can someone help me use the information in exercise 2-4 to prepare an august 31 trial balance of the owner invested 7,500 cash and 32500 of photographyequipment in the business. Paid 3,000 cash for an insurance policy covering the next 24 months
Purchased office supplies for 1400 cash. Received 2,650 cashin photography fees earned, paid 875 cash for august utilites.
sorry i the same stage you in
how do I do a t account entry for purchased a one year professional liability policy
To prepare an August 31 trial balance based on the information given, you need to follow these steps:
Step 1: Identify the accounts involved in the transactions and create a chart of accounts. From the information provided, the relevant accounts are: Cash, Photography Equipment, Insurance Prepaid, Office Supplies, Photography Fees Earned, Utilities Expense, and Owner's Capital.
Step 2: Determine the starting balances of the accounts. The owner invested $7,500 in cash and $32,500 in photography equipment. Therefore, the starting balances are as follows:
- Cash: $7,500
- Photography Equipment: $32,500
Step 3: Record the transactions using appropriate journal entries. Based on the given information, here are the journal entries:
a. Owner's investment:
- Debit: Cash ($7,500)
- Debit: Photography Equipment ($32,500)
- Credit: Owner's Capital ($40,000)
b. Purchase of insurance policy:
- Debit: Insurance Prepaid ($3,000)
- Credit: Cash ($3,000)
c. Purchase of office supplies:
- Debit: Office Supplies ($1,400)
- Credit: Cash ($1,400)
d. Receipt of photography fees earned:
- Debit: Cash ($2,650)
- Credit: Photography Fees Earned ($2,650)
e. Payment of August utilities:
- Debit: Utilities Expense ($875)
- Credit: Cash ($875)
Step 4: Determine the ending balances for each account. Start with the starting balances and add/subtract any changes due to the transactions.
- Cash: Starting balance ($7,500) + Transaction d ($2,650) - Transaction e ($875) = Ending balance ($9,275)
- Photography Equipment: Starting balance ($32,500)
- Insurance Prepaid: Transaction b ($3,000)
- Office Supplies: Transaction c ($1,400)
- Photography Fees Earned: Transaction d ($2,650)
- Utilities Expense: Transaction e ($875)
- Owner's Capital: Starting balance ($40,000)
Step 5: Prepare the trial balance. The trial balance is a list of all accounts and their balances. Using the ending balances determined in Step 4, here is the trial balance:
Accounts Debit Credit
----------------------------------------------
Cash $9,275
Photography Equipment $32,500
Insurance Prepaid $3,000
Office Supplies $1,400
Photography Fees Earned $2,650
Utilities Expense $875
Owner's Capital $40,000
----------------------------------------------
Total $45,025 $45,025
This trial balance shows the debits and credits for each account. The totals of the debits and credits should always be equal, indicating that the books are in balance.