QuestionRecord Jake's Lawn Maintenance transactions for July: \$500 for services, \$450 for repairs, \$600 loan, \$110 advertising, \$450 payment, \$600 loan repayment. Use double-entry bookkeeping.
Studdy Solution
STEP 1
Assumptions1. Jake provides lawn services to Luke's repair shop on account, \$500.
. Luke provides repair services to Jake on account, \$450.
3. Luke pays \$500 to Jake for lawn services provided on July3.
4. Luke borrows \$600 from Jake by signing a note.
5. Jake purchases advertising in a local newspaper for the remainder of July and pays cash, \$110.
6. Jake pays \$450 to Luke for services provided on July6.
7. Luke performs repair services for other customers for cash, \$800.
8. Luke pays employee salaries for the month, \$300.
9. Luke pays \$600 to Jake for money borrowed on July14.
STEP 2
We will record each transaction as a journal entry. Each entry will have a debit and a credit, and the total amount debited must always equal the total amount credited.
STEP 3
On July3, Jake provides lawn services to Luke's repair shop on account, \$500. This increases Jake's Accounts Receivable (an asset) and increases his Service Revenue.
\begin{tabular}{|c|c|c|c|}
\hlineDate & General Journal & Debit & Credit \\
\hlineJuly3 & Accounts Receivable & \$500 & \\
\hline & Service Revenue & & \$500 \\
\hline\end{tabular}
STEP 4
On July6, Luke provides repair services to Jake on account, \$450. This increases Jake's Repair Expense and increases his Accounts Payable (a liability).
\begin{tabular}{|c|c|c|c|}
\hlineDate & General Journal & Debit & Credit \\
\hlineJuly6 & Repair Expense & \$450 & \\
\hline & Accounts Payable & & \$450 \\
\hline\end{tabular}
STEP 5
On July9, Luke pays \$500 to Jake for lawn services provided on July3. This decreases Jake's Accounts Receivable and increases his Cash.
\begin{tabular}{|c|c|c|c|}
\hlineDate & General Journal & Debit & Credit \\
\hlineJuly9 & Cash & \$500 & \\
\hline & Accounts Receivable & & \$500 \\
\hline\end{tabular}
STEP 6
On July14, Luke borrows \$600 from Jake by signing a note. This increases Jake's Notes Receivable (an asset) and increases his Cash.
\begin{tabular}{|c|c|c|c|}
\hlineDate & General Journal & Debit & Credit \\
\hlineJuly14 & Notes Receivable & \$600 & \\
\hline & Cash & & \$600 \\
\hline\end{tabular}
STEP 7
On July18, Jake purchases advertising in a local newspaper for the remainder of July and pays cash, \$110. This increases Jake's Advertising Expense and decreases his Cash.
\begin{tabular}{|c|c|c|c|}
\hlineDate & General Journal & Debit & Credit \\
\hlineJuly18 & Advertising Expense & \$110 & \\
\hline & Cash & & \$110 \\
\hline\end{tabular}
STEP 8
On July20, Jake pays \$450 to Luke for services provided on July6. This decreases Jake's Accounts Payable and decreases his Cash.
\begin{tabular}{|c|c|c|c|}
\hlineDate & General Journal & Debit & Credit \\
\hlineJuly20 & Accounts Payable & \$450 & \\
\hline & Cash & & \$450 \\
\hline\end{tabular}
STEP 9
On July31, Luke pays \$600 to Jake for money borrowed on July14. This decreases Jake's Notes Receivable and increases his Cash.
\begin{tabular}{|c|c|c|c|}
\hlineDate & General Journal & Debit & Credit \\
\hlineJuly31 & Cash & \$600 & \\
\hline & Notes Receivable & & \$600 \\
\hline\end{tabular}
STEP 10
Transactions on July27 and July30 are related to Luke's business and do not affect Jake's business. Therefore, no journal entries are required for these transactions.
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