Journal Entries | Problem & Solution-01

Journal Entries | Problem & Solution-01
Journal Entries | Problem & Solution-01

 

 
 
Here you will learn how to record the transaction in the journal book. I will analysis individual journal entries step by step so that you can learn the journal entries quickly.
 
 
Let’s start
 

Journal Entries: Problem-01

 
Mr. Wood started his own Business “Wood Bakery” on June1, 2019.
 
The following transactions occurred during the month of June in the book of “Wood Bakery”
 
June   1:    Wood invested $8,000 cash in the business
June   2:    Purchased goods for cash $4,000 and $ 3,000 on account
June   3:    Paid $ 300 for purchased utilities
June   4:    Goods sold to customer $ 2,000 on account
June   5:    Received from customer $ 1,000
June   7:    Withdrew cash $ 400 for personal use
June   8:    Paid for the goods purchased on account on June 2.
June 10:    Paid $100 cash for advertisement
June 12:    Paid cash $ 300 for telephone bill
June 14:    Purchased goods for $ 3,000 from Gordon by signing a note payable
June 16:    Paid cash $150 for electricity bill of May 2019
June 19:    Purchased a used Delivery Van for cash $ 6,000
June 24:    Paid Cash $400 for office rent.
June 29:    Paid cash $ 700 for employee salaries
June 30:    Paid for goods purchased on June 14
 
 
Journalize the June Transaction.




 
Solution:
 
Before starting to solve this problem just remember this formula for better understanding of journal entries
Accounts Types Increase/Decrease Debit/Credit
Expenses Increase Debit
Expenses Decrease Credit
Revenues Increase Credit
Revenues Decrease Debit
Owner’s Equity Increase Credit
Owner’s Equity Decrease Debit
Liabilities Increase Credit
Liabilities Decrease Debit
Assets Increase Debit
Assets Decrease Credit
 
June 1: Wood invested $8,000 cash in the business
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Cash
Asset
Increase
Debit
Owner’s Capital
Owner’s Equity
Increase
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
Jun 1
 
 
Cash
     Owner’s Capital
(To record owner’s investment of cash in business)
 
 
 
8,000
 
 
 
 
 
8,000
 
 
 
 
June 2: Purchased goods for cash $4,000 and $ 3,000 on account
 
Here involve 3 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Purchase
Expense
Increase
Debit
Cash
Asset
Decrease
Credit
Accounts Payable
Liability
Increase
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
Jun 2
 
 
Purchase
   Cash
   Accounts Payable
(To record purchase of goods cash and on account)
 
 
 
7000
 
 
4000
3000
 
 
 
June 3: Paid $ 300 for purchased utilities
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Utilities
Expense
Increase
Debit
Cash
Asset
Decrease
Credit
 

Journal entry for this transaction

Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
Jun 3
 
 
Stationary
    Cash
(To record Cash purchase of Utilities)
 
 
 
300
 
 
300
 
 
 
June 4: Goods sold to customer $ 2,000 on account
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
A/C Receivable
Asset
Increase
Debit
Sales
Revenue
Increase
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
Jun 4
 
A/c Receivable
Sales
(To record Sales on account)
 
 
 
 
2,000
 
 
2,000
 
 
 
June 5: Received Cash $ 1,000 from customer
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Cash
Asset
Increase
Debit
A/C Receivable
Asset
Decrease
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 5
 
Cash
    A/c Receivable
(To record received cash from customers)
 
 
 
1000
 
 
1000
 
 
June 7: Withdrew cash $ 400 for personal use
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Cash
Asset
Decrease
Credit
Owner’s Drawings
Owner’s Equity
Decrease
Debit
 
 
Journal entry for this transaction
 
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 7
 
Owner’s Drawing
    Cash
(To record owner’s drawing for personal use)
 
 
 
400
 
 
400
 
 
 
June 8: Paid for the goods purchased on account on June 2.
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Cash
Asset
Decrease
Credit
A/C Payable
Liability
Decrease
Debit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
Jun 8
 
A/c Payable
  Cash
(To record cash Paid to Vendor)
 
 
 
3000
 
 
3000
 
 
 
June 10: Paid $100 cash for advertisement
 
Here involve 2 accounts
 
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Cash
Asset
Decrease
Credit
Advertisement
Expense
Increase
Debit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
Jun 10
 
Advertisement Expense
   Cash
(To record cash paid for advertisement)
 
 
 
100
 
 
100
 
 
 
June 12: Paid cash $ 300 for telephone bill
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Cash
Asset
Decrease
Credit
Telephone Bill
Expense
Increase
Debit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 12
 
Telephone bill
   Cash
(To record cash paid  for telephone bill)
 
 
 
300
 
 
300
 
 
 
June 14:Purchased goods for $ 3,000 from Gordon by signing a note payable
 
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Purchase
Expense
Increase
Debit
Note Payable
Liability
Increase
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 14
 
Purchase
    Note Payable
(To record Goods purchased by signing Note Payable)
 
 
 
3000
 
 
3000
 
 
 
June 16: Paid cash $150 for electricity bill of May 2019
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Electricity Bill
Expense
Increase
Debit
Cash
Asset
Decrease
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 16
 
Electricity Expense
    Cash
(To record Cash paid for electricity bill)
 
 
 
 
150
 
 
150
 
 
 
June 19:  Purchased a used Delivery Van for cash $ 6,000
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Vehicle
Asset
Increase
Debit
Cash
Asset
Decrease
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 19
 
Vehicle
  Cash
(To record paid cash for purchasing a used delivery Van)
 
 
 
 
6000
 
 
6000
 
 
 
June 24: Paid Cash $400 for office rent.
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Office Rent
Expense
Increase
Debit
Cash
Asset
Decrease
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 24
 
Office rent
  Cash
(To record cash paid for office rent)
 
 
 
400
 
 
400
 
 
 
June 29: Paid cash $ 700 for employee salaries
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Salary Expense
Expense
Increase
Debit
Cash
Asset
Decrease
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 29
 
Salary expense
   Cash
(To record cash paid for employee salaries)
 
 
 
 
700
 
 
700
 
 
 
June 30: Paid for goods purchased on June 14
 
Here involve 2 accounts
 
Account Titles
Account Type
Increase/Decrease
Debit /Credit
Note Payable
Liability
Decrease
Debit
Cash
Asset
Decrease
Credit
 
 
Journal entry for this transaction
 
Date
Account Titles and Explanation
Ref.
Debit
Credit
2019
June 30
 
Note Payable
  Cash
(To record cash payment against note Payable)
 
 
3000
 
 
3000
 
 
 
 
General Journal for all the transaction 
 
 
 
 
Wood Bakery’s
Journal Book
Date Account Titles and Explanation Ref. Debit Credit
2019
1-Jun Cash 8,000
Owner’s Capital 8,000
(To record owner’s investment of cash in business)
2-Jun Purchase 7,000
Cash 4,000
Accounts Payable 3,000
(To record purchase of goods cash and on account)
3-Jun Utilities 300
Cash 300
(To record Cash purchase of Utilities)
4-Jun A/c Receivable 2000
Sales 2000
(To record Sales on account)
5-Jun Cash 1000
A/c Receivable 1000
(To record cash received from customers)
7-Jun Owner’s Drawing 400
Cash 400
(To record owner’s drawing for personal use)
8-Jun A/c Payable 3000
Cash 3000
(To record cash Paid to Vendor)
10-Jun Advertisement Expense 100
Cash 100
(To record cash paid for advertisement)
12-Jun Telephone bill 300
Cash 300
(To record cash paid  for telephone bill)
14-Jun Purchase 3,000
Note Payable 3,000
(To record Goods purchased by signing Note Payable)
16-Jun Electricity Expense 150
Cash 150
(To record Cash paid for electricity bill)
19-Jun Vehicle 6,000
Cash 6,000
(To record paid cash for purchasing a used delivery Van)
24-Jun Office rent 400
Cash 400
(To record cash paid for office rent)
29-Jun Salary expense 700
Cash 700
(To record cash paid for employee salaries)
30-Jun Note Payable 3,000
Cash 3,000
(To record cash payment against note Payable)
Total 35,350 35,350

If you want to improve your accounting skill solve this accounting Quizzes 

 
 
 
 
 
 

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