Journal Entry: Long Answer Question Service Firm (Problem and Solution)

Arjun EP

Published on: October 1, 2020

How to make journal entries for long answer question of service firm

Journal entries of long answer question are the comprehensive question and solution.

It is the summary of entire chapter of the journal entry.

It is designed for deep knowledge.

It is the base for ledger accounts and trial balance.

PROBLEM: 23

EP Online Study LLC has the following transaction: (all transaction through bank)

(a) Invested cash Rs 100,000 into business and converted into common stock of 1,000 shares @ Rs 100 each.

(b) Promissory note issued to take loan Rs 40,000.

(d) Purchase insurance policy in advance for Rs 8,000.

(e) Service provided of Rs 100,000.

(f) Service provided on account Rs 50,000.

(g) Service revenue received in advance Rs 20,000.

(h) Office expenses paid Rs 10,000.

(i) Office supplies purchased worth Rs 5,000.

(j) Office supplies purchased on account (credit) Rs 15,000

(k) Dividend distributed Rs 10,000.

Required: Journal entries

SOLUTION

Journal Entry

EP Online Study LLC

Date			LF	Dr Amount	Cr Amount
a	Bank account	Dr		100,000
	To Common stock account				100,000
	(Being- business commenced with equity shares)

b	Bank account	Dr		40,000
	To Promissory note				40,000
	(Being- note taken)

c	Equipment account	Dr		20,000
	To Bank account				20,000
	(Being- equipment purchased by cheque)

d	Advance insurance account	Dr		8,000
	To Bank account				8,000
	(Being: insurance policy purchased in advance)

e	Bank account	Dr		100,000
	To Service revenue account				100,000
	(Being: service provided in cash)

f	Account receivable account	Dr		50,000
	To Service revenue				50,000
	(Being: service provided on credit)

g	Bank account	Dr		20,000
	To Advance service revenue				20,000
	(Being: cheque received and discount allowed)

h	Office expenses account	Dr		10,000
	To Bank account				10,000
	(Being: office expenses paid)

i	Office supplies account	Dr		5,000
	To Bank account				5,000
	(Being: office supplies purchased)

j	Office supplies account	Dr		15,000
	To Account payable account				15,000
	(Being: office supplies purchased on account)

k	Dividend paid account	Dr		10,000
	To Bank account				10,000
	(Being: dividend paid)

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Click on link for YouTube videos topic wise :
Accounting Equation	http://tiny.cc/c89jkz
Basic Journal Entries in Nepali	http://tiny.cc/uaakkz
Basic Journal Entries	http://tiny.cc/8aakkz
Journal Entry and Ledger	http://tiny.cc/caakkz
Ledger Account	http://tiny.cc/haakkz
Subsidiary Book	http://tiny.cc/399jkz
Cash Book	http://tiny.cc/889jkz
Trial Balance and Adjusted Trial Balance	http://tiny.cc/c59jkz
Bank Reconciliation Statement (BRS)	http://tiny.cc/q59jkz
Depreciation	http://tiny.cc/ugakkz
Click on link for YouTube videos chapter wise:
Financial Accounting and Analysis (All videos)	http://tiny.cc/jlersz
Accounting Process	http://tiny.cc/mlersz
Accounting for Long Lived Assets	http://tiny.cc/plersz
Analysis of Financial Statement	http://tiny.cc/slersz