Transactions and Journal Entries Are Shown Below $\$ 45,000$ In the Business

question 22

Essay

Transactions and journal entries are shown below.Read the transaction and determine if the correct journal entry
has been made.If a correction is necessary,use the ruling method to make the correction.
a Bert Hollis, the owner, invested $\$ 45,000$ in the business.

$\begin{array}{ll}\text { Cash } & 45,000 \\\text { Bert Hollis, Drawing } && 45,000\end{array}$

b. Hollis paid the monthly rent of $\$ 1,275$ .

$\begin{array}{ll}\text { Cash } & 1,275 \\\text { Rent Expense } && 1,275\end{array}$

c. Hollis paid cash to Union Electric for monthly utilities, $\$ 250$ .

$\begin{array}{llr} \text { Utilities Expense } &250 \\ \text {Accounts Payable } &&250\\\end{array}$

d. Hollis made payment on account for office supplies purchased previously, $\$ 100$ .

$\begin{array}{llr} \text { Office Supplies } &100\\ \text { Accounts Payable } &&100\\\end{array}$

e. A customer made a payment on account, $\$ 1,100$ .
$\begin{array}{ll}\text { Accounts Receivable } & 1,100 \\\text { Service Fees } && 1,100 \end{array}$

---

Definitions:

Residual Equity

Residual Equity represents the amount of equity that remains for the common shareholders after all liabilities and preferential stock claims have been settled.

Assets

Assets are possessions of an individual or a business that hold value and can yield benefits in the future.

Liabilities

Financial obligations or debts that a company owes to outside parties, which must be paid back in the future.

Liabilities

Financial obligations or debts that an entity owes to others, which need to be settled over time via the transfer of economic benefits.