Double-Entry Bookkeeping The transactions of Wheels Repair Shop for January 2019

Question

Double-Entry Bookkeeping The transactions of Wheels Repair Shop for January 2019 are shown below January 3-Debby Star opened a bank account under the name of her new business and deposited E30,000 in cash. January 4-She rented a temporary shop and paid E300 for the January rent, issued cheque. amount of £80 was paid for January, issued cheque. Company for £400 on account. one-year note payable for the balance. be opened in his name. He promised to settle the account within 30 days. This arrangement was authorized by January 5-Rented automotive tools and equipment until the firm could purchase its own. Rent in the January 5-Purchased motorcycle parts and supplies described on invoice from the Southern Supply January 10-Purchased land as a prospective building site for £10,000. Paid E4,000 in cash and issued a January 12- Made repairs on George Shipman's motorcycle for E40. Shipman asked that a charge account service manager January 26-Made repairs on Jay Munson's motorcycle for £180. A charge account was opened in his name. January 29 Purchased motorcycle parts and supplies from Delco Supply House for £250 on account January 29- Paid the Southern Supply £300 on account (cheque) January 31- Paid electricity and water bills of £80 for January January 31-Paid £1,700 in salaries for the month January 31-Made motorcycle repairs for various cash customers for £4,800 January 31-Debby Star withdrew £300 in cash in anticipation that at least as much income had been earned January 31-Purchased automotive tools and equipment for cash £4,000. The list price was 5,000. January 31-Paid a premium of £600 on a 12 months insurance policy, it becomes effective on February 1, 2019. January 31-Received a cheque for £10 from George Shipman. Required: (a) Analyze the transactions using extended accounting equation formula (b) Journalize the transactions (c) Post to the ledger (d) Prepare a trial balance sheet / footing (a) Extended accounting equation formula: Journal of transactions Dr January 3, 2019 Bank E30,000 Capital E30,000

Explanation / Answer

a) Accounting Equation formula , Assets = Liabilities + Stockholder's Equity + Net Income Assets Liabilities + Stockholder's Equity + Net Income Cash Accounts Receivable Prepaid Insurance Supplies Automotive tools Land Accounts Payable Notes Payable Stockholders Equity Retained Earnings Revenue- Expense Expense Type 1 30000 30000 2 -300 300 Rent 3 -80 80 Rent 4 400 400 5 -4000 10000 6000 6 40 40 7 180 180 8 250 250 9 -300 300 10 -80 80 Electricity and water bills 11 -1700 1700 Salaries 12 4800 4800 13 -300 -300 14 -4000 4000 15 -600 550 50 Insurance 16 10 -10 b) Date Transactions Debit Credit 3.01.2019 Cash 30000 To Debby Star, Capital 30000 (Being bank account opened by investing capital) 04.01.2019 Rent Expense 300 To Cash 300 (Being shop rent expense paid) 05.01.2019 Automobile tools and Equipment Rent 80 To Cash 80 (Being automobile tools and equipment rent paid) 05.01.2019 Purchases 400 To Southern Supply Company 400 (Being purchase of motorcycle parts and supplies on account) 10.01.2019 Land 10000 To Cash 4000 To Note payable 6000 (Being purchase of land as a prospective building) 12.01.2019 George Shipman's motorcycle 40 To Service revenue 40 (Being repairs services provided on account) 26.01.2019 Jay Munson's 180 To Service Revenue 180 (Being repairs services provided on account) 29.01.2019 Purchases 250 To Delco Supply House 250 (Being purchase of motorcycle parts and supplies on account) 29.01.2019 Southern Supply Company 300 To Cash 300 (Being payment made to southern supply) 31.01.2019 Electricity and water bills 80 To Cash 80 (Being electricity and water bills paid) 31.01.2019 Salaries Expense 1700 To Cash 1700 (Being Salaries Expense paid) 31.01.2019 Cash 4800 To Service Revenue 4800 (Being motorcycle repairs service provided for cash) 31.01.2019 Drawings 300 To Cash 300 (Being cash withdrawan by Debby Star) 31.01.2019 Automotive tools and equipment 4000 To Cash 4000 (Being automotive tools and equipment purchased) 31.01.2019 Insurance Expense 50 Prepaid Insurance 550 To Cash 600 (Being insurance premium paid) 31.01.2019 Cash 10 To George Shipman 10 (Being cash received from George Shipman) c) Cash Particulars Debit Particulars Credit Debby Star, Capital 30000 Rent Expense 300 Service Revenue 4800 Rent Expense 80 Accounts Receivable 10 Land 4000 Accounts Payable 300 Electricity and water bills 80 Salaries 1700 Drawings 300 Automobile tools and equipment 4000 Insurance 600 Accounts Payable 10 Bal 23440 34810 34810 Debby Star, Capital Particulars Debit Particulars Credit Bal 30000 Cash 30000 30000 30000 Rent Expense Particulars Debit Particulars Credit Cash 300 Cash 80 Bal 380 380 380 Purchases Particulars Debit Particulars Credit Accounts Payable 400 Accounts Payable 250 Bal 650 650 650 Accounts Payable Particulars Debit Particulars Credit Cash 300 Purchases 400 Cash 10 Purchases 250 Bal 340 650 650 Land Debit Credit Balance Cash 10000 Bal 10000 10000 10000 Notes Payable Debit Credit Balance Balance 6000 Land 6000 6000 6000 Service Revenue Debit Credit Balance Accounts Receivable 40 Accounts Receivable 180 Balance 5020 Cash 4800 5020 5020 Accounts Receivable Debit Credit Service Revenue 40 Cash 10 Service Revenue 180 Balance 210 220 220 Electricity and water bills Debit Credit Balance Cash 80 Balance 80 80 80 Salaries Debit Credit Balance Cash 1700 Balance 1700 1700 1700 Drawings Debit Credit Balance Cash 300 Balance 300 300 300 Automobile tools and equipment Debit Credit Balance Cash 4000 Balance 4000 4000 4000 Insurance Debit Credit Balance Cash 50 Balance 50 50 50 Prepaid Insurance Debit Credit Balance Cash 550 Balance 550 550 550 d) WHEELS REPAIR SHOP TRIAL BALANCE As on 31st January 2019 Accounts Debit Credit Cash 23440 Debby Star, Capital 30000 Rent Expense 380 Purchases 650 Accounts Payable 340 Land 10000 Notes Payable 6000 Service Revenue 5020 Accounts Receivable 210 Electricity and Water Bills 80 Salaries 1700 Drawings 300 Automobile Tools and Equipment 4000 Insurance 50 Prepaid Insurance 550 Total 41360 41360

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