P2-29A

Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance

Vincent Yarwood practices medicine under the business title Vincent Yarwood, M.D. During July, the medical practice completed the following transactions:

Jul. 1 Yarwood contributed $68,000 cash to the business in exchange for capital.

5 Paid monthly rent on medical equipment, $550.

9 Paid $17,000 cash to purchase land to be used in operations.

10 Purchased office supplies on account, $1,800.

19 Borrowed $24,000 from the bank for business use.

22 Paid $1,700 on account.

28 The business received a bill for advertising in the daily newspaper to be paid in August, $290.

31 Revenues earned during the month included $6,000 cash and $5,500 on account.

31 Paid employees salaries $2,000, office rent $1,000, and utilities $550. Record as a compound entry.

31 The business received $1,260 for medical screening services to be performed next month.

31 Yarwood withdrew cash of $7,400.

The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Yarwood, Capital; Yarwood, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; and Advertising Expense.

Requirements

1. Journalize each transaction. Explanations are not required.

2. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal.

3. Prepare the trial balance of Vincent Yarwood, M.D., as of July 31, 2017.

P2-41

Journalizing transactions, posting to T-accounts, and preparing a trial balance

Problem P2-41 continues with the consulting business begun in Problem P1-54 in Chapter 1. Here you will account for Daniels Consultings transactions as it is actually done in practice.

Daniels Consulting completed the following transactions during December 2016:

Dec. 2 Daniels contributed $20,000 cash in exchange for capital.

2 Paid monthly office rent, $2,000.

3 Paid cash for a computer, $3,600. This equipment is expected to remain in service for five years.

4 Purchased office furniture on account, $3,000. The furniture should last for five years.5Purchased office supplies on account, $800.

9 Performed consulting service for a client on account, $2,500.

12 Paid utilities expenses, $150.

18 Performed service for a client and received cash of $2,100.

21 Received $2,400 in advance for client service to be performed in the future.

21 Hired an administrative assistant to be paid $2,055 on the 20th day of each month. The secretary begins work immediately.

26 Paid $200 on account.

28 Collected $400 on account.

30 Daniels withdrew $1,000.

Requirements

1. Journalize the transactions, using the following accounts: Cash; Accounts Receivable; Office Supplies; Equipment; Furniture; Accounts Payable; Unearned Revenue; Daniels, Capital; Daniels, Withdrawals; Service Revenue; Rent Expense; and Utilities Expense. Explanations are not required.

2. Open a T-account for each of the accounts.

3. Post the journal entries to the T-accounts, and calculate account balances. Formal posting references are not required.

4. Prepare a trial balance as of December 31, 2016.

5. Prepare the income statement of Daniels Consulting for the month ended December 31, 2016.

6. Prepare the statement of owners equity for the month ended December 31, 2016.

7. Prepare the balance sheet as of December 31, 2016.

8. Calculate the debt ratio for Daniels Consulting at December 31, 2016.

Date 1-Jul 5 9 10 19 22 28 31 31 31 31 Accounts and Explanation Debit Credit Available accounts for journal entries: Cash Yarwood, Capital Rent Expense Cash Land Cash Office Supplies Accounts Payable Cash Notes Payable Accounts Payable Cash Advertising Expense Advertising Payable Cash Accounts Receivable Service Revenue Salaries Expense Rent Expense Utilities Expense Cash Cash Unearned Revenue Yarwood, Withdrawals Cash Cash Jul. 1 Jul. 19 Jul. 31 Jul. 31 Jul. 5 Jul. 9 Jul. 22 Jul. 31 Jul. 31 Jul. 22 Accounts Payable Advertising Payable Bal. Accounts Receivable Unearned Revenue Office Supplies Notes Payable Land Yarwood, Capital Jul. 31 Bal. Jul. 10 Bal. Jul. 9 Bal. Jul. 31 Bal. Yarwood, Withdrawals Accounts Payable Service Revenue Jul. 10 Bal. Advertising Payable Salaries Expense Jul. 28 Bal. Jul. 31 Bal. Unearned Revenue Rent Expense Jul. 31 Bal. Jul. 5 Jul. 31 Bal. Notes Payable Jul. 19 Bal. Utilities Expense Jul. 31 Bal. Yarwood, Capital Yarwood, Withdrawals Jul. 1 Bal. Advertising Expense Jul. 28 Bal. Jul. 31 Bal. VINCENT YARWOOD, MD Trial Balance July 31, 2015 Account Title Balance Debit Cash Accounts Receivable Office Supplies Land Accounts Payable Advertising Payable Unearned Revenue Notes Payable Yarwood, Capital Yarwood, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Advertising Expense Total Credit Date Dec. 2 2 3 4 5 9 12 18 21 21 26 28 30 Accounts and Explanation Debit Credit Available accounts for journ Cash Daniels, Capital Rent Expense Cash Equipment Cash Furniture Accounts Payable Office Supplies Accounts Payable Accounts Receivable Service Revenue Utilities Expense Cash Cash Service Revenue Cash Unearned Revenue No entry needed Accounts Payable Cash Cash Accounts Receivable Daniels, Withdrawals Cash Available accounts for journal entries: Daniels, Capital Rent Expense Equipment Accounts Payable Office Supplies Accounts Payable Accounts Receivable Service Revenue Utilities Expense Service Revenue Unearned Revenue one transaction requires no entry No entry needed Accounts Payable Accounts Receivable Daniels, Withdrawals Cash Dec. 2 Dec. 18 Dec. 21 Dec. 28 Accounts Payable Dec. 2 Dec. 3 Dec. 12 Dec. 26 Dec. 30 Dec. 26 Balance Accounts Receivable Dec. 9 Balance Unearned Revenue Dec. 28 Office Supplies Daniels, Capital Equipment Daniels, Withdrawals Dec. 5 Balance Dec. 3 Balance Dec. 30 Balance Furniture Dec. 4 Balance Service Revenue Accounts Payable Rent Expense Dec. 4 Dec. 5 Balance Dec. 2 Balance Unearned Revenue Utilities Expense Dec. 21 Balance Daniels, Capital Dec. 2 Balance Daniels, Withdrawals Service Revenue Dec. 9 Dec. 18 Balance Dec. 12 Balance DANIELS CONSULTING Trial Balance December 31, 2016 Account Title Balance Debit Cash Accounts Receivable Office Supplies Equipment Furniture Accounts Payable Unearned Revenue Daniels, Capital Daniels, Withdrawals Service Revenue Rent Expense Utilities Expense Total Credit DANIELS CONSULTING Income Statement Month Ended December 31, 2016 Revenues: Expenses: Total Expenses Net Income Available Accounts: Service Revenue Rent Expense Utilities Expense DANIELS CONSULTING Statement of Owner's Equity Month Ended December 31, 2016 Daniels, Capital, December 1, 2016 Owner contribution Net income for the month Owner withdrawal Daniels, Capital, December 31, 2016 DANIELS CONSULTING Balance Sheet December 31, 2016 Assets Cash Accounts Receivable Office Supplies Equipment Furniture Liabilities Accounts Payable Unearned Revenue Total Liabilities Owner's Equity Total Assets Daniels, Capital Total Liabilities and Owner's Equity abilities er's Equity Debt ratio = Total liabilities / Total assets