Cost of Good Sold

The cost will be recognized as an expense.

Shehgarlynn Mini Mart

The following are the daily business transaction of Shehgarlynn Mini Mart:

January 1, 2013  bought $6,500 of merchandise on account, terms 3/10, 2/15, n/30, from Yosores Company,

January 3, 2013 Sales on credit to Gary Co. amounted to $3,750, terms 2/10, n/30.

January 10, 2013 Gary Co. return of $570.00 on goods sold on Jan. 3, 2013

January 14, 2013 Received a cash from Gary Co. in payment of the goods sold on Jan. 3.

January 15, 2013 Sent a check # 025, amounting  to Yosores Co. in payment of purchase made on January 1,

January 18, 2013 Purchased merchandise on credit to Shehlynn Co. for $8,500, terms 3/10, 2/15, n/30.
                                     
January 25, 2013 Some items purchased from Shehlynn Co. are returned amounted $950 in goods purchased on January 18.

January 29, 2013 Paid for freight charges on purchase of Jan. 1. amounting $250.
                                     
January 31, 2013 Paid to Shehlynn Co., the total amount in payment of purchase made on January 18.

Prepare the Net Income of Shehgarlynn Mini Mart

Cash Payment Journal

A journal that records all transactions involving the payment of cash regardless of the reason. Is used any time that there is an outlay of cash. Cash payments will automatically call for the use of this multicolumn special journal.

Purchases Returns and Allowances

A contra or negative account that offsets the merchandise purchases account. When goods previously purchased are returned, the entry for the return causes a credit to be recorded in this contra-account.

Purchases Returns and Allowances Journal

A journal used by the seller of goods to acknowledge the receipt of a credit memorandum from the seller authorizing the return of goods and the reduction or elimination of the buyer's obligation to the seller.

Prepaid Expense

An asset account --an item that normally is considered to be an expense but, because it is paid in advance, is classified as an asset. When the value of the asset has been used up, an adjusting entry will convert this prepaid expense (asset) to an actual expense.

Purchases Journal

A journal that records all purchases on credit. This special journal is a multicolumn journal.

Cash Receipts Journal

A journal that records all transactions involving the receipt of cash regardless of the source. These sales, as well as other transactions causing an inflow of cash.

Special Journal

A book of original entry in which all transactions of a similar nature, such as credit sales or credit purchases are recorded.

Sales Returns and Allowances Journal

A journal used by the seller of goods to record the issuance of a credit memorandum, which services as evidence of the return of merchandise to the seller, giving the buyer credit for the return.

Sales Journal

Sales Journal - A journal that records all sales of goods and/ or services may be made for cash or on credit.

Recording Business Transaction

The following are the daily business transaction of Shehgarlynn Mini Mart:

January 1, 2013  bought $5,500 of merchandise on account, terms 3/10, 1/15, n/30, from Yosores Company,

Journal Entry

Merchandise Purchases                       $5,500.00
   Accounts Payable                                                       $5,500.00

January 5, 2013 Sales on credit to Gary Co. amounted to $2,500, terms 2/10, n/30.

Journal Entry

Accounts Receivable                           $2,500.00
   Sales                                                                              $2,500.00

January 10, 2013 Gary Co. return of $550.00 on goods sold on Jan. 5.

Journal Entry

Sales Returns and Allowances         $550.00
  Accounts Receivable                                           $550.00

January 14, 2013 Received a cash form Gary Co. in payment of the goods sold on Jan. 5.

Journal Entry

Cash                                          $1,911.00
Sales Discount                               39.00
  Accounts Receivable                                  1,950.00

Computation:
Cost of Goods Sold                             $2,500.00
Less: Sales Return and Allowances     550.00 
Total Sales ..................................$1,950.00
Discount Rate...............................      2%   
Sales Discount                                               39.00  

Sales                                    $1,950.00
Less: Sales Discount                39.00
Cash received                     $1,911.00

January 15, 2013 Sent a check # 025, amounting  to Yosores Co. in payment of purchase made on January 1,

Journal Entry

Accounts Payable                           $5,500.00
   Purchases Discount                                                     55.00
   Cash                                                                          $5,445.00

Computation:
Merchandise Purchases             $5,500.00
Discount Rate                                            1%   
Purchases Discount                               55.00

Merchandise Purchases             $5,500.00
Less:Purchases Discount                     55.00
Net Purchases                                   5,445.00

January 18, 2013 Purchased merchandise on credit to Shehlynn Co. for $7,500, terms 3/10, n/30.

Journal Entry

Merchandise Purchases                          $7,500.00
   Accounts Payable                                                          $7,500.00

January 20, 2013 Sales for the day amounted to $15,325.00

Journal Entry

Cash                                         $15,325.00
   Sales                                                                 $15,325.00

January 25, 2013 Some items purchased from Shehlyn Co. are returned amounted $1,750 in goods purchased on January 18.

Journal Entry

Accounts Payable                          $1,750.00
   Purchases Returns & Allowances                $1,750.00

January 29, 2013 Paid for freight charges on purchase of Jan. 1. amounting $150.

Journal Entry

Freight on Purchases                         $150.00
   Cash                                                                           $150.00

January 31, 2013 Paid to Shehlynn Co., the total amount in payment of purchase made on January 18.

Journal Entry

Accounts Payable                                $5,750.00
   Cash                                                                                $5,750.00

Computation

Merchandise Purchase                                $7,500.00
Less: Purchases Returns & Allowances    1,750.00
Net Purchases                                                  $5,750.00

Sales Discount

Terms - "2/10, n/30" - Maybe be offered

2/10  mean 2% discount will be given if the obligation is paid within 10 days of the invoice date, on the entire amount.

n/30 = mean that the entire obligation, Net (n), is due the seller with in 30 days of the invoice.

The sales discount is offered but the seller, but it is the buyer who exercises the option of taking the cash discount or not.

Example:

January 2, 2013, Gary Company sales on credit amounted to $5,150 of merchandise to Shehgarlynn Supermarket, terms 5/10, n/30.  On January 9, 2013, Gary's Co. received a cash from Shehgarlynn Supermarket in payment of the account last Jan. 2, 2013.
Computation:

Cost of Merchandise          $5,150.00
Discount                                      5%     
Sales Discount                         257.50

Journal Entries: Books of the Seller

January 2, 2013  Accounts Receivable        $5,150.00
                                      Sales                                                            $5,150.00
                                   To record sales on credit, amounted $5,150, terms offered 5/10, n/30


January 9, 2013  Cash                                $4,892.50
                                    Sales Discount                   257.50
                                       Accounts Receivable                    $5,150.00
                                  To record the payment of Shehgarlynn account.        
                                                                                                                                     

Purchases Discount

Terms - "2/10, n/30" - Maybe be offered

2/10  mean 2% discount will be given if the obligation is paid within 10 days of the invoice date, on the entire amount.

n/30 = mean that the entire obligation, Net (n), is due the seller with in 30 days of the invoice.

The sales discount is offered but the seller, but it is the buyer who exercises the option of taking the cash discount or not.

Example:

January 2, 2013, Shehgarlynn Supermarket bought $5,150 of merchandise to Gary Company on credit, terms 5/10, n/30.  On January 9, 2013, Shehgarlynn paid cash for the goods.

Computation:

Cost of Merchandise          $5,150.00
Discount                                      5%     
Purchases Discount                 257.50


Journal Entries: Books of the Buyer

January 2, 2013  Merchandise Purchases        $5,150.00
                                      Accounts Payable - Gary Co.                         $5,150.00
                                   To record purchases of merchandise, terms offered 5/10, n/30


January 9, 2013  Accounts Payable - Gary Co.   $5,150.00
                                       Cash                                                                        $4,892.50
                                       Purchases discount                                                 257.50
                                   To record the payment of merchandise.

Sales Return and Allowances

When the customer returning goods to a seller, she has the right to do so. The accountant establish the title of this account as Sales return and allowances.

Example:
Jerry return goods amounting of $300.

Journal Entry:

Sales Returns and Allowances            $300
  Cash                                                                          $300
To record the goods return and paid back cash $300

Recording Sales

On January 10, 2013 Shehgarlynn Mini Mart, total sales of merchandise amounting of $13,000; the cashier count the total cash receipt amounting of $10,500, and the rest of sales on account.

Journal Entry:

Jan. 10, 2013   Cash ...........................              $10,500
                               Accounts Receivable ......             2,500
                                   Sales .................................                    $13,000
                                To record the merchandise sold for the day.

                                                       Or


Jan. 10, 2013   Cash .............................     $10,500
                                  Sales ...................................             $10,500
                                To record the merchandise sold for cash

                              Account Receivable - Credit Card ........  $2,500
                                Sales ..................................................                  $2,500
                               To record the merchandise sold on credit.

Determining the Cost of Goods Available for Sale

Merchandise Inventory, Beg.                                                           $19,130
Purchases                                                                                  89,950
Less: Purchases Returns And Allowances    9,750
            Purchases Discount                                 11,300   21,050
Total                                                                                            68,900
Add: Freight on Purchases                                                    1,570
Net Purchases                                                                                           70,470
Cost of Goods Available for Sale                                89,600

Determining the Cost of Merchandise Sold

Cost of Merchandise Available for Sale ...................$89,600
Less: Merchandise Inventory, End ........................      13,750
Cost of Goods Sold .............................................        75,850

Determining Net Sales

Revenue

   Gross Sale ............................................................. $150,000
   Less: Sales Returns and Allowances ....... $5,155
              Sales Discount .......................             1,350               6,585
   Net Sales ...........................................................  ...$143,495

Determining Net Income

Net Sales - The results of subtracting sales returns and allowances and sales discounts from the sale account.

    Net Sales .......................................        $143,495
   Less: Cost of Goods Sold .............                 75,850
   Gross Profit ..................................             67,645
   Operating Expenses  .....................              45,750
   Net Income  ...................................         $21,895

Merchandise Purchases

Merchandise Purchases - The goods that a trading business purchases for the period of resale, or all goods bought exclusively for the purpose of resale. During the year this account is treated as an asset. However, its locations on the chart of accounts indicates that it is actually an expense, the assumption being that as the goods were bought for resale they represent expenses. Goods that were actually sold become part of the calculation of cost of goods sold, which is an expense category.

Service VS Trading

Service Businesses - Sell knowledge (ex. law firm, accounting firm, advertising agencies, and health care, perform services and the compensation received for those services is recorded in various accounts such as: income from services, income from fees, and commission income.)

Trading Businesses - Sell a particular product or group of products. First the organization acquire the product by purchasing or to make with in the organization and sell the products. In short buy and sell a product.

Test IV - Prepare a Post-Closing Trial Balance

Shehla Shehgarlynn operates a repair service, known as Shehgarlynn Repair Service.
The following are the accounts of Shehgarlynn for the month of December 2012 of operations:

Cash in Bank ...............$13,140
Supplies.............................500
Prepaid Rent ..................6,000
Prepaid Insurance...........1,200
Accounts Receivable..........250
Repair Equipment...........5,000
Shehla, Capital..............20,000
Shehla, Drawing.................120
Repair Fees Earned.......11,000
Accounts Payable...........1,000
Advertising Expense .........500
Salaries Expense............5,000

Shehgarlynn accounting records are kept on accrual basis. At the end of December prepare the following adjustment needed:

1. Insurance has been used from Jan. to Dec., $100 per month.
2. Rent of the office has been used from Jan. to Dec., $500 per month
3. $250 of supplies has been used from Jan. to Dec. 

After closing all temporary capital accounts prepare a Post-Closing Trial Balance.

Test II - Closing Entries

Shehla Shehgarlynn operates a repair service, known as Shehgarlynn Repair Service.
The following are the accounts of Shehgarlynn for the month of December 2012 of operations:

Cash in Bank ...............$13,140
Supplies.............................500
Prepaid Rent ..................6,000
Prepaid Insurance...........1,200
Accounts Receivable..........250
Repair Equipment...........5,000
Shehla, Capital..............20,000
Shehla, Drawing.................120
Repair Fees Earned.......11,000
Accounts Payable...........1,000
Advertising Expense .........500
Salaries Expense............5,000

Shehgarlynn accounting records are kept on accrual basis. At the end of December prepare the following adjustment needed:

1. Insurance has been used from Jan. to Dec., $100 per month.
2. Rent of the office has been used from Jan. to Dec., $500 per month
3. $250 of supplies has been used from Jan. to Dec. 

After preparing the adjusting entries, prepare trial balance, financial statement, and close all temporary capital accounts.

Test I - Adjusting Entries

Shehla Shehgarlynn operates a repair service, known as Shehgarlynn Repair Service.
The following are the accounts of Shehgarlynn for the month of December 2012 of operations:

Cash in Bank ...............$13,140
Supplies.............................500
Prepaid Rent ..................6,000
Prepaid Insurance...........1,200
Accounts Receivable..........250
Repair Equipment...........5,000
Shehla, Capital..............20,000
Shehla, Drawing.................120
Repair Fees Earned.......11,000
Accounts Payable...........1,000
Advertising Expense .........500
Salaries Expense............5,000

Shehgarlynn accounting records are kept on accrual basis. At the end of December prepare the following adjustment needed:

1. Insurance has been used from Jan. to Dec., $100 per month.
2. Rent of the office has been used from Jan. to Dec., $500 per month
3. $250 of supplies has been used from Jan. to Dec. 

Test II - Closing Entries

Indicate whether each of the following accounts should be closed at year-end by writing YES or NO in the answer column.
                                                                           Answer

1. Service Revenue                                _______
2. Shehla, Capital                                    _______
3. Shehla, Drawing                                 _______
4. Supplies Expense                              _______
5. Prepaid Expense                               _______
6. Accumulated Depreciation           _______
7. Accounts Payable                             _______
8. Wages Payable                                  _______
9. Wages and Salaries Expense        _______
10. Supplies                                                 _______
11. Prepaid Insurance                            _______
12. Accounts Receivable                       _______
13. Depreciation Expense                     _______
14. Unearned Revenue                          _______
15. Interest Income                                _______
16. Office Equipment                             _______
17. Computer                                            _______
18. Water and Power Payable           _______
19. Notes Payable                                   _______
20. Prepaid Rent                                      _______

Reversing Entries

An entries recorded at the very beginning of the new accounting period, each representing the exact opposite of the adjusting entry recorded at the end of the previous accounting period. A reversing entry is necessary any time an adjusting entry sets up an account that will not be closed at the end of the accounting period and that does not normally carry a balance on the books during the year.

Permanent Capital Account

The owner's equity in a business organization that is not expected to change other than as a result of an increase or a decrease in the owner's investment in the business.

Temporary Capital Account

Accounts that will be eliminated at the end of the accounting period. The temporary capital accounts for a sole proprietorship consists of revenue, expenses, and proprietor's drawing account.

Post-Closing Trial Balance

A trial balance prepared after closing the ledger. Temporary capital accounts, having no balances after the closing entries have been posted.

Closing Entries

A journal entries usually prepared at the end of the accounting period to eliminate the balances in the temporary capital account and to transfer these balances  to the income summary and eventually to the permanent capital account.

After the accountant prepared the income statement and balance sheet, a summary account variously known as Expense and Income Summary or Profit and Loss Summary is set up. In order to close all the temporary capital account.

Example: Temporary account

Revenue .................. $13,500
Rent Expense................1,500
Utilities Expense..............750
Salaries Expense...........2,500
Supplies Expense.............995
Shehla, Drawing ...........1,500

The closing entries are as follows:

1. Close out income accounts.
   Dec. 31 Revenue...............................$13,500
                      Expense and Income Summary .............$13,500
                        To close the revenue account

2. Close out expense accounts.
  Dec. 31 Expense and Income Summary...$7,245
                     Rent Expense.......................................1,500
                     Utilities Expense.....................................750
                     Salaries Expense..................................2,500
                     Supplies Expense....................................995
                       To close the expense accounts.

3. Close out the Expense and Income Summary account.
  Dec. 31 Expense and Income Summary.........$6,255
                    Shehla, Capital.............................................$6,255
                       To close the expense and income summary account.

Note: If the revenue is more than the expenses, it shows the profit to be added to the capital. If expenses is more than the revenue, then a loss has been sustained, and a credit is made to Expense and Income Summary and a debit to the capital account.

4. Close out the drawing account.
   Dec. 31 Shehla, Capital .....................$1,500
                      Shehla, Drawing ................................$1,500
                        To close Shehla, Drawing account.

Adjusting Entries

Are journal entries that are recorded in order to properly reflect the appropriate balances in the various ledger accounts for a specific accounting period. The entries are usually prepared at the end of the accounting period but may be prepared at any time that the accountant considers appropriate.

To adjust expense or income items that have already been recorded:

Example 1 Prepaid Rent

On January 1, 2013, Shehla paid $6,000 in advance for office rent, $500 a month.

 Recording in Journal Entry
2013
Jan. 1 Prepaid Rent .................$6,000
            Cash ......................................$6,000
               To record the payment of office rent in advance

Note: At the end of the month the accountant need to adjust the accrued expenses, which is below.

   Recording the Adjusting Entries
2013
Feb. 1 Rent Expense ..............$500
             Prepaid Rent......................$500
               To record the expense have been incurred

Accounting Cycle

Is a sequence of accounting procedures that are usually performed during an accounting period.

An accounting period - is the time period for which the income statement is prepared.

Calendar year - is from January 1 to December 31.

Fiscal year - is any twelve month period. A fiscal year could be a calendar year but does not have to be.

Interim reports - are statements that are usually prepared for a month or a quarter (a portion of the fiscal year)

Double-Entry Bookkeeping

An accounting system in which the recording of each transaction affects two or more accounts, and the total of the debit is equal to the total of the credit.

Account Number

The numbers assigned to accounts according to the chart of account. 

Source Documents

A business papers, such as checks, invoices, receipts, letters and memos, that furnish proof that a transaction has taken place.

What are Business Transaction?

A business transactions is any business activity that affects what a business owns and owes, as well as the ownership of the business. We learned in Part III to keep track of business transaction by using an expanded form of the accounting equations. Most business, however, are involved in daily business transactions.

Information to keep track of:

• When we added a business transaction to the accounting equation, we showed the change that took place in the specific record.
• This increase or decrease is an important part of our record, but we also want to keep track of the date that a particular transaction takes place.
• Some form of explanation is also helpful, especially if the specific item acquired may not be apparent from the title of the record we maintain for it.

Thus, every business transaction should contain three kinds of information:

1. The date of transaction.
2. An explanation of the transaction (where necessary).
3. The amount of the transaction and its result; whether it represents an increase or a decrease.

Posting

Is the process of transferring information from the journal to the ledger. Posting is the third critical step in the process of preparing financial reports.

The posting process consists of four steps:

1. Write the date of the transaction in the accounts sate column.
2. Write the amount of the transaction in the debit or credit column, and enter the new balance in the balance column under debit or credit.
3. Write the page number of the journal in the posting reference column of the ledger account.
4. Record the ledger account number in the posting preference column of the journal.

Test VII - Final Exam

Shehla Shehgarlynn operates a taxi company known as the Shehgarlynn's Taxi Co. The beginning balance of her accounts as of January 1, 2013 as follows:

Cash.....................................$76,500
Supplies .....................................800
Automobile ...........................15,000
Accounts Payable..................33,000
Capital...................................10,500

The transactions of the firm during the month of January appear below:

1. Paid balance owed to the creditor.
2. Income (cash) for the month, $8,500
3. Paid wages for the month, $2,100
4. Paid for advertising, $150
5. Purchased an additional used taxi for $7,500, terms half in cash and the balance on account.
6. Paid $475 for maintenance of automobiles.
7. Sold $150 of our supplies at cost as an accommodation.
8. Shehla withdrew $950 for personal use. 
9. Inventory of supplies at the end of the month was $425 (used).

Prepare the following:

1. Journal Entries
2. General Ledger
3. Trial Balance
4. Financial Statement

Test VI - Balance Sheet

The following are the transactions of Shehgarlynn Repair Service. Journalize the following transactions in proper form. The chart of accounts includes: Cash and Bank; Prepaid Rent; Supplies; Repair  Equipment; Accounts Payable; Accounts Receivable; Shehla, Capital; Shehla, Withdrawal; Repair Fees Earned; Salaries Expense; Advertising Expense; and Supplies Expense.

January 1, 2013, Shehla invested $15,000 cash and $5,000 of repair equipment in the business. (The cash deposit to Bank of America checking account No.0013447)

January 1, 2013, Paid twelve (12) month's rent in advance, $500 per month. check no. 001

January 5, 2013, Bought repair supplies from Arden Co. on account, amounting of $500. (These  supplies have not yet been consumed or used up).

January 10, 2013, Perform repair work, received $750 cash, and had to bill Gary Co. for remaining  balance of $250. (cash was deposited to the Bank of America)

January 18, 2013, Shehla paid her home telephone bill, amounting of $120, check no. 002

January 20, 2013, Advertising bill for $500 from Jerry Co. received but payment not due yet.   (advertising has already appeared in the newspaper).

January 24, 2013, Paid salary to Shehla as a manager of the company, amounting of $5,000, check no. 003

January 30, 2013, Paid insurance for 1 year in advance, $100 per month. check no. 004.

After  preparing statement of owner's equity, prepare the Balance Sheet.

Test V - Statement of Owner's Equity

The following are the transactions of Shehgarlynn Repair Service. Journalize the following transactions in proper form. The chart of accounts includes: Cash and Bank; Prepaid Rent; Supplies; Repair  Equipment; Accounts Payable; Accounts Receivable; Shehla, Capital; Shehla, Withdrawal; Repair Fees Earned; Salaries Expense; Advertising Expense; and Supplies Expense.

January 1, 2013, Shehla invested $15,000 cash and $5,000 of repair equipment in the business. (The cash deposit to Bank of America checking account No.0013447)

January 1, 2013, Paid twelve (12) month's rent in advance, $500 per month. check no. 001

January 5, 2013, Bought repair supplies from Arden Co. on account, amounting of $500. (These  supplies have not yet been consumed or used up).

January 10, 2013, Perform repair work, received $750 cash, and had to bill Gary Co. for remaining  balance of $250. (cash was deposited to the Bank of America)

January 18, 2013, Shehla paid her home telephone bill, amounting of $120, check no. 002

January 20, 2013, Advertising bill for $500 from Jerry Co. received but payment not due yet.   (advertising has already appeared in the newspaper).

January 24, 2013, Paid salary to Shehla as a manager of the company, amounting of $5,000, check no. 003

January 30, 2013, Paid insurance for 1 year in advance, $100 per month. check no. 004.

After  preparing the income statement, prepare the Statement of Owner's Equity

Test IV - Income Statement

The following are the transactions of Shehgarlynn Repair Service. Journalize the following transactions in proper form. The chart of accounts includes: Cash and Bank; Prepaid Rent; Supplies; Repair  Equipment; Accounts Payable; Accounts Receivable; Shehla, Capital; Shehla, Withdrawal; Repair Fees Earned; Salaries Expense; Advertising Expense; and Supplies Expense.

January 1, 2013, Shehla invested $15,000 cash and $5,000 of repair equipment in the business. (The cash deposit to Bank of America checking account No.0013447)

January 1, 2013, Paid twelve (12) month's rent in advance, $500 per month. check no. 001

January 5, 2013, Bought repair supplies from Arden Co. on account, amounting of $500. (These  supplies have not yet been consumed or used up).

January 10, 2013, Perform repair work, received $750 cash, and had to bill Gary Co. for remaining  balance of $250. (cash was deposited to the Bank of America)

January 18, 2013, Shehla paid her home telephone bill, amounting of $120, check no. 002

January 20, 2013, Advertising bill for $500 from Jerry Co. received but payment not due yet.   (advertising has already appeared in the newspaper).

January 24, 2013, Paid salary to Shehla as a manager of the company, amounting of $5,000, check no. 003

January 30, 2013, Paid insurance for 1 year in advance, $100 per month. check no. 004.

After  preparing the trial balance, prepare the Income Statement.

Test III - Trial Balance

The following are the transactions of Shehgarlynn Repair Service. Journalize the following transactions in proper form. The chart of accounts includes: Cash and Bank; Prepaid Rent; Supplies; Repair  Equipment; Accounts Payable; Accounts Receivable; Shehla, Capital; Shehla, Withdrawal; Repair Fees Earned; Salaries Expense; Advertising Expense; and Supplies Expense.


January 1, 2013, Shehla invested $15,000 cash and $5,000 of repair equipment in the business. (The cash deposit to Bank of America checking account No.0013447)

January 1, 2013, Paid twelve (12) month's rent in advance, $500 per month. check no. 001

January 5, 2013, Bought repair supplies from Arden Co. on account, amounting of $500. (These  supplies have not yet been consumed or used up).

January 10, 2013, Perform repair work, received $750 cash, and had to bill Gary Co. for remaining  balance of $250. (cash was deposited to the Bank of America)

January 18, 2013, Shehla paid her home telephone bill, amounting of $120, check no. 002

January 20, 2013, Advertising bill for $500 from Jerry Co. received but payment not due yet.   (advertising has already appeared in the newspaper).

January 24, 2013, Paid salary to Shehla as a manager of the company, amounting of $5,000, check no. 003

January 30, 2013, Paid insurance for 1 year in advance, $100 per month. check no. 004.



After posting the account to each debit or credit ledger account. Prepare the Trial Balance.

Test II - Posting to the Ledger

The following are the transactions of Shehgarlynn Repair Service. Journalize the following transactions in proper form. The chart of accounts includes: Cash and Bank; Prepaid Rent; Supplies; Repair  Equipment; Accounts Payable; Accounts Receivable; Shehla, Capital; Shehla, Withdrawal; Repair Fees Earned; Salaries Expense; Advertising Expense; and Supplies Expense.


January 1, 2013, Shehla invested $15,000 cash and $5,000 of repair equipment in the business. (The cash deposit to Bank of America checking account No.0013447)

January 1, 2013, Paid twelve (12) month's rent in advance, $500 per month. check no. 001

January 5, 2013, Bought repair supplies from Arden Co. on account, amounting of $500. (These  supplies have not yet been consumed or used up).

January 10, 2013, Perform repair work, received $750 cash, and had to bill Gary Co. for remaining  balance of $250. (cash was deposited to the Bank of America)

January 18, 2013, Shehla paid her home telephone bill, amounting of $120, check no. 002

January 20, 2013, Advertising bill for $500 from Jerry Co. received but payment not due yet.   (advertising has already appeared in the newspaper).

January 24, 2013, Paid salary to Shehla as a manager of the company, amounting of $5,000, check no. 003

January 30, 2013, Paid insurance for 1 year in advance, $100 per month. check no. 004.

After preparing the Journal entry, prepare the ledger or T-Account, post each account to each debit or credit ledger account.

Test I - Journalizing

The following are the transactions of Shehgarlynn Repair Service. Journalize the following transactions in proper form. The chart of accounts includes: Cash and Bank; Prepaid Rent; Supplies; Repair  Equipment; Accounts Payable; Accounts Receivable; Shehla, Capital; Shehla, Withdrawal; Repair Fees Earned; Salaries Expense; Advertising Expense; and Supplies Expense.

January 1, 2013, Shehla invested $15,000 cash and $5,000 of repair equipment in the business. (The cash deposit to Bank of America checking account No.0013447)

January 1, 2013, Paid twelve (12) month's rent in advance, $500 per month. check no. 001

January 5, 2013, Bought repair supplies from Arden Co. on account, amounting of $500. (These  supplies have not yet been consumed or used up).

January 10, 2013, Perform repair work, received $750 cash, and had to bill Gary Co. for remaining  balance of $250. (cash was deposited to the Bank of America)

January 18, 2013, Shehla paid her home telephone bill, amounting of $120, check no. 002

January 20, 2013, Advertising bill for $500 from Jerry Co. received but payment not due yet.   (advertising has already appeared in the newspaper).

January 24, 2013, Paid salary to Shehla as a manager of the company, amounting of $5,000, check no. 003

January 30, 2013, Paid insurance for 1 year in advance, $100 per month. check no. 004.

Prepare the Journal Entry.