Selected Transactions for Garver Company During Its First Month in Business

question 50

Essay

Selected transactions for Garver Company during its first month in business are presented below.
Sept. 1 Invested $25,000 cash in the business in exchange for common stock.
5 Purchased equipment for $27,000 paying $6,000 in cash and the balance on account.
11 Performed $3,900 of services for clients, collecting $1,000 cash and billing them for the remainder.
25 Paid $7,000 cash on balance owed for equipment.
30 Declared and paid a $600 cash dividend.
30 Collected $1,200 from the clients from the September 11 transactions.
The Chart of accounts shows: No. 101 Cash, No. 112 Accounts Receivable, No. 157 Equipment, No. 201 Accounts Payable, No. 311 Common Stock, No. 332 Dividends, and No. 400 Service Revenue.
Instructions
(a) Journalize the transactions on page 1 of the journal (Omit explanations).
(b) Post the transactions using the standard account form.
(c) Based only on these transactions, what amount would Garver Company report as total assets in the October 31 balance sheet?
(d) Based only on these transactions, what amount would Garver Company report as total liabilities in the October 31 balance sheet.

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Definitions:

Commission

Payment to an employee or to an agent for performing or helping to perform a business transaction or service.

Accrued Interest

The amount of interest that has accumulated on a loan or bond over a specific period but has not yet been paid.

Semiannually

Occurring twice a year; every six months.

Accrued Interest

The interest that has accumulated on a financial obligation over a period of time but has not yet been paid.