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.

Journal

A book of original or first entry. The basic two column journal provides for entering business transaction are recorded, and provision is made for adequate explanation.

Journalizing = The process of recording a business transaction in a journal.

Where to Record Business Transaction

1. Accounts 
2. Double-Entry Accounting
3. Journal
4. Ledger
5. Trial Balance

In recording business transaction:

1. Analyze what account are involve.
2. Classify the account involve. (Accounting Equation)
3. Are the account increase or decrease
4. Record the transaction

To test your understanding of the recording procedure, describe the nature of the transactions that have taken place. (see the accounting equation)

Example:

Januanry 1, 2013, Shegarlynn's invest $50,000 cash in the business.

Note: The account involve are investment of Shehgarlynn $50,000, which is cash.

Accounting Equation
Assets = Liabilities + Owner's Equity

Assets = Cash  (Increase)
Owner's Equity = Shehgarlynn, Capital (Increase)

The Journal Entry of the above example:

Date    Description                        Debit                Credit
2013
Jan. 1  Cash ................................$50,000
             Shehgarlynn, Capital...............................$50,000
               To record the original investment of Shehla.                      

Note: Remember always record the date first, the description, debit part, and credit part of the entry.