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.


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Comments for Basic Accounting Journal Entries Exercise

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Comment
by: Anonymous

I'm happy to got this page
Answer:
by: Sophia

Seltzer Reality
General Journal
For the month of March,2008

a.
Dr. Cash In Bank P30,000
Cr. Giny Tyler, Capital P30,000

b.
Dr. Supplies P2,650
Cr. Accounts Payable P2,650

c.
Dr. Accounts Payable P1,500
Cr. Cash In Bank P1,500

d.
Dr. Cash In Bank P36,750
Cr. Revenue P36,750

e.
Dr. Rent Expense P5,200
Cr. Cash In Bank P5,200

f.
Dr. Giny Tyler, Drawing P8,000
Cr. Cash In Bank P8,000

g.
Dr. Automobile Expense P2,500
Dr. Miscellaneous Expense P1,200
Cr. Cash In Bank P3,700

h.
Dr. Salaries Expense P9,250
Cr. Cash In Bank P9,250

i.
Dr. Supplies Expense P1,750
Cr. Supplies P1,750

- Sophia,
Grade 11 ABM Student (Philippines)
Adjusting entry - value of supplies on hand at the end of the month
by: Sherie

b Hi Sir, I just want to know what is the adjusting entry for this transactions. So, value of supplies on hand at the end of the month, P300

See other comments here for the solution.

- Editor
Supplies Expense for i)
by: Anonymous

Hi. Can the journal entries for i) become

DR. Acc payable 2650
CR. Cost of supplies on hand 900
Cr. cost of supplies used 1750

No, this is incorrect. You need to debit Supplies used (expense) and credit Supplies on hand (asset). See solutions in other comments here...

- Editor
Capital Investment (Owned Capital)
by: Paul

Hello Sir, my name is Paul from Cameroon Central Africa.

The 30,000 is called capital investment, which can be further explained as owners capital (Owner's Equity). That is money used to start up a business which came from personal funding.

Once more Sir thanks so much for the resources you have provided to us, it is really helping me to get more understanding as am walking up the ladder of accounting and finance.

Hi Paul,

Thanks for adding a comment here. And thank you for the feedback - I'm glad to hear the site is helping you!

Best,
Michael C.
Accounting Basics for Students
Business bank account 30,000 deposit from personal funds
by: unknown

Opened a business bank account with a deposit of 30,000 from personal funds. Can you help me to explain this?

This is a capital investment by the owner.

See the lesson on the Owner's Equity Journal Entry (Capital Investment).

Best,
Michael C.
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

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