CH 03

The General Journal
and the General Ledger
DEMONSTRATION PROBLEM
G. Bell, a fitness enthusiast, buys an existing exercise center, Body Firm. The following
chart of accounts now applies:
Assets
111 Cash
124 Land
126 Building
128 Equipment
Liabilities
221 Accounts Payable
223 Mortgage Payable
Revenue
411 Income from Services
Expenses
511 Wages Expense
512 Utilities Expense
513 Advertising Expense
514 Repair Expense
519 Miscellaneous Expense
Owner's Equity
311 G. Bell, Capital
312 G. Bell, Drawing
Apr. 16
Bell deposited $100,000 in a bank account for the purpose of buying Body Firm.
17
Bought the assets of Body Firm for a total price of $188,000. The assets include
equipment, $28,000; building, $96,000; and land, $64,000. Made a down payment
of $89,000 and signed a mortgage note for the remainder.
17
Bought additional equipment from Fitness Supply Co. on account for $3,550, paying $710 down, with balance due in thirty days.
29
Celebrated the grand opening of Body Firm. Advertising expenses were paid in
cash for the following:
Advertising in newspaper
Announcements mailed to local residents
Postage
Balloons, ribbons, flowers
Food and refreshments
30
Received fees for daily use of the facilities, $1,152.
30
Paid wages for the period April 17 through April 30, $833.
30
Received and paid electric bill, $129.
30
Received and paid repair bill, $96.
30
Bell withdrew $600 for personal use.
Copyright Houghton Mifflin Company. All rights reserved.
$314
85
125
126
58
Instructions
1. Record the transactions in the general journal.
2. Post the transactions to the general ledger.
3. Prepare a trial balance as of April 30.
SOLUTION
PAGE
GENERAL JOURNAL
DATE
1
2
3
4
20
Apr.
DESCRIPTION
POST.
REF.
DEBIT
1
CREDIT
1
16 Cash
G. Bell, Capital
Invested cash in the business.
111
311
17 Equipment
Building
Land
Cash
Mortgage Payable
Bought Body Firm.
128
126
124
111
223
100,000.00
100,000.00
5
6
7
8
9
10
11
28,000.00
96,000.00
64,000.00
6
7
8
89,000.00
99,000.00
14
15
16
17
18
21
22
17 Equipment
Cash
Accounts Payable
Bought equipment on account from
Fitness Supply Co., with balance
due in 30 days.
128
111
221
29 Advertising Expense
Cash
Grand opening expenses.
513
111
3,550.00
13
710.00
2,840.00
25
26
29
30
31
18
19
708.00
20
708.00
34
35
23
30 Cash
Income from Services
Received fees.
111
411
30 Wages Expense
Cash
Paid wages for period
April 17 through April 30.
511
111
30 Utilities Expense
Cash
Paid electric bill.
512
111
30 Repair Expense
Cash
Paid repair bill.
514
111
30 G. Bell, Drawing
Cash
Withdrawal for personal use.
312
111
1,152.00
24
1,152.00
38
39
27
833.00
28
833.00
42
43
29
30
31
32
129.00
33
129.00
34
35
36
96.00
37
96.00
38
39
40
41
25
26
36
37
21
22
32
33
15
17
27
28
14
16
23
24
10
12
19
20
11
12
13
40
600.00
42
43
44
41
600.00
44
GENERAL LEDGER
Cash
ACCOUNT
DATE
20
Apr.
ITEM
16
17
17
29
30
30
30
30
30
DATE
20
Apr.
1
1
1
1
1
1
1
1
1
BALANCE
DEBIT
CREDIT
100,000.00
89,000.00
710.00
708.00
1,152.00
833.00
129.00
96.00
600.00
ITEM
POST.
REF.
20
Apr.
ITEM
CREDIT
64,000.00
POST.
REF.
ITEM
17
17
124
DEBIT
CREDIT
64,000.00
126
BALANCE
DEBIT
CREDIT
96,000.00
DEBIT
CREDIT
96,000.00
Equipment
DATE
100,000.00
11,000.00
10,290.00
9,582.00
10,734.00
9,901.00
9,772.00
9,676.00
9,076.00
ACCOUNT NO.
17
ACCOUNT
CREDIT
BALANCE
DEBIT
Building
DATE
DEBIT
ACCOUNT NO.
17
ACCOUNT
20
Apr.
POST.
REF.
Land
ACCOUNT
111
ACCOUNT NO.
128
ACCOUNT NO.
POST.
REF.
1
1
BALANCE
DEBIT
CREDIT
28,000.00
3,550.00
DEBIT
CREDIT
28,000.00
31,550.00
Accounts Payable
ACCOUNT
DATE
20
Apr.
ITEM
17
DATE
20
Apr.
BALANCE
DEBIT
ITEM
17
CREDIT
DATE
20
Apr.
16
POST.
REF.
DATE
20
Apr.
30
CREDIT
DATE
POST.
REF.
30
CREDIT
99,000.00
311
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
100,000.00
100,000.00
312
ACCOUNT NO.
POST.
REF.
ITEM
DEBIT
ACCOUNT NO.
BALANCE
DEBIT
CREDIT
600.00
DEBIT
CREDIT
600.00
ACCOUNT
223
99,000.00
ITEM
2,840.00
BALANCE
DEBIT
G. Bell, Drawing
ACCOUNT
CREDIT
ACCOUNT NO.
ITEM
DEBIT
2,840.00
G. Bell, Capital
ACCOUNT
20
Apr.
POST.
REF.
Mortgage Payable
ACCOUNT
221
ACCOUNT NO.
411
ACCOUNT NO.
POST.
REF.
BALANCE
DEBIT
CREDIT
1,152.00
DEBIT
CREDIT
1,152.00
ACCOUNT
Wages Expense
DATE
20
Apr.
ACCOUNT
ITEM
30
20
Apr.
ACCOUNT
ACCOUNT
30
ACCOUNT
DATE
BALANCE
DEBIT
CREDIT
833.00
29
POST.
REF.
BALANCE
DEBIT
CREDIT
129.00
POST.
REF.
CREDIT
513
BALANCE
DEBIT
CREDIT
708.00
DEBIT
CREDIT
708.00
514
ACCOUNT NO.
POST.
REF.
BALANCE
DEBIT
CREDIT
96.00
DEBIT
CREDIT
96.00
Miscellaneous Expense
ITEM
DEBIT
129.00
Repair Expense
30
512
ACCOUNT NO.
ITEM
CREDIT
ACCOUNT NO.
ITEM
DEBIT
833.00
Adveritising Expense
DATE
20
Apr.
ITEM
DATE
20
Apr.
POST.
REF.
Utilities Expense
DATE
511
ACCOUNT NO.
519
ACCOUNT NO.
POST.
REF.
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
Body Firm
Trial Balance
April 30, 20
ACCOUNT NAM E
Cash
Land
Building
Equipment
Accounts Payable
Mortgage Payable
G. Bell, Capital
G. Bell, Drawing
Wages Expense
Utilities Expense
Advertising Ex pense
Repair Expense
DEBIT
CREDIT
9,076.00
64,000.00
96,000.00
31,550.00
2,840.00
99,000.00
100,000.00
600.00
1,152.00
833.00
129.00
708.00
96.00
202,992.00
202,992.00

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CH 03

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The General Journal

and the General Ledger

Received fees for daily use of the facilities, $1,152.

Received and paid electric bill, $129.

Received and paid repair bill, $96.

Bell withdrew $600 for personal use.

Copyright Houghton Mifflin Company. All rights reserved.

Copyright Houghton Mifflin Company. All rights reserved.

Copyright Houghton Mifflin Company. All rights reserved.

Copyright Houghton Mifflin Company. All rights reserved.

Income from Services

Copyright Houghton Mifflin Company. All rights reserved.

Copyright Houghton Mifflin Company. All rights reserved.

Copyright Houghton Mifflin Company. All rights reserved.

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