Based on the information given below, complete the steps of journalizing. Rex Co

Question

Based on the information given below, complete the steps of journalizing.

Rex Consulting Services opened for business in January, 2005. The company maintains the following ledger accounts:

1.1 Cash account
1.2 Accounts receivable
1.3 Office supplies
2.1 Accounts payable
3.1 Capital stock
3.2 Retained earnings
4.1 Consulting revenue
5.1 Rent expenses
5.2 Utilities expenses

The company engaged in the following business activity in January:

Jan 15: Invested capital of $50,000.
Jan 17: Paid $400 office rent for the remainder of January.
Jan 20: Purchased office supplies for $200. The supplies will last for several months, and payment is not due until February 15th.
Jan 25: Purchased office equipment for $15,000 cash.
Jan 27: Performed consulting services and billed clients for $2,000. The entire amount will not be collected until February.
Jan 31: Recorded a $100 utilities expense. Payment is not due until February 20th.

Guidelines for the assignment:

* Analyze and identify the accounts.
* Classify the accounts.
* Apply the rules of debit and credit.
* Create a T account.
* Pass the journal entry.

Record each of the above transactions in a general journal form.

Part 2:

Write down all the steps required for journalizing the following business transactions:

* On January 5th, Mr. David took $20,000 from his personal savings and deposited it to start a business account in the name of David Transport Service.
* On January 6, David Transport Service issued check No. 506 for $2,000 to buy a computer system.
* On January 10, David Transport Service paid $100 to Blue company for telephone charges. Memorandum 5.
* On January 15, David Transport Service mailed check No. 507 for $500 toward the month

Explanation / Answer

Part 1: Asset Accounts: Cash, Accounts Receivable, Office Supplies (Debit Balance) Liability Accounts: Accounts Payable (Credit Balance) Owner's Equity Accounts: Capital Stock and Retained Earnings (Debit Balance) Revenue Accounts: Consulting Revenue (Credit Balance) Expense Accounts: Rent Expenses and Utilities Expenses (Debit Balance) *A T-Account is a basic "t" chart, with the account headings listed at the top of each (i.e. Cash, Supplies, Accounts Payable, etc.), and with a debit column on the left, and a credit column on the right. Each account varies in the way the balances are handled. Asset Accounts, Equity, and Expense Accounts carry a Debit Balance (Credits decrease the balances), while Liabilities and Revenues carry a Credit Balance (Debits decrease the overall balance of the account. General Journal Form: Debit Credit 1. Capital Stock 50,000 Cash (50,000) 2. Rent Expense 400 Cash (400) 3. Office Supplies 200 Accounts Payable 200 4. Office Supplies 15,000 Cash (15,000) 5. Accounts Receivable 2,000 Consulting Revenue 2,000 6. Utilities Expense 100 Accounts Payable 100 Part 2: 1. Mr. David took $20,000 from his savings to establish a Petty Cash Fund. Debit Petty Cash, Credit Cash. 2. Check No. 506 for computer system. Debit Office Supplies, Credit Petty Cash. Ref. Check No. 506 3. Memo 5. for telephone charges. Debit Utilities Expense, Credit Petty Cash. Ref. Memo 5. 4. Check No. 507 for rent. Debit Utilities Expense, Credit Petty Cash. Ref. Check No. 507. 5. Check No. 508 for personal use. Debit Miscellaneous Expense, Credit Petty Cash. Ref. Check No. 508.

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