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  • Jan 28, 2011, 12:53 PM
    rosa21
    Need help with this questions anyone
    Abramson Financial Services was formed on May 1, 2011. The following events and transactions are from its first month:

    May 1 Jacob Abramson invested $40,000 cash and office equipment worth $10,000 in the company.
    1 Hired one employee to work in the office for a salary of $2,475 per month.
    2 Paid $3,300 cash for a one-year insurance policy.
    5 Signed a two-year rental agreement on an office and paid $4,800 cash. Half was for the May 2011 rent and the other half was for the final month’s rent. (Hint: The portion for the final month is considered prepaid rent.)
    8 Purchased additional office equipment costing $17,000. A cash payment of $7,000 was made immediately. Signed a note payable for the balance.
    9 Purchased office supplies for $500 cash.
    15 Purchased more office supplies for $750 on account.
    17 Completed a contract for a client for $3,000 on account.
    22 Paid $250 for May’s telephone bill.
    25 Completed services for a client and immediately collected $1,100.
    26 Paid Jacob Abramson $1,600 cash for his personal use.
    28 Collected $2,500 from the client billed on May 17.
    30 Paid for the office supplies purchased on account on May 15.
    30 Paid $50 interest expense on the note payable.
    31 Received a cash advance of $500 for services to be completed in June.
    31 Paid the employee’s monthly salary, $2,475.
  • Jan 28, 2011, 01:35 PM
    pready

    May 1 Debit Cash and Office Equipment for their amount and Credit the difference to the owners capital account.

    May 1 no entry required.

    May 5 Debit Prepaid rent for half of the payment and Rent Expense for the other half of the payment, Credit Cash for the total payment.

    May 8 Debit Office Equipment for the total amount, Credit Cash for the amount paid and Credit Notes Payable for the difference

    The rest are pretty straightforward.

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