Question

Oliver Rowe owned a bus and was tired of his current job. He decided to open a business, Oliver, Inc., that provides day tours to tourists through Hollywood and Los Angeles. Prepare journal entries to record the following transactions during the month of September, 2020, then prepare a unadjusted Trial Balance for Oliver, Inc. Below is a Chart of Accounts for Oliver, Inc.:

Chart of Accounts

Cash

Bus

Office Equipment

Tour Supplies

Prepaid Insurance

Accounts Receivable

Accounts Payable

Common Stock

Dividends

Tour Revenue

Parking Expense

Salary Expense

    *Please use only the above account names for your journal entries.  You won't need to use all of them.   

Sept 1

Oliver invested $40,000 cash and his bus valued at $70,000 in the business in exchange for Common Stock.

Sept 2

Oliver paid $5,000 cash for office equipment to help him keep track of business activities.

Sept 3

Oliver bought tour supplies costing $7,500 on credit.

Sept 4

Oliver paid $1,000 for the first month's parking lot expense with cash.

Sept 5

Oliver paid $2,400 cash in advance for a six-month insurance policy.

Sept 10

Oliver received $4,500 cash from clients for his first tour

Sept 12

Oliver provided a $7,500 tour on credit, the customer has agreed to pay within 10 days.

Sept 19

Oliver paid for the tour supplies originally purchased on Sept 3.

Sept 22

Oliver receives payment on the account from the client entry on Sept 12.

Sept 29

Oliver paid his tour guide a salary of $2,000

Sept 30

The company paid $4,000 cash in dividends to the owner. (sole stockholder)

Answer 1

JOURNAL ENTRIES IN THE BOOKS OF OLIVER INC. FOR MONTH OF SEP20

DATE	PARTICULARS	DEBIT($)	CREDIT($)
1/9/20	Cash a/c Dr Bus a/c Dr To Common Stock (Being Invested Cash and Bus in exchange for Common Stock)	40,000 70,000	1,10,000
2/9/20	Office Equipment a/c Dr   To Cash a/c (Being Office Equipment purchased for Cash)	5,000	5,000
3/9/20	Tour Supplies a/c Dr To Account Payables a/c (Being Tour Supplies purchased on credit)	7,500	7,500
4/9/20	Parking Expenses a/c Dr To Cash a/c (Being Cash Paid for Parking Lot )	1,000	1,000
5/9/20	Prepaid Insurance a/c Dr To Cash a/c (Being Cash paid in advance for 6 months Insurance Policy)	2,400	2,400
10/9/20	Cash a/c Dr To Tour Revenue a/c (Being Cash received from the clients for tour)	4,500	4,500
12/9/20	Accounts Receivable a/c Dr To Tour Revenue a/c (Being provided tour on credit)	7,500	7,500
19/9/20	Accounts Payable a/c Dr To Cash a/c (Being Cash paid for tour supplies bought on credit)	7,500	7,500
22/9/20	Cash a/c Dr To Accounts Receivable a/c (Being Cash received from the clients to whom trip was provided on credit)	7,500	7,500
29/9/20	Salary Expenses a/c Dr To Cash a/c (Being Salary tour guide salary paid)	2,000	2,000
30/9/20	Dividend a/c Dr To Cash a/c (Being Dividend paid in cash to owner)	4,000	4,000

UNADJUSTED TRAIL BALANCE OF OLIVER INC. FOR THE MONTH OF SEP 2020

PARTICULARS	DEBIT($)	CREDIT($)
Cash	30,100
Bus	70,000
Office Equipment	5,000
Tour Supplies	7,500
Prepaid Insurance	2,400
Common Stock		1,10,000
Dividend Paid	4,000
Tour Revenue		12,000
Parking Expenses	1,000
Salary Expenses	2,000
TOTAL	1,22,000	1,22,000

Working Notes:

1. CLOSING CASH BALANCE 40,000(Dr)-5,000(Cr)-1,000(Cr)-2,400(Cr)+4,500(Dr)-7,500(Cr)+7,500(Dr)-2,000(Cr)-4,000(Cr)

=30,100(Dr)

2. Tour revenue

4,500(Cr)+7,500(Cr)

= 12,000(Cr)