Michael Edi Lee - 2540123901 Financial Accounting Session 3 and 4

After researching the different forms of business organization, Mei-ling Lee decides to operate
“Matcha Creations” as a corporation. She then starts the process of getting the business running. In
November 2017, the following activities take place.

Nov. 8 Mei-ling sells her investments and receives NT$520, which she deposits in her personal bank
account.
8 She opens a bank account under the name “Matcha Creations” and transfers NT$500 from her
personal account to the new account in exchange for common stock.
11 Mei-ling pays NT$65 to have advertising brochures and posters printed. She plans to distribute
these as opportunities arise. (Hint: Use Advertising Expense.)
13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for NT$125 cash.
14 Mei-ling starts to gather some baking equipment to take with her when teaching the cookie
classes. She has an excellent top-of-the-line food processor and mixer that originally cost her NT$750.
Mei-ling decides to start using it only in her new business. She estimates that the equipment is
currently worth NT$300. She invests the equipment in the business in exchange for ordinary shares.
16 Mei-ling realizes that her initial cash investment is not enough. Her grandmother lends her
NT$2,000 cash, for which Mei-ling signs a note payable in the name of the business. Mei-ling deposits
the money in the business bank account. (Hint: The note does not have to be repaid for 24 months. As
a result, the notes payable should be reported in the accounts as the last liability and also on the
statement of financial position as the last liability.)
17 She buys more baking equipment for NT$900 cash.
20 She teaches her first class and collects NT$125 cash.
25 Mei-ling books a second class for December 4 for NT$150. She receives NT$30 cash in advance as a
down payment.
30 Mei-ling pays NT$1,320 for a one-year insurance policy that will expire on December 1, 2018.
Instructions
(a) Prepare journal entries to record the November transactions.
(b) Post the journal entries to general ledger accounts.
(c) Prepare a trial balance at November 30.
 Journalize
Journal Account
Date Particulars Debit $NT Credit $NT
Nov 8 Cash a/c 500
Common Stock a/c 500
(Cash Exchanged to Common Stock)

Nov 11 Advertising Expenses a/c 65

Cash a/c 65
(Cash used for advertising)

Nov 13 Baking Supplies a/c 125

Cash a/c 125
(Cash used for baking supplies)

Nov 14 Baking Equipment a/c 300

Common Stock a/c 300
(Common stock exchanged to Baking)

Nov 16 Cash a/c 2000

Note Payables a/c 2000
(Money lent in exchange of note pay)

Nov 17 Baking Equipment a/c 900

Cash a/c 900
(Cash used for baking equipment)

Nov 20 Cash a/c 125

Services a/c 125
(Cash collected for teaching)

Nov 25 Cash a/c 30

Services Prepaid a/c
(Cash received in advanced) 30

Nov 30 Prepaid Insurance a/c 1320

Cash a/c 1320
(Pay Insurance in Advance)
5365 5365
 Ledgers
Cash a/c
Particulars Amt $NT Particulars Amt $NT
Common Stock a/c 500 Advertising Exp a/c 65
Note Payables a/c 2000 Baking Supplies a/c 125
Services a/c 125 Baking Equipment a/c 900
Services Prepaid a/c 30 Prepaid Insurance a/c 1320
Closing Balance a/c 245
2655 2655

Common Stock a/c

Particulars Amt $NT Particulars Amt $NT
Closing Balance a/c 800 Cash a/c 500
Baking Equipment a/c 300

800 800

Advetising Expenses a/c

Particulars Amt $NT Particulars Amt $NT
Cash a/c 65 Closing Balance a/c 65

65 65

Notes Payable a/c

Particulars Amt $NT Particulars Amt $NT
Closing Balance a/c 2000 Cash a/c 2000

2000 2000

Services a/c
Particulars Amt $NT Particulars Amt $NT
Closing Balance a/c 125 Cash a/c 125

125 125
 Baking Supplies a/c
Particulars Amt $NT Particulars Amt $NT
Cash a/c 125 Closing Balance a/c 125

125 125

Baking Equipment a/c

Particulars Amt $NT Particulars Amt $NT
Common Stock a/c 300 Closing Balance a/c 1200
Cash a/c 900

1200 1200

Prepaid Insurance a/c

Particulars Amt $NT Particulars Amt $NT
Cash a/c 1320 Closing Balance a/c 1320

1320 1320

Servi ces Prepaid a/c

Particulars Amt $NT Particulars Amt $NT
Closing Balance a/c 30 Cash a/c 30

30 30

Trial Balance On November

Particulars Debit Credit
Cash A/c 245
Common Stock a/c 800
Advertising Expenses a/c 65
Notes Payable a/c 2000
Services a/c 125
Baking Supplies a/c 125
Baking Equipment a/c 1200
Prepaid Insurance a/c 1320
Services Prepaid a/c 30
2955 2955