PA12_GROUP 3_PE_CH2

Exercise 2.1B

Assets = Liabilities + Equity

Beginning of Year $ 60,000 = $ 20,000 + $ 40,000

End of Year 105,000 = 36,000 + 69,000

Statement of owner’s equity

For Year Ended

a. b. c. d.

Capital, Beginning $ 40,000 $ 40,000 $ 40,000 $ 40,000

of the year

Add:

Investment 0 0 55,000 35,000

Net income = 69,000 - 40,000 = 69,000 - 40,000 + = 69,000 - 40,000 +

= 29,000 15,000 = 44,000 15,000 - 35,000 =
9,000

Less:

Withdraw by 0 (15,000) 0 (15,000)

owner

Net loss = 69,000 - 40,000 -

55,000 = 26,000

Capital, End of 69,000 69,000 69,000 69,000

year

Exercise 2.2B

GENERAL JOURNAL J1

Transaction details Ref. Debit Credit

Year
Month Day

Sep 1 Cash 101 $ 38,000

Office Equipment 163 15,000
H.Humble, Capital 301 $ 53,000
(Owner’s investment of cash in business and
purchased equipment)

2 Prepaid rent 131 9,000

Cash 101 9,000
(Prepaid by cash for 12 months’ rent for office space)

4 Office Equipment 163 8,000

Office Supplies 124 2,400
Account Payable 201 10,400
(Purchased office equipment and office supplies and
payment is due 10 days)

8 Cash 101 3,280

Services Revenue 403 3,280
(Received for service revenue)

12 Accounts Receivable 106 15,400

Services Revenue 403 15,400
(Received for a project within 30 days)

13 Accounts Payable 201 10,400

Cash 101 10,400
(Paid for transaction on Sept 4)

19 Prepaid insurance 128 1,900

Cash 101 1,900
(Paid insurance on a 18-month insurance)

22 Cash 101 7,700

Accounts Receivable 106 7,700
(Received cash as partial payment for the work
completed on Sept 12)

24 Account receivable 106 2,100

Services Revenue 403 2,100
(Received completed work for client on account)

28 H.Humble, Withdrawals 302 5,300

Cash 101 5,300
(Owner’s withdrawals from the company)

29 Office Supplies 124 550

Accounts Payable 201 550
(Purchased office supplies on account)

30 Utilities Expense 690 860

Cash 101 860
(Paid cash for this month’s utility bill)
 b,
GENERAL LEDGER

Cash No.101

Date Explanation Ref. Debit Credit Balance

Sep 1 H.Humble, capital J1 $ 38,000 $ 38,000

2 Prepaid rent J1 $ 9,000 29,000

8 Service Revenue J1 3,280 32,280

13 Account Payable J1 10,400 21,880

19 Prepaid insurance J1 1,900 19,980

22 Accounts Receivable J1 7,700 27,680

28 H.Humble, Withdrawals J1 5,300 22,380

30 Utilities Expense J1 860 21,520

Account Receivable No.106

Date Explanation Ref. Debit Credit Balance

Sep 12 Services Revenue J1 $ 15,400 $15,400

22 Cash J1 $7,700 7,700

24 Services Revenue J1 2,100 9,800

Office Supplies No.124

Date Explanation Ref. Debit Credit Balance

Sept 4 Account Payable J1 $ 2,400 $ 2,400

29 Accounts Payable J1 550 2,950

Prepaid Insurance No.128

Date Explanation Ref. Debit Credit Balance

Sept 19 Cash J1 $ 1,900 $ 1,900

 Prepaid Rent No.131

Date Explanation Ref. Debit Credit Balance

Sept 2 Cash J1 $ 9,000 $ 9,000

Office Equipment No.163

Date Explanation Ref. Debit Credit Balance

Sept 1 H.Humble, Capital J1 $ 15,000 $ 15,000

4 Account Payable J1 8,000 23,000

Accounts Payable No.201

Date Explanation Ref. Debit Credit Balance

Sept 4 Office Equipment J1 $ 10,400 $ 10,400

Office Supplies

13 Cash J1 $ 10,400 0

29 Office Supplies J1 550 550

H. Humble, Capital No.301

Date Explanation Ref. Debit Credit Balance

Sept 1 Cash J1 $ 53,000 $ 53,000

Office Equipment

H. Humble, Withdrawals No.302

Date Explanation Ref. Debit Credit Balance

Sept 1 Cash J1 $ 5,300 $ 5,300

Services Revenue No.403

Date Explanation Ref. Debit Credit Balance

Sept 8 Cash J1 $ 3,280 $ 3,280

12 Accounts Receivable J1 15,400 18,680

 24 Account receivable J1 2,100 20,780

Utilities Expense No.690

Date Explanation Ref. Debit Credit Balance

Sept 30 Cash J1 $ 860 $ 860

c,

Humble Management Services

Trial balance
September 30, 2021

Debit Credit

Cash $ 21,520

Account Receivable 9,800

Office supplies 2,950

Prepaid Insurance 1,900

Prepaid Rent 9,000

Office Equipment 23,000

Accounts Payable $ 550

H. Humble, Capital 53,000

H. Humble, Withdrawals 5,300

Services Revenue 20,780

Utilities Expense 860

74330 74330