Journal entry preparation. On January 1 of the current year, Peter Houston invested 0,000 cash into his company MuniServ. Shortly thereafter, the company ac¬quired selected assets of a bankrupt competitor. The acquisition included land ($15,000), a building ($40,000), and vehicles ($10,000). MuniServ paid $45,000 at the time of the transaction and agreed to remit the remaining balance due of $20,000 (an account payable) by February 15.
During January, the company had additional cash outlays for the follow¬ing items:
Purchases of store equipment $4,600
Loan payment 500
Salaries expense 2,300
Advertising expense 700
The January utilities bill of $200 was received on January 31 and will be paid on February 10. MuniServ rendered services to clients on account amounting to $9,400 and $3,700 had been received in settlement.
Instructions
a. Present journal entries that reflect MuniServ’s January transactions, starting with the $100,000 investment.
b. Compute the total debits, total credits, and ending balance that would be found in the company’s Cash account. (Post to “T” Accounts)
c. Prepare a trail balance as of January 31.
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