FB2100 Lecture Demonstration (revised)

Semester B 2010-11

Chapter Two

Record the following transactions of Speedy Computer Service, owned by

Bill Smith, for the month of March 2009.

March 1. Bill Smith invested $2000 cash in his business.

15. Bill provided services and received cash amounting to $5,400

from customers.

16. Purchased supplies on account, $100.

17. Paid for gas and oil, $800.

18. Paid salaries, 5,290.

21. Provided service on credit, $600.

28. Bill provided services and received cash amounting to $6,000.

29. Paid for truck and equipment rental, $2,075.

30. Bill withdrew $2000 for personal use.

Required:

1. Record the above transactions in general journal form.

2. Use the trial balance provided to prepare and income statement and
a balance sheet. (This trial balance was taken from the general
ledger after the posting of properly prepared transactions).

3. Explain why the company’s cash balance does not agree with net
income.

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 Solution: Lecture Demonstration Problem
Chapter Two
GENERAL JOURNAL

DATE ACCOUNT TITLES AND P.R DEBIT CREDIT

EXPLANATION .
March 1 Cash 2 0 0 0 00
Bill Smith, Capital 2 0 0 0 00

5 4 0 0 00
15
Service Fees Earned 5 4 0 0 00

Supplies 1 0 0 00
16
1 0 0 00

Gas and Oil Expense 8 0 0 00

17
8 0 0 00

Salaries Expense 5 2 9 0 00
18
5 2 9 0 00

Accounts Receivable 6 0 0 00
21
6 0 0 00

Cash 6 0 0 0 00
28
6 0 0 0 00

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 Equipment _________________ 2 0 7 5 00
29
Cash 2 0 7 5 00

B. Smith, _____________ 2 0 0 0 00
30
Cash 2 0 0 0 00

Speedy Computer Service

Trial Balance
March 31, 2009
Cash
Accounts Receivable 6 0 0 00
1 0 0 00
Accounts Payable 1 0 0 00
B. Smith, Capital 2 0 0 0 00
B. Smith, Withdrawals
Service Fees Earned 1 2 0 0 0 00
Gas & Oil Expense 8 0 0 00
Equipment Rental Expense
Salaries Expense
Totals

©The McGraw-Hill Companies, Inc., 2009

2. Speedy Computer Service
Income Statement
______________________ ended March 3l, 2009

Fees Earned ............................................................... $

Expenses:
Equipment Rental Expense ................................ $2,075
Gas & Oil Expense..........................................
Salary Expense .................................................... 5,290
Total expenses ....................................................
Net income ................................................................. $

3. Speedy Computer Service

Balance Sheet
_______________

Assets Liabilities and ______________

Cash .................................. $3,235 Accounts payable .......... $

100
Accts Receivable ............. B. Smith, Capital .............. __*
Supplies ........................... 100
Total liabilities and
Total Assets ..................... $3,935 owner’s equity .......... $____

*Ending capital = beginning capital (0), add investment ($2,000), add

Net Income ($3,835), less withdrawals ($2,000).

©The McGraw-Hill Companies, Inc., 2009