Question) DATE JUNE 1 2 5 10 14 18 24 30 Solution) TRANSACTION

( TRANSACTIONS FOR QUALITY WEB DESIGNS)

Received $50,000 cash from its shareholders in exchange for common stock. Paid $1,500 cash for operating expenses for june. Paid $1,200 for a year's worth of insurance, with the policy starting on July 1 Performed services for clients on account, $3,000. Received a bill from AOL for internet services for $ 50 in June. Bill will be paid in July. Paid cash of $645 for operating expenses, of which $100 was for advertising. Received cash of $1,000 from customers billed on June 10. Purchased a printer for $600 by signing a note payable due on December 31.

ACCOUNTING EQUATIONS

ASSETS DATE 1-Jun Cash 50,000 2-Jun Cash (-) 1,500 5-Jun Cash (-) 1,200 Prepaid Insurance 1,200

= LIABILITIES

SHAREHOLDER'S EQUITY
Contributed Capital + Retained Earnings

Common Stock 50,000 Operating expenses (-) 1,500

10-Jun Accounts Receivable 3,000 14-Jun Other payables 50

Service Revenue 3,000 Operating expenses (-) 50 Operating expenses (-) 645

18-Jun Cash (-) 645 24-Jun Cash 1,000 30-Jun Equipment 600 Accounts Receivable (-) 1,000 Notes Payable 600

GENERAL JOURNAL
DATE PARTICULARS 1-Jun Cash A/C dr To Common Stock A/c (To record shareholder's contributions in exchange for common stock) 2-Jun Operating Expenses A/c Dr To Cash A/c (To record the payment of current expenses) 5-Jun Prepaid Insurance A/c Dr To Cash A/c (To record the payment for future insurance) 10-Jun Accounts Receivable A/c Dr To Service Revenue A/c (To record service revenue that has been earned on account) 14-Jun Operating Expenses A/c Dr To Payables A/c (To record Internet expenses) 18-Jun Operating Expenses A/c Dr To Cash A/c (To record payment for operating expenses) 24-Jun Cash A/c dr To Accounts Receivable A/c (To record collection on Accounts Receivable) 30-Jun Equipment(printer) A/c dr To Notes Payable A/c (To record purchase of equipment with a short- term note) TOTAL Dr. ($) 50,000 50,000 To common stock 1,500 1,500 By operating expenes ByBalance c/d 1,200 1,200 To Balance B/d Accounts Receivable A/C 51,000 47655 645 47655 51,000 To accounts receivables 50,000 By operating expenses 1,000 By prepaid insurance 1,500 Cr. ($) ASSETS Cash A/C

LEDGER ACCOUNTS
(=) LIABILITIES Other Payables A/C 5) Balance 1,200 50 50 Notes Payable A/C 8) Balance 600 600 600 Balance 600 3,000 3,000 50 Balance 50 50,000 50,000 (+) SHAREHOLDER'S EQUITY Common Stock A/C 1) 50,000 50,000

Service Revenue A/C 4) 3,000 3,000

3,000 3,000 4) 3,000 3,000 50 50 Prepaid Insurance A/C 3) 645 645 Office Equipment A/C 1,000 1,000 8) 600 Balance 600 600 600 57,995 57,995 600 600 1,200 1,200 Balance 1,200 1,200 7) Balance 1,000 2,000 3,000

Operating Expenses A/C 2) 5) 6) 1,500 50 645

Balance 2,195

2,195 2,195

TRIAL BALANCE
(Quality Web Designs)

S. No.
1) 2) 3) 4) 5) 6) 7) 8) 9)

Accounts
Cash Accounts receivable Prepaid Insurance Equipment Other payables Notes payable Common stock Service revenue Operating expenses

Dr.
($) 47,655 2,000 1,200 600

Cr
($)

50 600 50,000 3,000 2,195 53,650 53,650

Working Notes * Each transaction has to be recorded in a journal chronologically (date-wise), it is known as a journal entry. * These entries will be done using the following rules:a) Any increase in assets will be debited and decrease in assets will be credited. b) Any increase in liability will be credited and decrease in liability will be debited. c) Any increase in equity will be credited and decrease in equity will be debited. d) Any increase in revenue will be credited and decrease in revenue will be debited. e) Any increase in expense will be debited and decrease in expense will be credited. f) Any increase in dividend will be debited and decrease in dividend will be credtited. * After recording the journal entries, Ledger acccounts have to be made. * Each account name appearing in the journal will be posted in a separate ledger account. * After preparing the ledger accounts, Trial Balance has to be made. *NOTE:- The Debit balances of the ledger accounts will be posted in the credit side of the Trial Balance and Credit balances of the ledger accounts will be posted in the debit side of the Trial Balance.