Journal Entries | Problem & Solution-01
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| 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.
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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 |
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