Robert and Chip organized Chipper Corporation on January 1, 2008. Each of these

Question

Robert and Chip organized Chipper Corporation on January 1, 2008. Each of these owners invested $100,000 cash and received shares of stock. Below are selected transactions that were completed during January 2008:

(1) Owner’s invested $100,000 each to start the business.
(2) Prepaid three (3) months rent for $15,000 ($5,000 each month).
(3) Purchased equipment by signing a $75,000 note payable for $50,000 and paying the remainder in cash.
(4) Purchased two service vehicles for $24,000 each, paid $20,000 cash.
(5) Purchased $1,000 of supplies on account.
(6) Sales revenue on account was $85,000.
(7) Paid expenses of $48,000.
(8) Collected $42,000 from customers on account.
(9) Paid $2,000 on the note payable for the equipment and $1000 for the note payable for the service vehicles.

Record each transaction in journal form and post to the appropriate accounts in the ledger. Prepare a Trial Balance for January 31, 2008.

Explanation / Answer

1) DR Cash 100,000 CR Common Stock 100,000 2) DR Prepaid Rent 15,000 CR Cash 15,000 3) DR Fixed Assets-Equipment 75,000 CR Notes Payable 50,000 CR Cash 25,000 4) Fixed Assets-vehicles 48,000 CR Notes Payable 28,000 CR Cash 20,000 5) DR Supplies 1,000 CR Accounts Payable 1,000 6) DR Accounts receivable 85,000 CR Sales Revenue 85,000 7) DR Operating Expenses 48,000 CR Cash 48,000 8) DR Cash 42,000 CR Accounts receivable 42,000 9) DR Notes Payable 3,000 CR Cash 3,000 Trial Balance Debit Credit Cash 31,000 Accounts Receivable 43,000 Prepaid Expenses 15,000 Supplies 1,000 Fixed Assets-Equipment 75,000 Fixed Assets- Vehicles 48,000 Accounts Payable 1,000 Notes Payable 75,000 Common Stock 100,000 Sales Revenues 85,000 Operating expenses 48,000 Totals 261,000 261,000

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.