LO2 EXERCISE 3.3 Relationship between Journal and Ledger through Transactions are first journalized and then posted to ledger accounts. In this exercise, however, your understanding of the relationship between the journal and the ledger is tested by asking you to study some ledger accounts and determine the journal entries that probably were made to produce these ledger entries. The following accounts show the first six transactions of Avenson Insurance Company. Prepare a journal entry (including a written explanation) for each transaction. L05 Accounts Cash Vehicles Nov. 1 120,000 Nov. 30 9,400 Nov. 8 33,600 Nov. 25 12,000 Nov. 30 1,400 Land Notes Payable Nov. 8 70,000 Nov. 25 12,000 Nov. 8 Nov. 30 95,000 8,000 Building Accounts Payable Nov. 8 58,600 Nov. 21 480 Nov. 15 3,200 Office Equipment Capital Stock Nov. 15 3,200 Nov. 21 480 Nov. 1 120,000 L03 EXERCISE 3.12 Journalizing, Posting, and Preparing a Trial LO5 Balance LO8 LOS Herrold Consulting incorporated on February 1, 2011. The company engaged in the following transactions during its first month of operations: 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, building, and office equipment for $600,000. The value of the land was $100,000, the value of the building was $450,000, and the value of the office equipment was $50,000. The company paid $300,000 cash and issued a note payable for the balance. Feb. 11 Purchased office supplies for $600 on account. The supplies will last for several months. Feb. 14 Paid the local newspaper $400 for a full-page advertisement. The ad will appear in print on February 18. 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 owed for office supplies purchased on February 11. Chapter 3 The Accounting Cycle: Capturing Economic Events A partial list of the account titles used by the company includes: Cash Notes Payable Accounts Receivable Accounts Payable Office Supplies Capital Stock Land Client Service Revenue Building Advertising Expense Office Equipment Salaries Expense a. Prepare journal entries, including explanations, for the above transactions. b. Post each entry to the appropriate ledger accounts (use the T account format as illustrated in Exhibit 3-8 on page 108). c. Prepare a trial balance dated February 28, 2011. Assume accounts with zero balances are not included in the trial balance