INSTRUCTIONS 1COMPLETE A GENERAL LEDGER FOR THE FOLLOWING TR

INSTRUCTIONS:

1.COMPLETE A GENERAL LEDGER FOR THE FOLLOWING TRANSACTIONS.

2. EXPLAIN YOUR ENTRIES AND HOW THEY AFFECTED THE BALANCE SHEET AND INCOME STATEMENT

A. Mr. Jones starts Widgets, INC. by issuing shares of capital stock for $7500.00 on January 1, 20xy. the business elects to use the ccural basis of accoutning.

B. Widgets, INC. purchases equipment costing $6000.00. A cash down payment of $2000.00 is made upon delivery of the equpiment, and a note for $4000.00 was signed for the remaining balance of the purhcase price. No interest accrues and payments od not start until January 1, 20xy

C. Widgets, INC. purchases merchandise for resale, all on account, for $30000.00 during the year.

D. Widgets, INC. sells merchandise costing $26000.00 for $42000.00. All sales are on account.

E. Widgets, INC. collects $33000.00 of cash on accounts (from customers) during the year.

F. Widgets, INC. disburses cash of $25000.00 to creditors ( on account ) during the year.

G. Widgets, INC. disburses cash of $9400.00 for miscellaneous operating expenses during the year.

H. Widgets, INC. recognizes depreciation expense for the year of $2600.00.

I. Widgets, INC. declares and pays $1200.00 of divideends during the year.

Solution

Ledger

Cash A/c

Capital

A/c Receivable

7500

33000

Purchase

Misc

Depreciation

Dividend

A/c Payable

2000

9400

2600

1200

25000

Capital A/C

Purchase A/C

Cash

Notes Payable

A/c Payable

2000

4000

30000

Notes Payable A/C

Misc A/C

Depreciation A/C

Dividend A/C

A/C Receivable

Sales A/C

Balance Sheet is affected as follows:

Asset Side

Liability Side