Group 4
Problem P3-1
Tony Phan
Liliana Doonan
Julee Maidenberg
Erik Peterson
Shawn Croll
Choudhury Corporation
A. Example: Purchased equipment for use
in the business; paid one-third cash and
signed a note payable for the balance
Debit: Equipment Credit: Cash, Note
payable
B. Issued stock to new investors.
Debit: Cash Credit: Contributed Capital
C. Paid cash for salaries and wages.
Debit: Operating expenses Credit: Cash
D. Collected cash for services performed
this period.
Debit: Cash Credit: Service revenue
E. Collected cash on accounts receivable
for services performed last period.
Debit: Cash
Credit: Accounts receivable
F. Performed services this period on credit.
Debit: Accounts receivable
Credit: Service revenue
G. Paid operating expenses incurred this
period.
Debit: Operating expenses
Credit: cash
H. Paid cash on accounts payable for
expenses incurred last period.
Debit: Accounts payable Credit: cash
I. Incurred operating expenses this period
to be paid next period.
Debit: Operating expenses
Credit: Accounts payable
J. Purchased supplies to be used later;
paid cash
Debit: Supplies on Hand Credit: Cash
K. Used some of the supplies on hand for
operation.
Debit: Operating expenses
Credit: Supplies on Hand
L. Purchased a patent (an intangible asset);
paid cash.
Debit: Patents Credit: Cash
M. Made a payment on the equipment note
in (a); the payment was part principal
and part interest expense.
Debit: Note payable, interest expense
Credit: cash
N. Paid three-fourths of the income tax expense
for the year. The balance will be paid next
year.
Debit: Income tax expense Credit: income
taxes payable, cash
O. On the last day of the current period,
paid cash for an insurance policy
covering the next two years.
Debit: Prepaid expenses Credit: Cash