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Demo 3-2 SOLUTION - General Journal Entries (Debits & Credits) Required: Record the following transactions in general journal. Record the event number in the date column. 1. Issued common stock for $5,000 cash. 2. Borrowed $4,000 cash from a local bank. 3. Purchased $500 of supplies on account. 4. Recognized revenue of $8,000 for services provided on account. 5. Paid $3,900 cash for salaries expense. 6. Paid $2,400 cash in advance for a one-year lease to rent office space. 7. Purchased $3,500 of office furniture on account. 8. Received $1,800 cash for services to be performed in the future. 9. Collected $3,000 cash from accounts receivable. 10. Paid $1,200 cash for utilities. 11. Paid dividends of $1,000 cash to the stockholders. 12. Invested $2,000 cash in a certificate of deposit. 13. Repaid $1,600 of the bank loan described in Event No. 2. 14. Purchased land for $2,700 cash. Period-End Analysis & Adjustments: 15. Recognized $400 of accrued interest expense. 16. Completed $1,800 of services on contract described in Event No. 8. 17. Counted supplies on hand at the end of the accounting period. Determined that $400 of supplies were used during the accounting period. 18. Recognized accrued salary expense of $2,300. 19. Recognized $150 of accrued interest revenue. Demonstration Problem 3-2 Solution Date Event No. 1 Event No. 2 Event No. 3 Event No. 4 Event No. Event No. Event No. 5 6 7 Event No. 8 Event No. 9 Event No. 10 Event No. 11 Event No. Event No. Event No. Event No. Event No. Event No. 12 13 14 15 16 17 Event No. 18 Event No. 19 Account Titles Cash Common Stock Cash Notes Payable Supplies Accounts Payable Accounts Receivable Service Revenue Salaries Expense Cash Prepaid Rent Cash Office Furniture Accounts Payable Cash Unearned Revenue Cash Accounts Receivable Utilities Expense Cash Dividends Cash Certificate of Deposit Cash Notes Payable Cash Land Cash End of Period Adjusting Entries: Note: Accrual-basis acct adjustments will not include any entries to Cash! Interest Expense Interest Payable Unearned Revenue Service Revenue Supplies Expense Supplies Salaries Expense Salaries Payable Interest Receivable Interest Revenue Debit 5,000 Credit 5,000 4,000 4,000 500 500 8,000 8,000 3,900 3,900 2,400 2,400 3,500 3,500 1,800 1,800 3,000 3,000 1,200 1,200 1,000 1,000 2,000 2,000 1,600 1,600 2,700 2,700 400 400 1,800 1,800 400 400 2,300 2,300 150 150