Herrold Consulting incorporated on February 1, 2011. The company engaged in the following transactions during its first
Question:
Herrold Consulting incorporated on February 1, 2011. The company engaged in the following transactions during its first month of operations:
Date | Transaction |
Feb. 1 | Issued capital stock in exchange for $750,000 cash. |
Feb. 5 | Borrowed $50,000 from the bank by issuing a note payable |
Feb. 8 | Purchased land and building, for $550,000. The value of the land was $100,000, the value of the building was $450,000. The company paid $300,000 cash and issued a note payable for the balance amount. |
Feb. 10 | Purchased office equipment for $50,000. The company paid $30,000 cash and issued an account payable for the balance amount. |
Feb. 11 | Purchased office supplies for $1,000 on account. |
Feb. 14 | Paid the local newspaper $400 for a full-page advertisement. |
Feb. 16 | Paid rent 1,000 for the month of February. |
Feb. 20 | Several of the inkjet printer cartridges that Herrold purchased on February 11 were defective. The cartridges were returned and the office supply store reduced Herrold’s outstanding balance by $100. |
Feb. 22 | Performed consulting services for $6,000 cash |
Feb. 24 | Billed clients $9,000. |
Feb. 25 | Paid salaries of $5,000. |
Feb. 28 | Paid the entire outstanding balance for office supplies purchased on February 11. |
Required:
Prepare journal entries, for the above transactions. (3 marks)
Post each entry to the appropriate ledger accounts (3 marks)
Prepare a trial balance dated February 28, 2011 (4 marks)
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello