3
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.
