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During its first month of operation, the Melvin Plumbing Corporation, which specializes in re completed the following transactions July 1 Began business by making a deposit in a company bank account of $90,000, in July 3 July 5 July 7 July 10 July 14 for 9,000 shares of $10 par value common stock. Paid the current month's rent, $5,500 Paid the premium on a 1-year insurance policy, $4,800 Purchased supplies on account from Little Company, $900 Paid employee salaries, $3,300 Purchased equipment from Lake Company, $11,500. Paid $1,500 down and the placed on account. Payments will be $500.00 per month for 20 months. The first Note: Use accounts payable for the balance due July 15 Received cash for plumbing revenue for the first half of July, $7,700 July 19 Made payment on account to Lake Company, $500 July 31 Received cash for plumbing revenue for the last half of July, $8,505 July 31 Declared and paid cash dividends of $600 Prepare journal entries to record the July transactions in the General Journal below General Journal scription(Account Nam Debit Date Credit

Explanation / Answer

Melvin Plumbing Corporation

Journal Entries –

Date

Account Titles and Explanation

Debit

Credit

1-Jul

Cash

$90,000

Common Stock

$90,000

(To record issue of 9,000 shares at $10 par value)

3-Jul

Rent Expense

$5,500

Cash

$5,500

(To record payment of rent)

5-Jul

Prepaid Insurance

$4,800

Cash

$4,800

(To record payment of 1 year insurance policy)

7-Jul

Supplies

$900

Accounts Payable

$900

(To record purchase of supplies on account)

10-Jul

Salaries Expense

$3,300

Cash

$3,300

(

(To record salaries paid)

14-Jul

Equipment

$11,500

Cash

$1,500

Accounts Payable

$10,000

(Purchase of equipment for cash and balance on account)

15-Jul

Cash

$7,700

Revenue

$7,700

(To record cash received against plumbing services)

19-Jul

Accounts Payable

$900

Cash

$900

(To record payment made to Lake Company)

31-Jul

Cash

$8,505

Revenue

$8,505

(To record cash received against plumbing services)

31-Jul

Dividends

$600

Cash

$600

(To record payment of cash dividends)

T- Accounts –

T- Accounts

Supplies

Debit

Cash

Credit

Date

Description

Amount

Date

Description

Amount

Date

Description

Amount

Date

Description

Amount

7-Jul-18

Accounts Payable

$900

31-Jul-18

Supplies Expense

$525

1-Jul

Common Stock

$90,000

3-Jul

Rent Expense

$5,500

31-Jul

Balance

$375

15-Jul

Revenue

$7,700

5-Jul-18

Prepaid Insurance

$4,800

$900

$900

31-Jul

Revenue

$8,505

10-Jul

Salaries Expense

$3,300

14-Jul-18

Equipment

$1,500

Revenue

19-Jul-18

Accounts Payable

$900

Date

Description

Amount

Date

Description

Amount

31-Jul

Dividends

$600

15-Jul-18

Cash

$7,700

31-Jul

Balance

$89,605

31-Jul-18

Balance

$16,205

31-Jul

Cash

$8,505

$106,205

$106,205

$16,205

$16,205

Prepaid Insurance

Date

Description

Amount

Date

Description

Amount

Debit

Equipment

Credit

5-Jul-18

Cash

$4,800

31-Jul-18

Insurance Expense

$400

Date

Description

Amount

Date

Description

Amount

31-Jul

Balance

$4,400

14-Jul

Cash

$1,500

$4,800

$4,800

14-Jul

Accounts Payable

$10,000

31-Jul

Balance

$11,500

$11,500

$11,500

Salaries Expense

Date

Description

Amount

Date

Description

Amount

Debit

Accounts Payable

Credit

10-Jul-18

Cash

$3,300

31-Jul-18

Balance

$3,300

Date

Description

Amount

Date

Description

Amount

7-Jul

Supplies

$900

$3,300

$3,300

19-Jul

Cash

$900

14-Jul-18

Equipment

$10,000

31-Jul

Balance

$10,000

Insurance Expense

$10,900

$10,900

Date

Description

Amount

Date

Description

Amount

Debit

Common Stock

Credit

31-Jul-18

Prepaid Insurance

$400

Date

Description

Amount

Date

Description

Amount

31-Jul-18

Balance

$400

31-Jul-18

Balance

$90,000

1-Jul

Cash

$90,000

$90,000

$90,000

$400

$400

Debit

Accumulated Depreciation - Equipment

Credit

Rent Expense

Date

Description

Amount

Date

Description

Amount

Date

Description

Amount

Date

Description

Amount

31-Jul

Balance

$175

31-Jul

Depreciation Expense

$175

3-Jul-18

Cash

$5,500

31-Jul-18

Balance

$5,500

$175

$175

$5,500

$5,500

Credit

Depreciation Expense

Credit

Debit

Supplies Expense

Credit

Date

Description

Amount

Date

Description

Amount

Date

Description

Amount

Date

Description

Amount

31-Jul

Accumulated Depreciation -Equipment

$175

31-Jul

Balance

$175

31-Jul-18

Supplies

$525

31-Jul-18

Balance

$525

$175

$175

$525

Credit

$525

Income Tax Expense

Debit

Dividends

Credit

Date

Description

Amount

Date

Description

Amount

Date

Description

Amount

Date

Description

Amount

31-Jul

Income Tax Payable

$3,200

31-Jul

Balance

$3,200

31-Jul

Cash

$600

31-Jul

Retained Earnings

$600

$3,200

$3,200

$600

$600

Debit

Income Tax Payable

Credit

Date

Description

Amount

Date

Description

Amount

31-Jul

Balance

$3,200

31-Jul

Income Tax Expense

$3,200

$3,200

$3,200

Adjusting Entries –

Adjusting Entries

Date

Account Titles and Explanation

Debit

Credit

31-Jul

Insurance Expense

$400

Prepaid Insurance

$400

(To record 1 month insurance expense)

31-Jul

Supplies Expense

$525

Supplies

$525

(To record cost of supplies used)

31-Jul

Depreciation Expense

$175

Accumulated Depreciation - Equipment

$175

(To record depreciation expense for July)

31-Jul

Income Taxes Expense

$3,200

Income Tax Payable

$3,200

(To record income tax expense due but unpaid)

Trial Balance –

Melvin Pumbling Corp

Trial Balance

for the month ended July 31

Account Titles

Debit

Credit

Cash

$89,605

Supplies

$375

Prepaid Insurance

$4,400

Equipment

$11,500

Accumulated Depreciation - Equipment

$175

Accounts Payable

$10,000

Income Tax Payable

$3,200

Common Stock

$90,000

Revenue

$16,205

Dividends

$600

Salaries expense

$3,300

Supplies expense

$525

Rent expense

$5,500

Depreciation expense

$175

Insurance expense

$400

Income Tax Expense

$3,200

$119,580

$119,580

Date

Account Titles and Explanation

Debit

Credit

1-Jul

Cash

$90,000

Common Stock

$90,000

(To record issue of 9,000 shares at $10 par value)

3-Jul

Rent Expense

$5,500

Cash

$5,500

(To record payment of rent)

5-Jul

Prepaid Insurance

$4,800

Cash

$4,800

(To record payment of 1 year insurance policy)

7-Jul

Supplies

$900

Accounts Payable

$900

(To record purchase of supplies on account)

10-Jul

Salaries Expense

$3,300

Cash

$3,300

(

(To record salaries paid)

14-Jul

Equipment

$11,500

Cash

$1,500

Accounts Payable

$10,000

(Purchase of equipment for cash and balance on account)

15-Jul

Cash

$7,700

Revenue

$7,700

(To record cash received against plumbing services)

19-Jul

Accounts Payable

$900

Cash

$900

(To record payment made to Lake Company)

31-Jul

Cash

$8,505

Revenue

$8,505

(To record cash received against plumbing services)

31-Jul

Dividends

$600

Cash

$600

(To record payment of cash dividends)

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