2.12: Demonstration problem
- Page ID
- 48919
Green Hills Riding Stable, Incorporated, had the following balance sheet on 2010 June 30:
GREEN HILLS RIDING STABLE, INCORPORATED Balance Sheet 2010 June 30 |
|||
Assets |
|
|
|
Cash |
|
$ |
7,500 |
Accounts receivable |
|
|
5,400 |
Land |
|
|
40,000 |
Total assets |
|
$ |
52,900 |
Liabilities and Stockholders' Equity |
|||
Liabilities: |
|
|
|
Accounts payable |
|
$ |
800 |
Notes payable |
|
|
40,000 |
Total liabilities |
|
$ |
40,800 |
Stockholders' equity: |
|
|
|
Capital stock |
$ 10,000 |
|
|
Retained earnings |
2,100 |
|
|
Total stockholders' equity |
|
|
12,100 |
Total liabilities and stockholders' equity |
|
|
$52,900 |
a. Prepare the journal entries to record the transactions for July 2010.
b. Post the journal entries to the ledger accounts after entering the beginning balances in those accounts. Insert cross-indexing references in the journal and ledger. Use the following chart of accounts:
100 |
Cash |
320 |
Dividends |
103 |
Accounts Receivable |
402 |
Horse Boarding Fees Revenue |
130 |
Land |
404 |
Riding and Lesson Fees Revenue |
140 |
Buildings |
507 |
Salaries Expense |
200 |
Accounts Payable |
513 |
Feed Expense |
201 |
Notes Payable |
540 |
Interest Expense |
300 |
Capital Stock |
568 |
Miscellaneous Expense |
310 |
Retained Earnings |
|
|
c. Prepare a trial balance.
Solution to demonstration problem
a.
GREEN HILLS RIDING STABLE, INCORPORATED General Journal Page1 |
|||||||||||||||||
Date |
Account Titles and Explanation |
Post. Ref. |
Debit |
Credit |
|||||||||||||
2010 July |
1 |
Cash (+A) |
100 |
|
2 |
5 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Capital Stock (+SE) |
300 |
|
|
|
|
|
|
|
|
2 |
5 |
0 |
0 |
0 |
|
|
|
Additional capital stock issued. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Buildings (+A) |
140 |
|
2 |
4 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Cash (-A) |
100 |
|
|
|
|
|
|
|
|
2 |
4 |
0 |
0 |
0 |
|
|
|
Paid for building. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 |
Account Payable (-L) |
200 |
|
|
|
8 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Cash (-A) |
100 |
|
|
|
|
|
|
|
|
|
|
8 |
0 |
0 |
|
|
|
Paid accounts payable. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
Cash (+A) |
100 |
|
|
5 |
4 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Accounts Receivable (-A) |
103 |
|
|
|
|
|
|
|
|
|
5 |
4 |
0 |
0 |
|
|
|
Collected accounts receivable. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 |
Feed Expense (-SE) |
513 |
|
|
1 |
1 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Accounts Payable (+L) |
200 |
|
|
|
|
|
|
|
|
|
1 |
1 |
0 |
0 |
|
|
|
Purchased feed on account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 |
Accounts Receivable (+A) |
103 |
|
|
4 |
5 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Horse Boarding Fee Revenue (+SE) |
402 |
|
|
|
|
|
|
|
|
|
4 |
5 |
0 |
0 |
|
|
|
Billed boarding fees for July. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24 |
Miscellaneous Expense (-SE) |
568 |
|
|
|
8 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Cash (-A) |
100 |
|
|
|
|
|
|
|
|
|
|
8 |
0 |
0 |
|
|
|
Paid miscellaneous expenses for July. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 |
Interest Expense (-SE) |
540 |
|
|
|
2 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Cash (-A) |
100 |
|
|
|
|
|
|
|
|
|
|
2 |
0 |
0 |
|
|
|
Paid interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 |
Salaries Expense (-SE) |
507 |
|
|
1 |
4 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Cash (-A) |
100 |
|
|
|
|
|
|
|
|
|
1 |
4 |
0 |
0 |
|
|
|
Paid salaries for July. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 |
Accounts Receivable (+A) |
103 |
|
|
3 |
6 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Riding and Lesson Fee Revenue (+SE) |
404 |
|
|
|
|
|
|
|
|
|
3 |
6 |
0 |
0 |
|
|
|
Billed riding and lesson fees for July. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 |
Dividends (-SE) |
320 |
|
|
1 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Cash (-A) |
100 |
|
|
|
|
|
|
|
|
|
1 |
0 |
0 |
0 |
|
|
|
Paid a dividend to stockholders. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b. GREEN HILLS RIDING STABLE, INCORPORATED General Ledger Land Account No. 100 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 June |
30 |
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 |
5 |
0 |
0 |
0 |
Dr |
July |
1 |
Stockholders' investment |
G1 |
|
2 |
5 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
3 |
2 |
5 |
0 |
0 |
Dr |
|
1 |
Buildings |
G1 |
|
|
|
|
|
|
|
|
2 |
4 |
0 |
0 |
0 |
|
|
|
8 |
5 |
0 |
0 |
Dr |
|
8 |
Accounts payable |
G1 |
|
|
|
|
|
|
|
|
|
|
8 |
0 |
0 |
|
|
|
7 |
7 |
0 |
0 |
Dr |
|
10 |
Accounts receivable |
G1 |
|
|
5 |
4 |
0 |
0 |
|
|
|
|
|
|
|
|
|
1 |
3 |
1 |
0 |
0 |
Dr |
|
24 |
Miscellaneous expense |
G1 |
|
|
|
|
|
|
|
|
|
|
8 |
0 |
0 |
|
|
1 |
2 |
3 |
0 |
0 |
Dr |
|
31 |
Interest expense |
G1 |
|
|
|
|
|
|
|
|
|
|
2 |
0 |
0 |
|
|
1 |
2 |
1 |
0 |
0 |
Dr |
|
31 |
Salaries expense |
G1 |
|
|
|
|
|
|
|
|
|
1 |
4 |
0 |
0 |
|
|
1 |
0 |
7 |
0 |
0 |
Dr |
|
31 |
Dividends |
G1 |
|
|
|
|
|
|
|
|
|
1 |
0 |
0 |
0 |
|
|
|
9 |
7 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Receivable Account No. 103 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 June |
30 |
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
4 |
0 |
0 |
Dr |
July |
10 |
Cash |
G1 |
|
|
|
|
|
|
|
|
|
5 |
4 |
0 |
0 |
|
|
|
|
- |
0 |
- |
|
|
15 |
Horse boarding fees |
G1 |
|
|
4 |
5 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
4 |
5 |
0 |
0 |
Dr |
|
31 |
Riding and lessons fees |
G1 |
|
|
3 |
6 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
8 |
1 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land Account No. 130 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 June |
30 |
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
0 |
0 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings Account No. 140 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 July |
1 |
Cash |
G1 |
|
2 |
4 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
2 |
4 |
0 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable Account No. 200 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 June |
30 |
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 |
0 |
0 |
Cr |
July |
8 |
Cash |
G1 |
|
|
|
8 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
|
- |
0 |
- |
|
|
12 |
Feed expense |
G1 |
|
|
|
|
|
|
|
|
|
1 |
1 |
0 |
0 |
|
|
|
1 |
1 |
0 |
0 |
Cr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Ledger (continued) Notes Payable Account No. 201 |
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 June |
30 |
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
0 |
0 |
0 |
0 |
Cr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock Account No. 300 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 June |
30 |
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
0 |
0 |
0 |
0 |
Cr |
July |
1 |
Cash |
G1 |
|
|
|
|
|
|
|
|
2 |
5 |
0 |
0 |
0 |
|
|
3 |
5 |
0 |
0 |
0 |
Cr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained Earnings Account No. 310 |
||||||||||||||||||||||||
|
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 June |
30 |
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
1 |
0 |
0 |
Cr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Account No. 320 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 July |
31 |
Cash |
G1 |
|
|
1 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
1 |
0 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horse Boarding Fee Revenue Account No. 402 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 July |
15 |
Accounts receivable |
G1 |
|
|
|
|
|
|
|
|
|
4 |
5 |
0 |
0 |
|
|
|
4 |
5 |
0 |
0 |
Cr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Riding and Lesson Fee Revenue Account No. 404 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 July |
31 |
Accounts receivable |
G1 |
|
|
|
|
|
|
|
|
|
3 |
6 |
0 |
0 |
|
|
|
3 |
6 |
0 |
0 |
Cr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Ledger (concluded) Salaries Expense Account No. 507 |
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 July |
31 |
Cash |
G1 |
|
|
1 |
4 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
1 |
4 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Feed Expense Account No. 513 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 July |
12 |
Accounts payable |
G1 |
|
|
1 |
1 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
1 |
1 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense Account No. 540 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 July |
31 |
Cash |
G1 |
|
|
|
2 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
|
2 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Expense Account No. 568 |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Date |
Explanation |
Post Ref. |
Debt |
Credit |
Balance |
|||||||||||||||||||
2010 July |
24 |
Cash |
G1 |
|
|
|
8 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
|
8 |
0 |
0 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
c. |
GREEN HILLS RIDING STABLE, INCORPORATED |
|
|
|
Trial Balance |
|
|
|
2010 July 31 |
|
|
Acct. |
|
|
|
No. |
Account Title |
Debits |
Credits |
100 |
Cash |
$ 9,700 |
|
103 |
Accounts Receivable |
8,100 |
|
130 |
Land |
40,000 |
|
140 |
Buildings |
24,000 |
|
200 |
Accounts Payable |
|
$ 1,100 |
201 |
Notes Payable |
|
40,000 |
300 |
Capital Stock |
|
35,000 |
310 |
Retained Earnings |
|
2,100 |
320 |
Dividends |
1,000 |
|
402 |
Horse Boarding Fee Revenue |
|
4,500 |
404 |
Riding and Lesson Fee Revenue |
|
3,600 |
507 |
Salaries Expense |
1,400 |
|
513 |
Feed Expense |
1,100 |
|
540 |
Interest Expense |
200 |
|
568 |
Miscellaneous Expense |
800 |
|
|
|
$86,300 |
$86,300 |