tc

1) Credit cash $2,100

2) Debit cash $40,500

3) Debit cash $20,000

4) Credit cash $25,000

5) Credit cash $5,400

6) No effect on cash

7) No effect on cash

8) Debit cash $76,300

9) Credit cash $48,000

10) Credit cash $41,000

11) Credit cash $5,000

When preparing your trial balance, you need to add up all the cash debits and credits to get the balance in the cash account (it’s $10,300 by the way). Now you just have to figure out the other side of the entries. Just remember that if you pay cash, it’s a credit, if you receive cash, it’s a debit, and if it’s “on account,” cash isn’t affected.

Good luck!

Dr A/cs payable $2,100 (Left side in T-accounts for AP a/c)

Cr Cash $2,100 (Right side in T-a/cs for Cash a/c)

2. Performed services for cash 40,500

Dr Cash $40,500 (L side in T-a/cs for Cash a/c)

Cr Service revenue $40,500 (R side for Service revenue a/c)

3. Borrowed and issued Note 20,000

Dr Cash $20,000 (L side for Cash a/c)

Cr Notes payable $20,000 (R side for Notes payable a/c)

4. Paid cash for land 25,000

Dr Land $25,000 (L side for Land a/c)

Cr Cash $25,000 (R side for Cash a/c)

5. Rent paid for one year beginning 2/1/2005 5,400

Dr Rent expense $4,950 (L side for rent expense a/c)

Dr Prepaid rent $450 (L side for prepaid rent a/c)

Cr Cash $5,400 (R side for cash a/c)

6. Services performed on account 82,000

Dr A/cs receivable $82,000 (L side for AR a/c)

Cr Service revenue $82,000 (R side for service revenue a/c)

7. Operating expenses incurred on account 49,100

Dr Op’g exp $49,100 (L side for Op’g exp a/c)

Cr A/cs payable $49,100 (R side for AP a/c)

8. Accounts receivable collected 76,300

Dr Cash $76,300 (L side of for cash a/c)

Cr A/cs receivable $76,300 (R side for AR a/c)

9. Paid accounts payable 48,000

Dr A/cs payable $48,000 (L side for AP a/c)

Cr Cash $48,000 (R side for cash a/c)

10. Paid cash for salaries 41,000

Dr Salaries expense $41,000 (L side for salaries exp a/c)

Cr Cash $41,000 (R side for cash a/c)

11. Cash dividend paid 5,000

Dr Dividends $5,000 (L side for dividends a/c)

Cr Cash $5,000 (R side for cash a/c)

Explanatory note for Qn 5: 12 mths’ rent was paid on 1 Feb $5,400, i.e. each mth is $450. By 31 Dec, 11 mths’ rent shd be expensed off and you shd recognise 1 mth’s prepayment as the rent for Jan 2006 is prepaid.

Also, we’re not told the interest rate on the notes payable. If you do know the rate, you shd calculate the interest payable and:

Dr Interest expense (L side for interest exp a/c)

Cr A/cs payable or cash (R side of either AP or cash a/c)