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The General Journal and the General Ledger

DEMONSTRATION PROBLEM
G. Bell, a fitness enthusiast, buys an existing exercise center, Body Firm. The following chart of accounts now applies: Assets 111 Cash 124 Land 126 Building 128 Equipment Liabilities 221 Accounts Payable 223 Mortgage Payable Owner's Equity 311 G. Bell, Capital 312 G. Bell, Drawing Apr. 16 17 Bell deposited $100,000 in a bank account for the purpose of buying Body Firm. Bought the assets of Body Firm for a total price of $188,000. The assets include equipment, $28,000; building, $96,000; and land, $64,000. Made a down payment of $89,000 and signed a mortgage note for the remainder. Bought additional equipment from Fitness Supply Co. on account for $3,550, paying $710 down, with balance due in thirty days. Celebrated the grand opening of Body Firm. Advertising expenses were paid in cash for the following: Advertising in newspaper Announcements mailed to local residents Postage Balloons, ribbons, flowers Food and refreshments 30 30 30 30 30 Received fees for daily use of the facilities, $1,152. Paid wages for the period April 17 through April 30, $833. Received and paid electric bill, $129. Received and paid repair bill, $96. Bell withdrew $600 for personal use. $314 85 125 126 58 Revenue 411 Income from Services Expenses 511 Wages Expense 512 Utilities Expense 513 Advertising Expense 514 Repair Expense 519 Miscellaneous Expense

17 29

Copyright Houghton Mifflin Company. All rights reserved.

Instructions
1. Record the transactions in the general journal. 2. Post the transactions to the general ledger. 3. Prepare a trial balance as of April 30.

Copyright Houghton Mifflin Company. All rights reserved.

SOLUTION
GENERAL JOURNAL POST. REF. PAGE

1
CREDIT
1

DATE
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44

DESCRIPTION

DEBIT

20 Apr.

16 Cash G. Bell, Capital Invested cash in the business. 17 Equipment Building Land Cash Mortgage Payable Bought Body Firm. 17 Equipment Cash Accounts Payable Bought equipment on account from Fitness Supply Co., with balance due in 30 days. 29 Advertising Expense Cash Grand opening expenses. 30 Cash Income from Services Received fees. 30 Wages Expense Cash Paid wages for period April 17 through April 30. 30 Utilities Expense Cash Paid electric bill. 30 Repair Expense Cash Paid repair bill. 30 G. Bell, Drawing Cash Withdrawal for personal use.

111 311

100,000.00 100,000.00

2 3 4 5

128 126 124 111 223

28,000.00 96,000.00 64,000.00 89,000.00 99,000.00

6 7 8 9 10 11 12

128 111 221

3,550.00 710.00 2,840.00

13 14 15 16 17 18 19

513 111

708.00 708.00

20 21 22 23

111 411

1,152.00 1,152.00

24 25 26 27

511 111

833.00 833.00

28 29 30 31 32

512 111

129.00 129.00

33 34 35 36

514 111

96.00 96.00

37 38 39 40

312 111

600.00 600.00

41 42 43 44

Copyright Houghton Mifflin Company. All rights reserved.

GENERAL LEDGER
ACCOUNT

Cash
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

111

DATE

ITEM

20 Apr.

16 17 17 29 30 30 30 30 30

1 1 1 1 1 1 1 1 1

100,000.00 89,000.00 710.00 708.00 1,152.00 833.00 129.00 96.00 600.00

100,000.00 11,000.00 10,290.00 9,582.00 10,734.00 9,901.00 9,772.00 9,676.00 9,076.00

ACCOUNT

Land
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

124

DATE

ITEM

20 Apr.

17

64,000.00

64,000.00

ACCOUNT

Building
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

126

DATE

ITEM

20 Apr.

17

96,000.00

96,000.00

ACCOUNT

Equipment
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

128

DATE

ITEM

20 Apr.

17 17

1 1

28,000.00 3,550.00

28,000.00 31,550.00

Copyright Houghton Mifflin Company. All rights reserved.

ACCOUNT

Accounts Payable
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

221

DATE

ITEM

20 Apr.

17

2,840.00

2,840.00

ACCOUNT

Mortgage Payable
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

223

DATE

ITEM

20 Apr.

17

99,000.00

99,000.00

ACCOUNT

G. Bell, Capital
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

311

DATE

ITEM

20 Apr.

16

100,000.00

100,000.00

ACCOUNT

G. Bell, Drawing
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

312

DATE

ITEM

20 Apr.

30

600.00

600.00

ACCOUNT

Income from Services


ITEM POST. REF. DEBIT CREDIT

ACCOUNT NO. BALANCE DEBIT CREDIT

411

DATE

20 Apr.

30

1,152.00

1,152.00

Copyright Houghton Mifflin Company. All rights reserved.

ACCOUNT

Wages Expense
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

511

DATE

ITEM

20 Apr.

30

833.00

833.00

ACCOUNT

Utilities Expense
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

512

DATE

ITEM

20 Apr.

30

129.00

129.00

ACCOUNT

Adveritising Expense
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

513

DATE

ITEM

20 Apr.

29

708.00

708.00

ACCOUNT

Repair Expense
ITEM POST. REF. DEBIT CREDIT

ACCOUNT NO. BALANCE DEBIT CREDIT

514

DATE

20 Apr.

30

96.00

96.00

ACCOUNT

Miscellaneous Expense
POST. REF.

ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT

519

DATE

ITEM

Copyright Houghton Mifflin Company. All rights reserved.

Body Firm Trial Balance April 30, 20


ACCOUNT NAM E DEBIT CREDIT

Cash Land Building Equipment Accounts Payable Mortgage Payable G. Bell, Capital G. Bell, Drawing Income from Services Wages Expense Utilities Expense Advertising Ex pense Repair Expense

9,076.00 64,000.00 96,000.00 31,550.00 2,840.00 99,000.00 100,000.00 600.00 1,152.00 833.00 129.00 708.00 96.00 202,992.00

202,992.00

Copyright Houghton Mifflin Company. All rights reserved.

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