Question

AMG Consultants Inc. commenced business operations on April 1, 2020. For each of the transactions listed below, prepare the required journal entries. Select appropriate account titles for your journal entries. Please note that explanations for journal entries are not required. If a journal entry is not required, clearly indicate by stating “No Journal Entry Required”.

April 4 Purchased TRD Advisory Ltd. for $220,000. The price consists of land $110,000; building $80,000; and equipment $30,000. Paid cash of $60,000 and signed a mortgage payable for the balance.

April 9 Paid $2,200 for a one-year insurance policy; coverage begins May 1.

April 10 Purchased $800 of supplies on account. April 16 Provided $10,000 of consulting services to a client. The client paid cash of $3,000 and the balance was charged on account.

April 22 Received $5,000 from a client for consulting services to be provided in May.

April 30 Paid $900 of interest on the mortgage payable.

Answer 1

Date	Account title and explanation	Debit	Credit
April. 4	Land	110,000
	Building	80,000
	Equipment	30,000
	Cash		60,000
	Mortgage payable		160,000
April. 9	Prepaid insurance	2,200
	Cash		2,200
April. 10	Supplies	800
	Accounts payable		800
April. 16	Cash	3,000
	Accounts receivable (10,000-3,000)	7,000
	Service revenue		10,000
April. 22	Cash	5,000
	Unearned / Deferred revenue		5,000
April. 30	Interest expense	900
	Cash		900