Example (New Company) - Basie Journal Entries, T- Accounts, Trial Balance A - L + SE DR CR DR CR DR CR Rev=CR Exp - DR Div - DR In August, Maria Chen started her new taxidermy business: The Right Stuff Inc. The business focused on preserving family pets after they passed away. The following transactions occurred during August: August 1 Maria invested $1,000 cash in exchange for 250 common shares. Aug 1 DR CR Cash 1000 Common shares August | Rented workspace. Paid S600 for the month of August. Aug 1 DR CR Cash 600 Rent expense August 2 The company borrowed 55,000 in the form of a long-term bank loan. The money was planned to purchase much of the equipment that would be needed. Aug 2 DR CR 1000 600 Cash 5000 Bank Loan payable 5000 August 5 Purchased equipment: $4,000. Paid $1,000 with the rest payable at the end of August. Aug 5 DR CR Equipment 4000 Cash 1000 Accounts payable 3000 August 10 Received and completed first taxidermy job - a poodle named Rex. Received $400 cash. Aug 10 DR CR Aug 12 CR Cash 400 Taxidermy Rev 400 August 12 Purchased supplies on account: $200. DR Supplies 200 A/P 200 August 13 Completed second taxidermy job: A chocolate Labrador retriever named KitKat: $600 on account. Aug 13 DR CR A/R 600 Taxidermy Rev 600 August 14 Maria took a cash dividend of $500 to pay for personal expenses Aug 14 CR Aug Cash Dividend 500 500 August 19 Received and paid the utilities bill, $200. Aug 19 DR CR Utilities exp 200 Cash 200 August 20 Paid for the August 5 equipment purchase. Aug 20 DR CR 200 Cash 3000 A/P 3000 August 21 Received a telephone bill: $200. Did not pay yet. Aug 21 DR CR Telephone expense A/P 200 August 24 Received payment for the August 13th job. Aug 24 DR CR Cash 600 AR 600 August 27 Completed third taxidermy job: A calico cat named Spot: $250. Received payment. Aug 27 DR CR Cash 250 Taxidermy Rev 250 CR August 31 Paid salaries of $1,000. Aug 31 DR Salaries exp 1000 Cash 1000 Required: a. Record all necessary journal entries based on the transactions above. b. Post the transactions to T-accounts. c. Prepare a trial balance dated August 31. Solution a. Journal Entries August | Maria invested $1,000 cash in exchange for 250 common shares Aug 1 CR Cash 1000 Common shares 1000 DR CR DR August 1 Rented work space. Paid $600 for the month of August. Aug 1 DR Rent expense 600 Cash 600 August 2 The company borrowed 55,000 in the form of a long-term bank loan. The money was planned to purchase much of the equipment that would be needed. Aug 2 CR Cash 5000 Bank Loan payable 5000 August 5 Purchased equipment: $4,000. Paid $1,000 with the rest payable at the end of August. DR CR Equipment 4000 Cash 1000 Account payable 3000 Aug 5 CR August 10 Received and completed first taxidermy job - a poodle named Rex. Received $400 cash. Aug 10 DR Cash 400 Taxidermy Rev 400 August 12 Purchased supplies on account: $200. Aug 12 DR CR Supplies 200 AP 200 August 13 Completed second taxidermy job: A chocolate Labrador retriever named KitKat: $600 on account. Aug 13 DR CR A/R 600 Taxidermy Rev 600 Aug 14 DR CR Dividend Cash 500 500 August 19 Received and paid the utilities bill, $200. Aug 19 DR CR 200 Utilities exp Cash 200 August 20 Paid for the August 5 equipment purchase. Aug 20 DR CR Cash 3000 August 21 Received a telephone bill: $200. Did not pay yet. Aug 21 DR CR Telephone expense A/P 200 200 August 24 Received payment for the August 13th job. Aug 24 DR CR Cash 600 A/R 600 August 27 Completed third taxidermy job: A calico cat named Spot: $250. Received payment. Aug 27 DR CR 250 Cash 250 Taxidermy Rev August 31 Paid salaries of $1,000. Aug 31 DR CR 1000 Salaries exp Cash 1000 A/R 600 600 b. T-Accounts. Cash 1000 600 5000 1000 400 500 600 200 250 3000 1000 Bank Loan 5000 Equipment 4000 Common Shares 1000 Rent Expenses 3000 3000 200 200 Taxidermy Revenue 400 600 250 Telephone Expenses 200 600 Supplies 200 Dividends Salaries Expense 1000 500 Utilities Expense 200 c. Trial balance dated August 31. The Right Stuff, Inc. Trial Balance for the month ended by Aug 31. DR CR Cash s 950 Supplies 200 A/R Equipment 4000 A/P 400 Bank loan payable 5000 Common shares 1000 RE 0 Dividends 500 Taxidermy Revenue 1250 Rent Expense 600 Telephone Expense 200 Utilities Expense 200 Salaries Expense 1000
