Journal Entry Solution: Pokhara University, 2012 Spring
Question and solution of journal entry, t-account, and trial balance is given below.
Question: PU 2012 Spring Q. No. 2
Three members started a small firm in Pokhara Valley. The firm will provide consultancy service to small business. The following are the transactions during the first month of its operation.
Jan 1: Deposited Rs. 25,000 from each of the members in a bank in the exchange of shares @ of Rs. 100 each to start the business.
Jan 5: Purchased office supplies on account for Rs. 5,000.
Jan 10: Signed a promissory note and received cash Rs. 10,000 from the bank. The interest on the note is 12% payable at end.
Jan 12: Cash received from the customers for service to be provide in future Rs. 2,000.
Jan 15: Billed customers for service provided for Rs. 2,500. The amount of bill will be received after a week.
Jan 18: Paid Rs. 1,500 for advertisement to Kantipur Advertising Agency.
Jan 22: Received the amount billed the client on Jan 15.
Jan 26: Received cash of Rs. 2,800 for service provided during the month.
Jan 29: Paid Rs. 10,000 of salaries and wages for January.
Jan 30: Received and paid Rs. 1,400 in gas, electricity, and water bills.
Required : (i) Journal entries (ii) T-Accounts (iii) Trial Balance at January 31.
The solution first by journal entry,
i. Journal Entries
In the book of Pokhara Valley
Bank a/c Dr. Rs. 75,000
Share capital a/c Rs. 75,000
(To record the deposit of cash on the bank by three owners in exchange of shares)
Office supplies a/c Dr. Rs. 5,000
Account payable a/c Rs. 5,000
(To record the purchase of office supplies on account)
Cash a/c Dr. Rs. 10,000
Notes payable a/c Rs. 10,000
(To record the receipt of cash in exchange of note)
Cash a/c Dr. Rs. 2,000
Unearned service revenue or advance income a/c Rs. 2,000
(To record the received of cash in advance.)
Bills receivable a/c Dr. Rs. 2,500
Service revenue a/c Rs. 2,500
(To record the bills receivable from the customer.)
Advertising expenses a/c Dr. Rs. 1,500
Cash a/c Rs. 1,500
(To record the advertising expenses)
Cash a/c Dr. Rs. 2,500
Bills receivable a/c Rs. 2,500
(To record the cash received from the customer)
Cash a/c Dr. Rs. 2,800
Service revenue a/c Rs. 2,800
(To record the received of cash from service provided)
Salary and wages expenses a/c Dr. Rs. 10,000
Cash a/c Rs. 10,000
(To record the payment of salary and wages)
Utility expenses a/c Dr. Rs 1,400
Cash a/c Rs. 1,400
(To record the payment for gas, electricity, and water bills)
iii. Trial balance
|S.N.||Particulars/ details||Dr. Rs.||Cr. Rs.|
|Bank a/c |
Share capital a/c
Office supplies a/c
Account payable a/c
Notes payable a/c
Advance income a/c
Service revenue a/c
Bills receivable a/c
Advertisement expenses a/c
Salary & wages expenses a/c
Utility expenses a/c
|Total||Rs. 97,300||Rs. 97,300|
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