bill and dan opened up HEB Inc. on September 1, 2013. During the first month of
ID: 2520429 • Letter: B
Question
bill and dan opened up HEB Inc. on September 1, 2013. During the first month of operations the following transactions occurred.
Date Transaction
9-1-13 Common Stockholders invested $40,000 cash in this new business.
9-2 Paid $4,000 rent for its store for the month of September and prepaid October – December’s
rent (e.g., 3 mo.). All rent is due on the 2nd of the month.
9-3 Borrowed $10,000 from a bank via a 6-month (180 day) promissory note at a 12% annual
rate. (use a 360 day year for all calculations)
9-4 Purchased $25,000 of cleaning equipment.
9-5 Paid $1,200 for 1-year insurance policy.
9-10 Received a bill from NEWSCORP for advertising the opening of their store, for $400.
9-15 Performed services on account for $6,200.
9-20 Received $2,200 for services originally performed on account.
9-30 Declared a cash dividend of $700 to shareholders of record on 10/1/13. The dividend is
payable on 12/31/13.
Assignment:
Do:
1. Journalize all of the September transactions in the appropriate columns as indicated below in the GENERAL JOURNAL.
2. Open GENERAL LEDGER accounts (T-ACCOUNTS) and post all of the September transactions.
3. Prepare a TRIAL BALANCE as of September 30, 2013. (This is a pre-closing Trial Balance)
4. Prepare a TRIAL BALANCE as of December 31st, 2013 (Please do NOT make closing entries)
Please make all appropriate adjusting entries and assume no adjustments have been made prior to
December 31st.
Explanation / Answer
Date Account description Debit Credit 1-Sep Bank $ 40,000.00 Common Stock $ 40,000.00 2-Sep Rent $ 4,000.00 Prepaid rent $ 12,000.00 To Bank $ 16,000.00 3-Sep Bank $ 10,000.00 To 12% promissory note Payable $ 10,000.00 4-Sep Cleaning Equipment $ 25,000.00 To Bank $ 25,000.00 (Assumed it is purchased for Cash) 5-Sep Insurance $ 100.00 Prepaid Insurance $ 1,100.00 To Bank $ 1,200.00 10-Sep Advertising Expenses $ 400.00 To NEWSCORP $ 400.00 15-Sep Trade Receivables $ 6,200.00 To Revenue $ 6,200.00 20-Sep Bank $ 2,200.00 Trade Receivables $ 2,200.00 20-Sep Retained Earnings $ 700.00 Dividend Payable $ 700.00 30-Sep Interest $ 100.00 Accrued Interest $ 100.00 Bank A/C Particulars Amount Particulars Amount Common Stock $ 40,000.00 Rent $ 4,000.00 promissory note Payable $ 10,000.00 Prepaid rent $ 12,000.00 Trade Receivables $ 2,200.00 Cleaning Equipment $ 25,000.00 Insurance $ 100.00 Prepaid Insurance $ 1,100.00 To Balance C/f $ 10,000.00 $ 52,200.00 $ 52,200.00 Common Stock A/C Particulars Amount Particulars Amount By Bank $ 40,000.00 To Balance C/f $ 40,000.00 $ 40,000.00 $ 40,000.00 Rent A/C Particulars Amount Particulars Amount To Bank $ 4,000.00 To Retained Earnings $ 4,000.00 $ 4,000.00 $ 4,000.00 Prepaid Rent A/C Particulars Amount Particulars Amount To Bank $ 12,000.00 To Balance C/f $ 12,000.00 $ 12,000.00 $ 12,000.00 12% promissory note Payable Particulars Amount Particulars Amount By Bank $ 10,000.00 To Balance C/f $ 10,000.00 $ 10,000.00 $ 10,000.00 Cleaning Equipment Particulars Amount Particulars Amount To Bank $ 10,000.00 To Balance C/f $ 10,000.00 $ 10,000.00 $ 10,000.00 Insurance Particulars Amount Particulars Amount To bank $ 100.00 Retained Earnings $ 100.00 $ 100.00 $ 100.00 Prepaid Insurance Particulars Amount Particulars Amount To bank $ 1,100.00 To Balance C/f $ 1,100.00 $ 1,100.00 $ 1,100.00 Advertising Expenses Particulars Amount Particulars Amount To NEWSCORP $ 400.00 Retained Earnings $ 400.00 $ 400.00 $ 400.00 NEWSCORP Particulars Amount Particulars Amount Advertising Expenses $ 400.00 To Balance C/f $ 400.00 $ 400.00 $ 400.00 Trade Receivables Particulars Amount Particulars Amount To Revenue $ 6,200.00 Bank $ 2,200.00 To Balance C/f $ 4,000.00 $ 6,200.00 $ 6,200.00 Revenue Particulars Amount Particulars Amount Trade Receivables $ 6,200.00 To retained earnings $ 6,200.00 $ 6,200.00 $ 6,200.00 Retained Earnings Particulars Amount Particulars Amount Dividend Payable $ 700.00 Retained earnings $ 6,200.00 To Retained Earnings $ 4,000.00 Retained Earnings $ 100.00 Retained Earnings $ 400.00 Accrued Interest $ 100.00 To Profit for the Year $ 900.00 $ 6,200.00 $ 6,200.00 Trial Balance as on 31st September Amount Bank $ 10,000.00 Common Stock $ (40,000.00) Rent $ 4,000.00 Prepaid rent $ 12,000.00 12% promissory note Payable $ (10,000.00) Cleaning Equipment $ 25,000.00 Insurance $ 100.00 Prepaid Insurance $ 1,100.00 Advertising Expenses $ 400.00 NEWSCORP $ (400.00) Trade Receivables $ 4,000.00 To Revenue $ (6,200.00) Dividend $ 700.00 Dividend Payable $ (700.00) Accrued Interest $ (100.00) Interest $ 100.00 $ - Trial Balance as on 31st December Opening Transaction Closing Bank $ 10,000.00 $ (700.00) $ 9,300.00 Common Stock $ (40,000.00) ######### Rent $ 4,000.00 $ 12,000.00 ######### Prepaid rent $ 12,000.00 $ (12,000.00) $ - 12% promissory note Payable $ (10,000.00) ######### Cleaning Equipment $ 25,000.00 ######### Insurance $ 100.00 $ 300.00 $ 400.00 Prepaid Insurance $ 1,100.00 $ (300.00) $ 800.00 Advertising Expenses $ 400.00 $ 400.00 NEWSCORP $ (400.00) $ (400.00) Trade Receivables $ 4,000.00 $ 4,000.00 To Revenue $ (6,200.00) ######### Dividend $ 700.00 $ 700.00 Dividend Payable $ (700.00) $ 700.00 $ - Accrued Interest $ (100.00) $ (300.00) $ (400.00) Interest $ 100.00 $ 300.00 $ 400.00 $ -
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