ACC 205 Exercise 10 Journal entry preparation

ACC 205 Week 1 Exercise 10 Journal entry preparation

Journal entry preparation. On January 1 of the current year, Peter Houston invested $100,000 cash into his company MuniServ. Shortly thereafter, the company ac­quired selected assets of a bankrupt competitor. The acquisition included land ($15,000), a building ($40,000), and vehicles ($10,000). MuniServ paid $45,000 at the time of the transaction and agreed to remit the remaining balance due of $20,000 (an account payable) by February 15.

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During January, the company had additional cash outlays for the follow­ing items:

Purchases of store equipment   $4,600

Loan payment   500

Salaries expense           2,300

Advertising expense      700

The January utilities bill of $200 was received on January 31 and will be paid on February 10. MuniServ rendered services to clients on account amounting to $9,400 and $3,700 had been received in settlement.

Instructions

a.Present journal entries that reflect MuniServ’s January transactions, starting with the $100,000 investment. (See exhibit 2.6)

b.Compute the total debits, total credits, and ending balance that would be found in the company’s Cash account. (Post to “T” Accounts, see exhibit 2.3 and 2.4)

Prepare a trail balance as of January 31. (See exhibit 2.9

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