Basic Accounting Journal Entries Exercise

by Fatima
(Philippines)

Before you begin: For purposes of testing and exams it's important to make sure you not only answer exercises correctly but do so at the right speed. Use a watch or clock to time yourself while attempting this journal entries exercise.



Difficulty Rating:
Beginner --> Intermediate

Time limit:
12 minutes




Q: On March 1, 2008, Giny Tyler established Seltzer Reality. Ginny completed the following transactions during the month of March:

a. Opened a business bank account with a deposit of 30,000 from personal funds.
b. Purchased supplies (pens, file folders, papers, etc.) on account, 2,650.
c. Paid creditor on account, 1,500.
d. Earned sales commissions, receiving cash, 36,750.
e. Paid rent on office and equipment for the month, 5,200.
f. Withdrew cash for personal use, 8,000.
g. Paid automobile expenses (including rental charge) for month, 2,500, and miscellaneous expenses, 1,200.
h. Paid office salaries, 9,250.
i. Determined that the cost of supplies on hand was 900; therefore, the cost of supplies used was 1,750.

Indicate the effect of each transaction.



SEE COMMENT BELOW FROM ANONYMOUS VISITOR FOR FULL SOLUTION.


Tutorials related to this question:


Return to Basic Accounting Journal Entries page

Return to our page of Full Accounting Questions and Answers


Comments for Basic Accounting Journal Entries Exercise

Click here to add your own comments

Supplies on Hand vs Supplies Used
by: Anonymous

HELLO SIR,

MY NAME IS CLEVER. FIRST I REALLY CONGRATULATE YOUR EFFORT.

CAN YOU PLEASE EXPLAIN TO ME WHY THE SUPPLIES ON HAND 900 & SUPPLIES USED 1750 HAS BEEN POSTED WITH THE SAME AMOUNT?

DR SUPPLIES EXPENSE 1750
CR SUPPLIES ON HAND 1750

THANKS ONCE MORE
Koffi Clever

Hi Clever, you're welcome! Glad you are enjoying the exercise!

The "supplies on hand" is an asset account. When we credit it we are decreasing it.

The "supplies expense" is an expense account. It is the expense of actual supplies that we used. Expenses are debited.

Since it says we used 1,750 worth of supplies, this is the amount of the expense.

The asset also decreases by this amount. In other words, supplies on hand used to be 2,650. Now we are decreasing it by 1,750 so that the asset account will now reflect the actual balance of 900 (2,650 - 1750 = 900)

Hope that makes sense!

Best,
Michael Celender
Founder of Accounting Basics for Students

Supplies adjustment
by: Joshua

While supplies and supplies expenses is 1750.

Not sure what your question or comment here means Joshua. Maybe post again.

- Michael

Answers March 01 2008 transactions
by: Anonymous

a). Cash on hand.......30,000.00
Investment.................30,000.00
To record investment by owner.

b). Supplies...............2,650.00
Accounts Payable..............2,650.00
To record purchase supplies on account.

c). Accounts Payable........1,500.00
Cash.........................1,500.00
To record payment to creditor.

d). Cash....................36,750.00
Sale commission................36,750.00
To record earned sale commission.

e). Rent expense...............5,200.00
Cash.............................5,200.00
To record paid for office and equipment rental

f). Withdraw................8,000.00
Cash..........................8,000.00
To record withdraw by owner.

g). Rent expense...............2,500.00
Miscellaneous expense......1,200.00
Cash............................3,700.00
To record payment for automobile & miscellaneous expense.

h). Salaries expense.........9,250.00
Cash..........................9,250.00
To record payment for office staff salaries.

i). Supplies expense............1,750.00
Supplies on hand.................1,750.00
To record supplies expense for march.



Thanks for the solution Mr. Anonymous!

- Michael Celender
Accounting Basics for Students



Click here to add your own comments

Return to Ask a Question About This Lesson!.













© Copyright 2009-2020 Michael Celender. All Rights Reserved. 
Click here for Privacy Policy.