This information relates to Hanshew Real Estate Agency.

Oct. 1 Stockholders invested $35,000 in exchange for common stock of the corporation.

2 Hires an administrative assistant at an annual salary of $36,000.

3 Buys equipment for $3,500 on account.

6 Sells a house and lot for M Springer; commissions due from Springer, $10,000 (not paid by Springer at this time).

10 Receives cash of $140 as commission for acting as rental agent renting an apartment.

27 Pays $700 on account for the equipment purchased on October 3.

30 Pays the administrative assistant $3,000 in salary for October.

Required:

a. Journalize the transactions.

b. Post the transactions to T accounts.

Answer and Explanation:

a. The Journal entry is shown below:-

1. Cash Dr, $35,000

To common stock $35,000

(Being received cash in exchange of common stock is recorded)

2. No Journal entry is required

3. Equipment Dr, $3,500

To Accounts payable $3,500

(Being equipment is recorded)

4. Accounts receivable Dr, $10,000

To service revenue $10,000

(Being service revenue is recorded)

5. Cash Dr, $140

To Service revenue $140

(Being Cash is recorded)

6. Accounts payable Dr, $700

To Cash $700

(Being accounts payable is recorded)

7. Salaries and wages expenses Dr, $3,000

To Cash $3,000

(Being Salaries and wages expenses is recorded)

b. The transaction of T accounts is shown below:-

Cash

Oct 1 $35,000 Oct 27 $700

Oct 10 $140 Oct 30 $3,000

Oct 31 $31,440

Accounts receivable

Oct 6 $10,000

Oct 31 $10,000

Equipment

Oct 3 $3,500

Oct 31 $3,500

Accounts payable

Oct 27 $700 Oct 3 $3,500

Oct 31 $2,800

Common stock

Oct 1 $35,000

Oct 31 $35,000

Service revenue

Oct 6 $10,000

Oct 10 $140

Oct 31 $10,140

Salaries and wages revenue

Oct 30 $3,000

Oct 31 $3,000