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.
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The solution first by journal entry,
i. Journal Entries
In the book of Pokhara Valley
Jan 1
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)
Jan 5
Office supplies a/c Dr. Rs. 5,000
Account payable a/c Rs. 5,000
(To record the purchase of office supplies on account)
Jan 10
Cash a/c Dr. Rs. 10,000
Notes payable a/c Rs. 10,000
(To record the receipt of cash in exchange of note)
Jan 12
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.)
Jan 15
Bills receivable a/c Dr. Rs. 2,500
Service revenue a/c Rs. 2,500
(To record the bills receivable from the customer.)
Jan 18
Advertising expenses a/c Dr. Rs. 1,500
Cash a/c Rs. 1,500
(To record the advertising expenses)
Jan 22:
Cash a/c Dr. Rs. 2,500
Bills receivable a/c Rs. 2,500
(To record the cash received from the customer)
Jan 26
Cash a/c Dr. Rs. 2,800
Service revenue a/c Rs. 2,800
(To record the received of cash from service provided)
Jan 29
Salary and wages expenses a/c Dr. Rs. 10,000
Cash a/c Rs. 10,000
(To record the payment of salary and wages)
Jan 30
Utility expenses a/c Dr. Rs 1,400
Cash a/c Rs. 1,400
(To record the payment for gas, electricity, and water bills)
ii. T-Accounts
iii. Trial balance
January 31
| S.N. | Particulars/ details | Dr. Rs. | Cr. Rs. |
| 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. | Bank a/c Share capital a/c Cash 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 | 75,000 4,400 5,000 – 1,500 10,000 1,400 | 75,000 5,000 10,000 2,000 5,300 – |
| Total | Rs. 97,300 | Rs. 97,300 |
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