On December 1, Sylvia Workman started a haireutting business called Expressions.

Question

On December 1, Sylvia Workman started a haireutting business called Expressions. She invested $10,000 cash and $15,000 of equipment in the 2. company. On December 1, Expressions purchased with cash a one-year insurance policy for the business. It cost $1200. 3. On December 2, Expressions paid $600 cash for furniture for the shop. 4. On December 3, Expressions paid $500 cash to rent space in a strip mall for December. 5. On December 4, it purchased S1200 of equipment on credit for the shop (using a long-term note payable) On December 5, Expressions opened for business. Cash received from services provided in the first week and a half of business (ended December 15) is $825. 6. 7. On December 15, it provided S100 of haircutting services on account. 8. On December 17, it received a $100 check for services previously 9. On December 17, it paid S125 to an assistant for working during the 10. Cash received from services provided during the second half of December 11. 12. rendered on account. grand opening. is $930 On December 31, it paid a $400 installment toward principal on the note payable entered into on December 4. On December 31, Workman made a $900 cash withdrawal for personal use. A. Prepare journal entries for the transactions listed above. B. Post each entry to a General Ledger account. C. Prepare a trial balance as of December 31.

Explanation / Answer

A. Journal Entries Date Account Debit Credit Dec 1 Cash $10,000 Dec 1 Equipment $15,000 Dec 1 Capital, Sylvia $25,000 Dec 1 Prepaid Insurance $1,200 Dec 1 Cash $1,200 Dec 2 Furniture $600 Dec 2 Cash $600 Dec 3 Rent Expense $500 Dec 3 Cash $500 Dec 4 Equipment $1,200 Dec 4 Long Term Note Payable $1,200 Dec 15 Cash $825 Dec 15 Service Revenue $825 Dec 15 Accounts Receivable $100 Dec 15 Service Revenue $100 Dec 17 Cash $100 Dec 17 Accounts Receivable $100 Dec 31 Cash $930 Dec 31 Service Revenue $930 Dec 31 Long Term Note Payable $400 Dec 31 Cash $400 Dec 31 Drawing, Sylvia $900 Dec 31 Cash $900 Adjusting Entries: Dec 31 Depreciation Expense-Equipment $135 ((15000+1200)/10)/12 135 Dec 31 Accumulated Depreciation-Equipment $135 Dec 31 Depreciation Expense-Furniture $5 (600/10)/12 5 Dec 31 Accumulated Depreciation-Furniture $5 Dec 31 Salaries and wages expense $250 Dec 31 Salaries and wages payable $250 Dec 31 Insurance Expense $100 1200/12 Dec 31 Prepaid Insurance $100 Closing Entries: Dec 31 Service Revenue $1,855 Dec 31 Income Summary $1,855 Dec 31 Income Summary $990 Dec 31 Rent Expense $500 Dec 31 Insurance Expense $100 Dec 31 Salaries and wages Expense $250 Dec 31 Depreciation Expense $140 Dec 31 Income Summary $865 Dec 31 Retained Earning $865 Dec 31 Capital, Sylvia $900 Dec 31 Drawing, Sylvia $900 Accounts Receivable Equipment Debit Credit Debit Credit Dec 15 100 Dec 17 100 Dec 1 15000 Dec 4 1200 100 100 16200 0 Dec 31 Dec 31 16200 Cash Furniture Debit Credit Debit Credit Dec 1 10000 Dec 1 1200 Dec 2 600 Dec 15 825 Dec 2 600 Dec 17 100 Dec 3 500 600 0 Dec 31 930 1300 Dec 31 600 11855 3600 Dec 31 8255 Long Term Note Payable Debit Credit Capital, Sylvia Dec 31 400 Dec 4 1200 Debit Credit Dec 31 900 Dec 1 25000 400 1200 Dec 31 800 900 25000 Dec 31 24100 Prepaid Insurance Debit Credit Drawing, Sylvia Dec 1 1200 Dec 31 100 Debit Credit Dec 31 900 Dec 31 900 1200 100 Dec 31 1100 900 900 Dec 31 0 Rent Expense Debit Credit Dec 3 500 Dec 31 500 500 500 Dec 31 0 Service Revenue Debit Credit Dec 31 1855 Dec 15 825 Dec 15 100 Dec 31 930 1855 1855 Accumulated Depreciation Debit Credit Dec 31 135 Dec 31 5 0 140 Dec 31 140 Depreciation Expense Debit Credit Dec 31 135 Dec 31 140 Dec 31 5 140 140 Dec 31 0 Salaries and wages Expense Debit Credit Dec 31 250 Dec 31 250 250 250 Dec 31 0 Salaries and Wages Payable Debit Credit Dec 31 250 0 250 Dec 31 250 Insurance Expense Debit Credit Dec 31 100 Dec 31 100 100 100 Dec 31 0 Unadjusted Adjustment Adjusted Account Debit Credit Debit Credit Debit Credit Cash 8255 8255 Accounts Receivable 0 0 Prepaid Insurance 1200 100 1100 Equipment 16200 16200 Furniture 600 600 Accumulated Depreciation 140 140 Salaries and Wages Payable 250 250 Long Term Note Payable 800 800 Capital 25000 25000 Drawing 900 900 Service Revenue 1855 1855 Rent Expense 500 500 Insurance Expense 100 100 Salaries and wages Expense 250 250 Depreciation Expense 140 140 Total 27655 27655 490 490 28045 28045 Income Statement: Service Revenue 1855 Less: Operating Expense Rent Expense 500 Insurance Expense 100 Salaries and wages Expense 250 Depreciation Expense 140 990 Net Income 865 Balance Sheet: Cash 8255 Accounts Receivable 0 Prepaid Insurance 1100 Total Current Assets 9355 Equipment 16200 Furniture 600 Accumulated Depreciation -140 Plant and Equipment 16660 Total Assets 26015 Salaries and Wages Payable 250 Current Liabilities 250 Long Term Note Payable 800 Total Liabilities 1050 Capital 25000 Drawing -900 Retained Earnings 865 Total Equity 24965 Total Equity and Liabilities 26015 Closing Trial Balance Debit Credit Cash 8255 Accounts Receivable 0 Prepaid Insurance 1100 Equipment 16200 Furniture 600 Accumulated Depreciation 140 Salaries and Wages Payable 250 Long Term Note Payable 800 Capital 24100 Retained Earning 865 Total 26155 26155

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