Gulf Delivery Service, Inc. completed the following transactions during January,

Question

Gulf Delivery Service, Inc. completed the following transactions during January, 2018:

1Shareholders invested in the business $25,000 cash and a delivery truck valued at $35,000 in exchange for common stock.

2.Purchased supplies for $1,000 cash.

3.Paid $2,400 for a one-year insurance policy, effective January1.

3.Performed delivery services for a customer and received $2,500 cash.

4.Completed a large delivery job for a customer on account for $8,000.

5.Paid $6,000 for employee salaries.

6.Performed delivery services for customers and received $55,000 cash.

7.Collected $4,000 in advance for delivery service to be performed later.

8.Collected $3,000 cash from a customer on account.

9.Purchased fuel for the truck , paying $1,500 with a company credit card (Credit accounts payable).

10.Performed delivery services on account, $4,500.

11.Paid office rent $2,500.

12.Paid $500 for accounts payable.

13.Paid cash dividends of $10,000.

a.

Record each transaction in the journal. Key each transaction by its letter (Explanations are not required).

b.Post the transactions that you recorded in requirement 1 to the ledger accounts using T-accounts. The ledger for Gulf Delivery Service contains the following accounts:

Cash                                                    Service revenue

Accounts receivable                            Salaries expense

Supplies                                               Depreciation expense

Prepaid insurance                                Insurance expense

Delivery truck                                     Fuel expense

Accumulated depreciation                  rent expense

Accounts payable                                supplies expense

Salaries payable                                              

Unearned service revenue

Common stock

Retained earnings

Dividends

Income summary

Explanation / Answer

In the Books of Gulf Delivery Service Journal Entries a Particulars Dr Cr Date Jan 2018 Amount Amount 1 Cash A/C $25,000 Delivery Truck $35,000 To Common Stock $60,000 Being the cash and delivery truck invested in business and transferred to common stock 2 Supplies A/C $1,000 To Cash $1,000 Being the supplies purchased in cash 3 Prepaid Insurance A/C $2,400 To Cash $2,400 being the one year insurance policy paid effective 1st January 4 Cash A/C $2,500 To Revenue $2,500 being the delivery services performed in cash 5 Accounts Receivable A/C $8,000 To Revenue $8,000 being the large delivery services performed on account 6 Salary Expenses A/C $6,000 To Cash $6,000 being the employee salaries paid 7 Cash A/C $55,000 To Revenue $55,000 being the delivery services performed in cash 8 Cash A/C $4,000 To Unearned Service Revenue $4,000 being advance received for services to be performed later 9 Cash A/c $3,000 To Accounts Receivable $3,000 being cash collected on account 10 Fuel Expenses A/C $1,500 To Accounts Payable $1,500 being the fuel paid for the truck by credit card 11 Accounts Receivable A/C $4,500 To Revenue $4,500 being delivery services performed on account 12 Rent Expenses A/C $2,500 To Cash $2,500 being the office rent paid 13 Accounts Payable A/C $500 To Cash $500 being the accounts payable paid 14 Dividends A/C $10,000 To Cash $10,000 being the cash dividends paid b Jan-18 Date Particulars Amount Cash A/C Date Particulars Amount 1 To Common Stock $25,000 2 By Supplies $1,000 4 To Revenue $2,500 3 By Prepaid Insurance $2,400 7 To Revenue $55,000 6 By Salary Expenses $6,000 8 To Unearned Revenue $4,000 12 By Rent Expenses $2,500 Service 13 By Accounts Payable $500 9 To Accounts Receivable $3,000 14 By Dividends $10,000 31 By Bal C/d $67,100 $89,500 $89,500 Date Particulars Amount Common Stock Date Particulars Amount 31 To Bal C/D $60,000 1 By Cash A/C $25,000 1 By Delivery Truck $35,000 $60,000 $60,000 Date Particulars Amount Delivery Truck Date Particulars Amount 1 To Common Stock $35,000 31 By Bal C/D $35,000 $35,000 $35,000 Date Particulars Amount Supplies Date Particulars Amount 2 To Cash $1,000 31 By Bal C/D $1,000 $1,000 $1,000 Date Particulars Amount Prepaid Insurance Date Particulars Amount 3 To Cash $2,400 31 By Bal C/D $2,400 $2,400 $2,400 Date Particulars Amount Revenue Date Particulars Amount 4 By Cash $2,500 5 By Accounts Receivable $8,000 7 By Cash $55,000 31 To Bal C/D $70,000 11 By Accounts Receivable $4,500 $70,000 $70,000 Date Particulars Amount Accounts Receivable Date Particulars Amount 5 To Revenue $8,000 9 By Cash $3,000 11 To Revenue $4,500 31 By Bal C/D $9,500 $12,500 $12,500 Date Particulars Amount Salary Expense Date Particulars Amount 6 To Cash $6,000 31 By Bal C/D $6,000 $6,000 $6,000 Date Particulars Amount Unearned Service Revenue Date Particulars Amount 31 To Bal C/D $4,000 8 By Cash $4,000 $4,000 $4,000 Date Particulars Amount Fuel Expenses Date Particulars Amount 10 To Accounts Payable $1,500 31 By Bal C/D $1,500 $1,500 $1,500 Date Particulars Amount Rent Expenses Date Particulars Amount 12 To Cash $2,500 31 By Bal C/D $2,500 $2,500 $2,500 Date Particulars Amount Dividends Date Particulars Amount 14 To Cash $10,000 31 By Bal C/D $10,000 $10,000 $10,000 Date Particulars Amount Accounts Payable Date Particulars Amount 13 To Cash $500 10 By Fuel Expenses $1,500 31 To Bal C/D $1,000 $1,500 $1,500

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