JOURNALIZING CHAPTER 2 ILLUSTRATIVE AND PRACTICE PROBLEM

Things to remember when journalizing:

ADE-Assets, drawing, and expense accounts have debit balances and increase as debits. Drawing and expense
accounts are always debited in transactions unless you are making a mistake, correcting a mistake, or closing
your books. However, assets increase as debits and decrease as credits. When a company receives cash for any
reason, cash is always debited. As you purchase your assets including your prepaid assets, the asset account is
debited for an increase.
As you decrease your assets (no longer have them) including using/expiring your prepaid assets, the asset
account is credited. When a company pays cash for any reason, cash is always credited.

LCR-Liabilities, capital, and revenue accounts have credit balances and increase as credits. Capital and revenue
accounts are always credited in transactions unless you are making a mistake, correcting a mistake, or closing
your books. However, liabilities increase as credits and decrease as debits. As you purchase on credit or
account and owe more, the payable account is credit. As you pay what you owe, the payable account is debited.

Illustrative Problem and Solutions Below:Jardine Consulting Co. has the following accounts in its
ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Cammy Jardine, Capital;
Cammy Jardine, Drawing; Fees Earned; Rent Expense; Advertising Expense; Utilities Expense; Miscellaneous
Expense.

Journalize the following selected transactions for March 201X in a two-column journal. Journal entry
explanations may be omitted.

Mar. 1. Paid rent for the month, $2,500.

3. Paid advertising expense, $675.
5. Paid cash for supplies, $1,250.
6. Purchased office equipment on account, $9,500.
10. Received cash from customers on account, $16,550.
15. Paid creditor on account, $3,180.
27. Paid cash for repairs to office equipment, $540.
30. Paid telephone bill for the month, $375.
31. Fees earned and billed to customers for the month, $49,770.
31. Paid electricity bill for the month, $830.
31. Withdrew cash for personal use, $1,750.
201X
Mar. 1 Rent Expense 2,500
Cash 2,500

3 Advertising Expense 6750

Cash 6750

5 Supplies 1,2500
Cash 1,250

6 Office Equipment 9,500

Accounts Payable 9,500
 10 Cash 16,550
Accounts Receivable 16,550

15 Accounts Payable 3,180

Cash 3,180

27 Miscellaneous Expense 540

Cash 540

30 Utilities Expense 375

Cash 375

31 Accounts Receivable 49,770

Fees Earned 49,770

31 Utilities Expense 830

Cash 830

31 Cammy Jardine, Drawing 1,750

Cash 1,750

Another Practice Problem and Solutions Below:

JOHN Co. has been in business only one month. It was started July1, 201X. The chart of accounts is as
follows: 11 Cash; 12 Accounts Receivable; 13 Supplies; 18 Equipment; 21 Accounts Payable; 31 M. John,
Capital; 32 M. John Drawing; 41 Fees Earned; 51 Salary Expense; 52 Utilities Expense; 53 Rent Expense.
Journalize the transactions for the month of August in the two-column journal that follows.
Aug. 2 Purchased Equipment on account, $5,000.
3 Paid creditor on account, $3,000.
4 Paid salary expense of $8,000.
5 Received cash of $10,000 for jobs completed.
6 Jobs completed and billed to the customers for the week, $15,000.
9 Received cash of $6,000 from customers on account.
10 Paid utilities expense for the month, $300.
11 Paid rent for the month, $2,000.
12 Mary John transferred additional cash from a personal bank account for the business, $10,000.
13 Purchased equipment for cash, $1,000.
14 Purchased supplies on account, $200.
15 Mary John withdrew cash for personal use, $5,000.
JOURNAL Page No. 2
Date Description Post Ref. Debit Credit
Practice Problem Solutions:
JOURNAL Page No. 2
Date Description Post Ref. Debit Credit
201X
Aug. 2 Equipment 5,000
Accounts Payable 5,000
3 Accounts Payable 3,000
Cash 3,000
4 Salary Expense 8,000
Cash 8,000
5 Cash 10,000
Fees Earned 10,000
6 Accounts Receivable 15,000
Fees Earned 15,000
9 Cash 6,000
Accounts Receivable 6,000
10 Utilities Expense 300
Cash 300
11 Rent Expense 2,000
Cash 2,000
12 Cash 10,000
Mary John, Capital 10,000
13 Equipment 1,000
Cash 1,000
14 Supplies 200
Accounts Payable 200
15 Mary John, Drawing 5,000
Cash 5,000