Answers
Question a
Company has provided services of $55,000 so it has to recognize the revenue of $55,000 which will increase its equity by $55,000. Cash and equipment are assets and notes payable is liabilities.
Question b
Journal entry is as below:
Question c
Asset = Cash + Equipment = 17,000 + 59,000 = Liabilities + Equity Note payable + Revenue 21,000 + 55,000
Date Journal entry in the books of Groro Co. Particulars Debit ($) Credit ($) Cash A/c ------ Dr 17000 Equipment A/c --------- Dr 59000 To, Sales revenue A/c 55000 To, Note payable A/c 21000 (being services provided and cash and equipment received and notes payable accepted as consideration)
Cash Beg. Bal 17,000 End Bal 17,000 17,000 17,000 Equipment Beg. Bal 59,000 End bal 59,000 59,000 59,000 Notes payable Beg. Bal 21,000 End bal 21,000 21,000 21,000 Sales revenue Beg.
.
Bal 55,000 End bal 55,000 55,000 55,000
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