At the beginning of April, Brooke Grechus launched a custom computer programming comp
At the beginning of April, Brooke Grechus launched a custom computer programming company called
Softways. The company had the following transactions during April:
a. Brooke Grechus invested $45,000 cash, office equipment with a value of $4,500, and $28,000 of
computer equipment in the company.
b. Purchased land worth $24,000 for an office by paying $4,800 cash and signing a long-term note
payable for $19,200.
c. Purchased a portable building with $21,000 cash and moved it onto the land acquired in b.
d. Paid $6,600 cash for the premium on a two-year insurance policy.
e. Provided services to a client and collected $3,200 cash.
f. Purchased $3,500 of additional computer equipment by paying $700 cash and signing a longterm
note payable for $2,800.
g. Completed $3,750 of services for a client. This amount is to be received within 30 days.
h. Purchased $750 of additional office equipment on credit.
I. Completed client services for $9,200 on credit.
j. Received a bill for rent of a computer testing device that was used on a recently completed job.
The $320 rent must be paid within 30 days.
k. Collected $4,600 cash from the client described in transaction I.
l. Paid $1,600 cash for wages to an assistant.
m. Paid $750 cash to settle the account payable created in transaction h.
n. Paid $425 cash for minor repairs to the computer equipment.
o. Grechus withdrew $3,875 cash for personal use.
p. Paid $1,600 cash for wages to an assistant.
q. Paid $800 cash for advertisements in the local newspaper during April.
Required
1. Prepare general journal entries to record these transactions (use the account titles listed in
part 2).
2. Open the following accounts—their account numbers are in parentheses (use the balance column
format): Cash (101); Accounts Receivable (106); Prepaid Insurance (108); Office Equipment (163);
Computer Equipment (164); Building (170); Land (172); Accounts Payable (201); Notes Payable
(250); B. Grechus, Capital (301); B. Grechus, Withdrawals (302); Fees Earned (402); Wages
Expense (601); Computer Rental Expense (602); Advertising Expense (603); and Repairs Expense
(604). Post the journal entries from part 1 to the accounts and enter the balance after each posting.
3. Prepare a trial balance as of the end of this month’s operations.
