On July 31, 2017, the general ledger of Hills Legal Services Inc. showed the following balances: Cash


On July 31, 2017, the general ledger of Hills Legal Services Inc. showed the following balances: Cash $4,000, Accounts Receivable $1,500, Supplies $500, Equipment $5,000, Accounts Payable $4,100, Common Stock $3,500, and Retained Earnings $3,400. During August, the following transactions occurred.

Aug. 3 Collected $1,200 of accounts receivable due from customers.

5 Received $1,300 cash for issuing common stock to new investors.

6 Paid $2,700 cash on accounts payable.

7 Performed legal services of $6,500, of which $3,000 was collected in cash and the remainder was due on account.

12 Purchased additional equipment for $1,200, paying $400 in cash and the balance on account.

14 Paid salaries $3,500, rent $900, and advertising expenses $275 for the month of August.

18 Collected the balance for the services performed on August 7.

20 Paid cash dividend of $500 to stockholders

24 Billed a client $1,000 for legal services performed.

26 Received $2,000 from Laurentian Bank; the money was borrowed on a bank note payable that is due in 6 months.

27 Agreed to perform legal services for a client in September for $4,500. The client will pay the amount owing after the services have been performed.

28 Received the utility bill for the month of August in the amount of $275; it is not due until September 15.

31 Paid income tax for the month $500.


(a) Using T-accounts, enter the beginning balances to the ledger.

(b) Journalize the August transactions.

(c) Post the August journal entries to the ledger. (d) Prepare a trial balance on August 31, 2017.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Accounting Tools for Business Decision Making

ISBN: 978-1118096895

6th edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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