit: Dividends Payable $500

Credit: Cash $500

To record payment of dividends payable.

August 24:

Debit: Accounts Receivable $1,000

Credit: Services $1,000

To record services performed on accounts.

August 26:

Debit: Cash $2000

Credit: Accounts Payable $2,000

To record note payable from Laurentian Bank within 6 months.

August 27:

No Transaction needed. If the prepayment has been made by client then then transaction would have been recorded. But neither Payment is received in advance nor services have been performed in advance, So no transaction needs to be recorded at this moment.

August 28:

Debit: Utilities Expense $275

Credit: Accounts Payable $275

To record utilities expense occurred and due in September.

August 31: paid income tax for the month of $500.

Debit: Income Tax $500

Credit: Cash $500

To record payment of Income Tax.

Part 3:

Please see the attached Picture.

Part 4:

Please see the attached Picture.