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Entries into T Accounts and Trial Balance
Leila Durkin, an architect, opened an office on May 1, 2012. During the month, she completed the following transactions connected with her professional practice:
Transferred cash from a personal bank account to an account to be used for the business, $30,000.
Paid May rent for office and workroom, $3,500.
Purchased used automobile for $25,000, paying $5,000 cash and giving a note payable for the remainder.
Purchased office and computer equipment on account, $9,000.
Paid cash for supplies, $1,200.
Paid cash for annual insurance policies, $2,400.
Received cash from client for plans delivered, $8,150.
Paid cash for miscellaneous expenses, $300.
Paid cash to creditors on account, $2,500.
Paid installment due on note payable, $400.
Received invoice for blueprint service, due in June, $1,200.
Recorded fee earned on plans delivered, payment to be received in June, $12,900.
Paid salary of assistant, $1,800.
Paid gas, oil, and repairs on automobile for May, $600.
1. Record the above transactions directly into the T accounts. To the left of the amount entered in the accounts, place the appropriate letter to identify the transaction.
2. Determine the balances of the T accounts.
Hint(s)
Cash
Bal.
Accounts Receivable
Supplies
Prepaid Insurance
Automobiles
Equipment
Notes Payable
Bal.
Accounts Payable
Bal.
Leila Durkin, Capital
Professional Fees
Bal.
Rent Expense
Salary Expense
Blueprint Expense
Automobile Expense
Miscellaneous Expense
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1, 2. First, identify what account is used and then what type of account is used. Every account is either an asset, liability, capital, withdrawal, revenue, or expense account. Every transaction involves at least two accounts. Then determine whether the account increases or decreases. Each increase or decrease is recorded as a debit or credit in the T-accounts, following the rules of debit and credit (See Exhibit 3). Net debits against credits to determine the balance and double-check to see if it is a normal balance for that account classification.
Hint(s)
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3. Prepare an unadjusted trial balance for Leila Durkin, Architect, as of May 31, 2012. For those boxes in which no entry is required, leave the box blank.
Leila Durkin, Architect
Unadjusted Trial Balance
May 31, 2012
Debit Balances
Credit Balances
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3. The trial balance lists the ending balance of each account in a corresponding Debit or Credit column. The trial balance column totals should be equal.
4. Determine the net income or net loss for May.
$
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