Learn How to Solve P3-5A Foyle Architects Problem

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Problem Overview

Before getting started, lets take a look at the problem details. We will then prepare the journal entries, t-accounts, and financial statements. All of this is done step-by-step, then the included together in an excel spreadsheet attached to this lesson. 

Problem 3-5A Details - Foyle Architects

Foyle Architects incorporated as licensed architects on April 1, 2014. During the first month of the operation of the business, these events and transactions occurred:

Transactions

  • Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the corporation.
  • 1 Hired a secretary-receptionist at a salary of $375 per week, payable monthly.
  • 2 Paid office rent for the month $900.
  • 3 Purchased architectural supplies on account from Burlington Company $1,300.
  • 10 Completed blueprints on a carport and billed client $1,900 for services.
  • 11 Received $700 cash advance from J. Madison to design a new home.
  • 20 Received $2,800 cash for services completed and delivered to M. Svetlana.
  • 30 Paid secretary-receptionist for the month $1,500.
  • 30 Paid $300 to Burlington Company for accounts payable due.

Prepare the Journal Entries

The first thing we need to to for Foyle Architects is prepare the journal entries. 

Journal Entries

Date Account Debit Credit
1-Apr Cash 18000
  Common Stock 18000
1-Apr No Entry 0
No Entry 0
2-Apr Rent 900
  Cash 900
3-Apr Supplies 1300
  Accounts Payable 1300
10-Apr Accounts Receivable 1900
  Service Revenue 1900





Download Excel Spreadsheet for All Journal Entries

Use Journal to Prepare the T-Accounts

Next, we need to use the Journal Entries in the previous step to prepare T-Accounts for the company. This will show the changes in each account over time and help us prepare the financial statements. 

Cash T-Account


Date Debit Date Credit
1-Apr 1800 2-Apr 900
11-Apr 700 30-Apr 1500
20-Apr 2800 30-Apr 300
Bal 18,800


Download Excel Spreadsheet for All T-Accounts

Now We Can Prepare Foyle's Trial Balance

The final step is to prepare the trial balance. This step uses the figures in our T-Accounts to put the data into a format that provides more readability for the users of financial statements. In addition, this information can be used to produce the company's main financial statements. 

Foyle Architects - Trial Balance

Account Debit Credit
Cash 18,800
Accounts Receivable 1900
Supplies 1300


Download Excel Spreadsheet for Full Trial Balance

Full Answer Sheet in Excel for P3-5A Foyle

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Academics Accounting

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