Exercise 3-10 Journal Entries

1. Received contribution of $6,500 from each of the three principal owners of We-
Go Delivery Service in exchange for shares of stock.
2. Purchased office supplies for cash of $130.
3. Purchased a van for $15,000 on an open account. The company has 25 days to
pay for the van.
4. Provided delivery services to residential customers for cash of $125.
5. Billed a local business $200 for delivery services. The customer is to pay the bill
within 15 days.
6. Paid the amount due on the van.
7. Received the amount due from the local business billed in (5).

Note: Please use the format that you have been taught for preparing journal entries.

1) Cash a/c……………..Dr 19,500

To Share capital a/c 19,500
(Being business started with cash)

2) Office supplies a/c……………Dr. 130

To Cash a/c 130
(Being Office supplies purchased for cash)

3) Vehicle/Van a/c……………….Dr. 15,000

To Account payable a/c 15,000
(Being Van purchased on credit or on account)

4) Cash a/c………………….Dr. 125

To service revenue a/c 125
(Being service provided for cash to residential customers)

5) Bills receivable a/c………………….Dr. 200

To service revenue a/c 200
Being service provided to local business on account)
 6) Account payable a/c……………..Dr. 15,000
To cash a/c 15,000
(Being amount due on van purchased was paid)

7) Cash a/c…………………Dr. 200

To bills receivable a/c 200
(Being cash received from local business against receivable)

Q. no 2 Prepare Journal entries of the following transactions

April 1: Articles of incorporation are filed with the state, and 100,000 shares of common
stock are issued for $100,000 in cash.
April 4: A six-month promissory note is signed at the bank. Interest at 9% per annum will
be repaid in six months along with the principal amount of the loan of $50,000.
April 8: Land and a storage shed are acquired for a lump sum of $80,000. On the basis
of an appraisal, 25% of the value is assigned to the land and the remainder to the
building.
April 10: Mowing equipment is purchased from a supplier at a total cost of $25,000. A
down payment of $10,000 is made, with the remainder due by the end of the month.
April 18: Customers are billed for services provided during the first half of the month.
The total amount billed of $5,500 is due within ten days.
April 27: The remaining balance due on the mowing equipment is paid to the supplier.
April 28: The total amount of $5,500 due from customers is received.
April 30: Customers are billed for services provided during the second half of the month.
The total amount billed is $9,850.
April 30: Salaries and wages of $4,650 for the month of April are paid.
 Company’s Name
Journal Entries
For the month of April

Debits Credits
Date Particulars (In $) (In $)
1-Apr Cash a/c ……………………………………….Dr 100,000  

  To Capital stock a/c   100,000

  (Being business started with cash)    
     

4-Apr Cash a/c……………………………………….Dr. 50,000  

  To Notes payable a/c   50,000

(Being six-month, 9% promissory note issued for
  cash)    
     

8-Apr Land a/c………………………………………..Dr. 20,000  

  Building a/c………………………………..…..Dr. 60,000  

  To Cash a/c   80,000

(Being land and a storage shed purchased for
  cash)    
     

10-Apr Mowing equipment a/c………………………Dr. 25,000  

  To Cash a/c   10,000

  To account payable a/c   15,000

(Being mowing equipment purchased with
down payment and remainder due by
  end of month)    
     

18-Apr Accounts Receivable a/c.............................. Dr. 5,500  

  To Service revenue a/c   5,500

(Being customers billed for services provided
  on account; amounts due within ten days)    
     

27-Apr Accounts Payable a/c ..................................Dr. 15,000  

  To Cash a/c   15,000
(Being remaining balance paid which was due on
open
  account for purchase of mowing equipment)    
     

28-Apr Cash a/c ……………………………………….Dr 5,500  

  To Account Receivable a/c   5,500

  (Being cash collected on open account)    
     

30-Apr Accounts Receivable a/c.............................. Dr. 9,850  

  To Service revenue a/c   9,850

(Being customers billed for services provided
  on account)    
     

30-Apr Salary and Wage Expense a/c.....................Dr. 4,650  

  To Cash a/c   4,650

  (Being April payroll paid)