Question

Journalizing Transactions in Template, Journal Entry Form, and T-Accounts Creative Designs, a firm providing art services for advertisers, began business on June 1, 2015.
The following transactions occurred during the month of June.
June 1: Anne Clem invested $12,000 cash to begin the business in exchange for common stock.
June 2: Paid $950 cash for June rent.
June 3: Purchased $6,400 of office equipment on account.
June 6: Purchased $3,800 of art materials and other supplies; paid $1,800 cash with the remainder due within 30 days.
June 11: Billed clients $4,700 for services rendered.
June 17: Collected $3,250 cash from clients on their accounts.
June 19: Paid $3,000 cash toward the account for office equipment suppliers (see June 3).
June 25: Paid $900 cash for dividends.
June 30: Paid $350 cash for June utilities.
June 30: Paid $2,500 cash for June salaries.
a. Record the below transactions for June using the financial statement effects template.
b. Record the transactions for June in journal entry form.
c. Post the transactions to the appropriate T-accounts. (For each T-account, enter answers in the in the first available space debit or credit space, as appropriate.)
Note: Use negative signs with your answers.

Answer 1

Answer:

Creative Designs

a. Financial Statement Effects Template:

June 1:

Assets (Cash +$12,000) = Liabilities + Equity (Common Stock +$12,000)

June 2:

Rent Expense $950 Cash $950

Assets (Cash -$950) = Liabilities + Equity (Retained Earnings - $950)

June 3:

Office Equipment $6,400 Accounts Payable $6,400

Assets (Office Equipment +$6,400) = Liabilities (Accounts payable +$6,400) = Equity

June 6:

Art Materials & Other Suppliers $3,800 Cash $1,800 Accounts Payable $2,000

Assets (Supplies +$3,800 Cash -$1,800) = Liabilities (Accounts payable +$2,000) = Equity

June 11:

Accounts Receivable $4,700 Service Revenue $4,700

Assets (Accounts Receivable +$4,700) = Liabilities + Equity (Retained Earnings +$4,700)

June 17:

Cash $3,250 Accounts Receivable $3,250

Assets (Cash +$3,250 Accounts Receivable -$3,250) = Liabilities + Equity

June 19:

Accounts Payable $3,000 Cash $3,000

Assets (Cash -$3,000) = Liabilities (Accounts payable -$3,000) + Equity

June 25:

Dividends $900 Cash $900

Assets (Cash -$900) = Liabilities + Equity (Retained Earnings -$900)

June 30:

Utilities Expense $350 Salaries Expense $2,500 Cash $2,850

Assets (Cash -$2,850) = Liabilities + Equity (Retained Earnings -$2,850)

b. Journal Entries:

June 1:

Debit Cash $12,000

Credit Common Stock $12,000

To record the issuance of common stock.

June 2:

Debit Rent Expense $950

Credit Cash $950

To record the payment of rent expense for the month.

June 3:

Debit Office Equipment $6,400

Credit Accounts Payable $6,400

To record the purchase of office equipment on account.

June 6:

Debit Art Materials & Other Suppliers $3,800

Credit Cash $1,800

Credit Accounts Payable $2,000

To record the purchase of supplies for cash and on account.

June 11:

Debit Accounts Receivable $4,700

Credit Service Revenue $4,700

To record the earning of revenue for services rendered.

June 17:

Debit Cash $3,250

Credit Accounts Receivable $3,250

To record the collection of cash from customers on account.

June 19:

Debit Accounts Payable $3,000

Credit Cash $3,000

To record payment to suppliers on account.

June 25:

Credit Dividends $900

Credit Cash $900

To record the payment of cash dividends.

June 30:

Debit Utilities Expense $350

Debit Salaries Expense $2,500

CreditCash $2,850

To record the payment of expenses.

c. June 1:

Cash

Account Titles        Debit      Credit

Common Stock      $12,000

Rent Expense                         $950

Art Materials & Suppliers       1,800

Accounts receivable 3,250

Accounts Payable                 3,000

Dividends                                900

Utilities Expense                     350

Salaries Expense                 2,500

Common Stock

Account Titles        Debit      Credit

Cash                                    $12,000

June 2:

Rent Expense

Account Titles        Debit      Credit

Cash                      $950

June 3:

Office Equipment

Account Titles        Debit      Credit

Accounts Payable  $6,400

Accounts Payable

Account Titles        Debit      Credit

Office Equipment               $6,400

Art materials & supplies      2,000

Cash                     $3,000

June 6:

Art Materials & Other Suppliers

Account Titles        Debit      Credit

Cash                        $1,800

Accounts Payable   2,000

June 11:

Accounts Receivable

Account Titles        Debit      Credit

Service Revenue $4,700

Cash                                    $3,250

Service Revenue

Account Titles        Debit      Credit

Accounts Receivable          $4,700

June 25:

Dividends

Account Titles        Debit      Credit

Cash                      $900

June 30:

Utilities Expense

Account Titles        Debit      Credit

Cash                     $350

Salaries Expense

Account Titles        Debit      Credit

Cash                     $2,500

Explanation:

a) Data and Calculations:

June Transactions:

June 1:

Cash $12,000 Common Stock $12,000

June 2:

Rent Expense $950 Cash $950

June 3:

Office Equipment $6,400 Accounts Payable $6,400

June 6:

Art Materials & Other Suppliers $3,800 Cash $1,800 Accounts Payable $2,000

June 11:

Accounts Receivable $4,700 Service Revenue $4,700

June 17:

Cash $3,250 Accounts Receivable $3,250

June 19:

Accounts Payable $3,000 Cash $3,000

June 25:

Dividends $900 Cash $900

June 30:

Utilities Expense $350

Salaries Expense $2,500

Cash $2,850