CHAPTER 2: RECORDING BUSINESS TRANSACTIONS
E2-4 (textbook – p.100)
The following transactions occurred for London Engineering:
Jul 2 Paid electricity and gas expense of $400.
Jul 5 Purchase equipment on credit, $2,100
Jul 10 Performed service for a client on credit, $2,000
Jul 12 Borrowed $7,000 cash, signing a bill payable.
Jul 19 Sold for $29,000 land that had cost this same amount.
Jul 21 Purchased supplies for $800 and paid cash
Jul 27 Paid the liability from 5 July. Requirement:
Journalise the preceding transactions, including the explanations.
E2-11 (textbook – p.103)
Principle Technology Solutions completed the following transactions during August
201N, its first month of operations:
Aug 1, Received cash of $48,000 from owner
Aug 2, Purchased supplies of $500 on credit
Aug 4, Paid $47,000 cash for a building
Aug 6, performed service for customers and received cash, $4,400
Aug 9, Paid $200 on accounts payable. Aug 1 ,
7 Performed service for customers on credit, $2,200 Aug 2 ,
3 Received $1,600 cash from a customer on account. Aug 3 ,
1 Paid the following expenses: salary, $1,900; rent, $700 Requirement:
Record the preceding transactions in the journal of Principle Technology Solutions.
Include an explanation for each entry. ANSWERS E2-4 Journal DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT Jul
2 Electricity and gas expense 400 Cash 400 5 Equipment 2 100 Accounts payable 2 100 10 Accounts receivable 2 000 Service revenue 2 000 12 Cash 7 000 Note payable 7 000 19 Cash 29 000 Land 29 000 21 Supplies 800 Cash 800 27 Accounts payable 2 100 Cash 2 100 E2-11 Journal POST. DATE ACCOUNTS AND EXPLANATIONS REF. DEBIT CREDIT Aug 1 Cash 48 000 Principe, capital 48 000 Owner investment 2 Supplies 500 Accounts payable 500
Purchased supplies on account. 4 Building 47 000 Cash 47 000 Paid cash for a building. 6 Cash 4 400 Service revenue 4 400 Performed service for cash. 9 Accounts payable 200 Cash 200 Paid cash on account. 17 Accounts receivable 2 200 Service revenue 2 200 Performed service on account. 23 Cash 1 600 Accounts receivable 1 600 Received cash on account. 31 Salary expense 1 900 Rent expense 700 Cash 2 600 Paid expenses.