{"id":218079,"date":"2025-05-23T07:32:31","date_gmt":"2025-05-23T07:32:31","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=218079"},"modified":"2025-05-23T07:32:34","modified_gmt":"2025-05-23T07:32:34","slug":"during-march-the-following-transactions-were-completed-2","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/23\/during-march-the-following-transactions-were-completed-2\/","title":{"rendered":"During March, the following transactions were completed."},"content":{"rendered":"\n

TMM opened Fresh Step Carpet Cleaners on March 1. During March, the following transactions were completed.Mar. 1. Shareholders invested $14,000 cash in the business in exchange for ordinary shares. Purchased used truck for $8,000, paying $3,000 cash and the balance on account.Purchased cleaning supplies for $1,200 on account.Paid $1,800 cash on one-year insurance policy effective March 1. Billed customers $4,800 for cleaning services.18 Paid $1,500 cash on amount owed on truck and $500 on amount owed on cleaning supplies.Mar. 20 Paid $1,800 cash for employee salaries.21 Collected $1,600 cash from customers billed on March 14.28 Billed customers $2,500 for cleaning services.31 Paid $320 for the monthly gasoline bill for the truck.31 Declared and paid $800 cash dividends.The chart of accounts for Fresh Step Carpet Cleaners contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation\u2014Equipment, No. 201 Accounts Payable, No. 212 Salaries and Wages Payable, No. 311 Share Capital\u2014Ordinary, No. 320 Retained Earnings, No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gasoline Expense, No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries and Wages Expense.
Instructions(A) Journalize and post the March transactions. Use page J1 for the journal and the three-column form of account.(B) Prepare a trial balance at March 31 on a worksheet.(C) Enter the following adjustments on the worksheet and complete the worksheet.(1) Unbilled revenue for services performed at March 31 was $750.(2) Depreciation on equipment for the month was $300.(3) One-twelfth of the insurance expired.(4) An inventory count shows $250 of cleaning supplies on hand at March 31.(5) Accrued but unpaid employee salaries were $720.(D) Prepare the income statement and a retained earnings statement for March and a classified statement of financial position at March 31.(E) Journalize and post adjusting entries. Use page J2 for the journal.(F) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.(G) Prepare a post-closing trial balance at March 31.<\/p>\n\n\n\n

The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n

(A) Journal Entries & Ledger Posting Summary (March Transactions):<\/h3>\n\n\n\n

Here is a summary of the balances in the general ledger after posting the March transactions:<\/p>\n\n\n\n

Account<\/th>Balance<\/th><\/tr><\/thead>
Cash<\/td>\\$5,880<\/td><\/tr>
Accounts Receivable<\/td>\\$5,700<\/td><\/tr>
Supplies<\/td>\\$1,200<\/td><\/tr>
Prepaid Insurance<\/td>\\$1,800<\/td><\/tr>
Equipment<\/td>\\$8,000<\/td><\/tr>
Accounts Payable<\/td>\\$4,200 Cr<\/td><\/tr>
Share Capital\u2014Ordinary<\/td>\\$14,000 Cr<\/td><\/tr>
Service Revenue<\/td>\\$7,300 Cr<\/td><\/tr>
Salaries and Wages Expense<\/td>\\$1,800<\/td><\/tr>
Gasoline Expense<\/td>\\$320<\/td><\/tr>
Dividends<\/td>\\$800<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

This trial balance sets the foundation for the rest of the accounting cycle. The credit and debit balances currently do not balance<\/strong>, because several adjustments are still pending. Once we complete the adjustment and closing steps, we will have a full picture of the financial health and operations for March.<\/p>\n\n\n\n

<\/h3>\n\n\n\n

The journalizing and posting of the March transactions provide a systematic and chronological way to record Fresh Step Carpet Cleaners’ financial activity. Each entry records a specific transaction\u2019s effect on the accounting equation (Assets = Liabilities + Equity).<\/p>\n\n\n\n

We start with the initial investment<\/strong> by shareholders, which increases cash and share capital, ensuring the business has operating funds. The purchase of a truck (equipment) is split between cash and accounts payable, which reflects both a decrease in cash and a liability due to the unpaid portion. Supplies and insurance are also assets acquired, but the insurance is prepaid and thus a deferred expense.<\/p>\n\n\n\n

Service revenue is recorded using accrual accounting \u2014 when earned, not when collected. That\u2019s why there\u2019s an entry for billed customers and a separate one when the cash is collected. The business also incurs expenses (salaries, gas), which reduce cash and increase operating costs. These will later impact the net income.<\/p>\n\n\n\n

The business pays some liabilities \u2014 reducing both cash and accounts payable \u2014 and declares dividends, decreasing retained earnings.<\/p>\n\n\n\n

All entries are posted to the ledger. The ledger summarizes the effect of each transaction in one place. At this point, some key accounts like Cash (\\$5,880)<\/strong> and Accounts Receivable (\\$5,700)<\/strong> reflect actual balances after multiple entries.<\/p>\n\n\n\n

However, before financial statements can be finalized, adjusting entries<\/strong> are needed to account for accrued and deferred items like unbilled revenue, insurance used, and depreciation. These entries bring accounts up to date and ensure accurate financial reporting.<\/p>\n\n\n\n

Next steps will involve preparing a trial balance<\/strong>, recording adjusting entries, and ultimately generating the income statement<\/strong>, retained earnings<\/strong>, and statement of financial position<\/strong> for March.<\/p>\n\n\n\n

\"\"<\/figure>\n","protected":false},"excerpt":{"rendered":"

TMM opened Fresh Step Carpet Cleaners on March 1. During March, the following transactions were completed.Mar. 1. Shareholders invested $14,000 cash in the business in exchange for ordinary shares. Purchased used truck for $8,000, paying $3,000 cash and the balance on account.Purchased cleaning supplies for $1,200 on account.Paid $1,800 cash on one-year insurance policy effective […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-218079","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/218079","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=218079"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/218079\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=218079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=218079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=218079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}