Tom Pryor formed a management consulting firm specializing in cost management systems.

Below are the

transactions that occurred during the initial month of operation. [1]

June 2 Tom Pryor invested $25,000 cash in the capital stock of the newly formed corporation.
June 3 Hired an administrative assistant, to be paid $3,000 per month. Leased office space at
the rate of $1,000 per month. Signed a contract with Pomero to deliver consulting
services valued at $7,500. Theortical aspects in the following link:
June 8 Purchased (and immediately used) office supplies on account for $750. http://financesilk.blogspot.in/?view=magazine
June 9 Received $2,500 from Pomero for work performed to date.
June 15 Paid $1,200 for travel costs associated with consultation work.
June 16 Provided services on account to Arpy for $3,000.
June 17 Paid $1,500 to administrative assistant for salary.
June 23 Billed Farris for $4,000 consulting engagement performed.
June 25 The company paid Tom Pryor a $1,000 dividend.
June 26 Collected 50% of the amount due for the billing on June 23.
June 27 Purchased computer furniture for $4,000, paying $1,000 down.
June 27 Paid $750 on the open account relating to the June 8 purchase.
June 28 Completed the Pomero job and billed the remaining amount.
June 30 Paid $1,500 to administrative assistant for salary.
June 30 Paid rent for June, $1,000.

Pryor consulting uses the following accounts:

Cash
Accounts
Receivable
Equipment
Accounts
Payable
Capital Stock
Revenues
Salary
Expense
Rent Expense
Travel
Expense
Supplies
Expense
Dividends

(a) Journalize the listed transactions.

(b) Post the transactions to the appropriate general ledger accounts.
(c) Prepare a trial balance as of June 30.
GENERAL JOURNAL Page 1 [2]

Date Accounts Debit Credit

June 2 Cash 25,000
Capital Stock 25,000

Tom Pryor invested $25,000 cash in the

capital stock of the newly formed corporation.

Supplies Expense 750 A (Assets) L L (Liability)

Cash 750 E (Expenditure)
I I (Income)

Purchased (and immediately used) office

supplies on account for $750.

A+++ Dr++ Dr E++++ Dr++++ Dr.

Cash 2,500 A---- Dr--- Cr E----- Dr----- Cr
Revenues 2,500

Received $2,500 from Pomero for work

L++++ Cr+++++ Cr I++++ Cr++++ Cr
performed to date.

L------ Cr----- Dr I----- Cr---- Dr

Travel Expense 1,200
Cash 1,200

Paid $1,200 for travel costs associated with

consultation work.

Accounts Receivable 3,000

Revenues 3,000

Provided services on account to Arpy for

$3,000.

Salary Expense 1,500

Cash 1,500

Paid $1,500 to administrative assistant for

salary.

GENERAL JOURNAL Page 2

Date Accounts Debit Credit

Accounts Receivable 4,000
Revenues 4,000

Billed Farris for $4,000 consulting

engagement performed.

Dividends 1,000
Cash 1,000

The company paid Tom Pryor a $1,000

dividend.

Cash 2,000
Accounts Receivable 2,000

Collected 50% of the amount due for the

billing on June 23.

Equipment 4,000
Cash 1,000
Accounts Payable 3,000
 Purchased computer furniture for $4,000,
paying $1,000 down.

Accounts Payable 750

Cash 750

Paid $750 on the open account relating to the

June 8 purchase.

A++
Accounts Receivable 5,000
+
Revenues 5,000 I+++

Completed the Pomero job and billed the

remaining amount.

GENERAL JOURNAL Page 3

Date Accounts Debit Credit

E++
Salary Expense 1,500
+
Cash 1,500 A---

Paid $1,500 to administrative assistant for

salary.

E++
Rent Expense 1,000
+
Cash 1,000 A----
Paid rent for June, $1,000.
CASH [3]
Real world Exam Method Debit Credit
Date Balance
Description Description (Income) (Expenses)
June 1 Balance forward ( -) ( -) ( -)
Tom Pryor invested $25,000 cash in the capital stock
Capital A/c ( 25,000) ( -) ( 25,000) Notes
of the newly formed corporation.
Purchased (and immediately used) office supplies on
Supplies A/c ( 750) ( 24,250) Description section:
account for $750.
Received $2,500 from Pomero for work performed to
Revenue A/c ( 2,500) ( 26,750) In exam you have to write the name of account instead narration unlike what we have done here
date.
Paid $1,200 for travel costs associated with
Travel A/c ( 1,200) ( 25,550) But this is real pratise method
consultation work.
Salary expenses
Paid $1,500 to administrative assistant for salary. ( 1,500) ( 24,050) CASH A/C
A/c
The company paid Tom Pryor a $1,000 dividend. Divident A/c ( 1,000) ( 23,050) Income Expenses
Collected 50% of the amount due for the billing on Accounts
( 2,000) ( 25,050) Capital a/c 25000 Supplies 750
June 23. receivable A/c
Purchased computer furniture for $4,000, paying
Equipment A/c ( 1,000) ( 24,050) Revenue a/c 25000 Travel a/c 1200
$1,000 down.
Paid $750 on the open account relating to the June 8 Acounts
( 750) ( 23,300) Salary a/c 1500
purchase. payable
Paid rent for June, $1,000. Rent A/c ( 1,000) ( 22,300) Dividend a/c 1000
Salary expenses
Paid $1,500 to administrative assistant for salary. ( 1,500) ( 20,800)
A/c

ACCOUNTS RECEIVABLE

Date Description Debit Credit Balance

June 1 Balance forward ( -) ( -) ( -)

Provided services on account to Arpy for $3,000. ( 3,000) ( 3,000)

Billed Farris for $4,000 consulting engagement
( 4,000) ( 7,000)
performed.
Collected 50% of the amount due for the billing on
( 2,000) ( 5,000)
June 23.
Completed the Pomero job and billed the remaining
( 5,000) ( 10,000)
amount.
( 12,000) ( 2,000) ( 10,000)

EQUIPMENT

Date Description Debit Credit Balance

June 1 Balance forward ( -) ( -) ( -)

Purchased computer furniture for $4,000, paying
( 4,000) ( 4,000)
$1,000 down.

ACCOUNTS PAYABLE

Date Description Debit Credit Balance

June 1 Balance forward ( -) ( -) ( -)

Purchased computer furniture for $4,000, paying
( 3,000) ( 3,000)
$1,000 down.
Paid $750 on the open account relating to the June 8
( 750) ( 2,250)
purchase.

( 750) ( 3,000) ( 2,250)

CAPITAL STOCK

Date Description Debit Credit Balance

June 1 Balance forward ( -) ( -) ( -)

Tom Pryor invested $25,000 cash in the capital stock
( -) ( 25,000) ( 25,000)
of the newly formed corporation.

DIVIDENDS

Date Description Debit Credit Balance

June 1 ( -) ( -) ( -)

The company paid Tom Pryor a $1,000 dividend. ( 1,000) ( 1,000)

REVENUES

Date Description Debit Credit Balance

June 1 ( -) ( -) ( -)
Received $2,500 from Pomero for work performed to
( 2,500) ( 2,500)
date.
Provided services on account to Arpy for $3,000. ( 3,000) ( 5,500)
Billed Farris for $4,000 consulting engagement
( 4,000) ( 9,500)
performed.
Completed the Pomero job and billed the remaining
( 5,000) ( 14,500)
amount.

SALARY EXPENSE

Date Description Debit Credit Balance

 June 1 ( -) ( -) ( -)

Paid $1,500 to administrative assistant for salary. ( 1,500) ( 1,500)

Paid $1,500 to administrative assistant for salary. ( 1,500) ( 3,000)

RENT EXPENSE

Date Description Debit Credit Balance

June 1 ( -) ( -) ( -)

Paid rent for June, $1,000. ( 1,000) ( 1,000)

TRAVEL EXPENSE

Date Description Debit Credit Balance

June 1 ( -) ( -) ( -)
Paid $1,200 for travel costs associated with
( 1,200) ( 1,200)
consultation work.

SUPPLIES EXPENSE

Date Description Debit Credit Balance

June 1 ( -) ( -) ( -)
Purchased (and immediately used) office supplies on
( 750) ( 750)
account for $750.
[4]

TOM PRYOR CONSULTING

Trial Balance
June 30, 20XX

Debits Credits

Cash ($ 20,800)
Accounts Receivable ( 10,000)
Equipment ( 4,000)
Accounts Payable ( 2,250) Chemistry
Capital Stock ( 25,000) L++++ Cr+++ Cr. Capital
Revenues ( 14,500) A+++ Dr++++ Dr. cash
Salary Expense ( 3,000)
Rent Expense ( 1,000)
Travel Expense ( 1,200)
Supplies Expense ( 750)
Dividends ( 1,000)

Balance ( 41,750) ( 41,750)

[1] I-02.01

[2] I-02.01(a)

[3] I-02.01 (b)

[4] I-02.01 (c)