Q1 In January 2024, Jack Chan started Champion Cleaners, a business that provides house cleaning services. The following transactions were extracted from its accounting records for the month of January 2024:
Date
Transactions
Jan 1 Jack invested RM90,000 into Champion Cleaners. A bank account was also opened.
In addition, he also brought in cleaning equipment from his previous business, valued at RM54,000.
2 Champion Cleaners bought a one-year fire insurance policy for RM8,640.
2 Champion Cleaners purchased additional cleaning equipment. The business obtained a RM18,000 bank loan to pay the vendor.
2 Champion Cleaners purchased RM5,760 worth of cleaning supplies on account.
8 Champion Cleaners completed a RM1,800 project. It received a RM900 cheque for its services. Client A will pay the balance on 8 February.
12 Client B paid for an advance of RM2,700 for a house cleaning service that will be completed in March.
14 The business advertised its services on an online news site at a cost of RM450.
17 Champion Cleaners signed a contract worth RM1,440 with Client C. Client C paid a
10% deposit. The cleaning service will commence in April.
19 Champion Cleaners was paid for a RM810 project for Client D.
20 Champion Cleaners settled in full the cleaning supplies purchased on 2 January.
24 Champion Cleaners received January telephone bill for RM450. It is due for payment on 5 February.
30 Paid January rental amounting to RM1,800.
31 Champion Cleaners paid cleaners’ salary totalling RM5,400.

The chart of accounts of Champion Cleaners are as follows:
Cash at bank, Accounts receivable, Cleaning supplies, Prepaid rent, Prepaid insurance, Equipment, Accumulated depreciation-Equipment, Accounts payable, Loan payable, Utilities payable, Unearned service revenue, Owner’s capital, Owner’s drawings, Service revenue, Rent expense, Insurance expense, Depreciation expense, Insurance expense, Utilities expense and Salary expense.
Required:
a) Record the necessary journal entries for the above transactions. Narrations are required. (20½ marks)

b) Post the journals to the respective general ledger accounts and calculate the balance carried forward to February 2024. (30 marks)

c) Prepare the Trial Balance of Champion Cleaners as at 31 January 2024. (9½ marks)

Answers to Above Questions on Principles of Accounting

Answer 1: The journal entries recording the above transactions on principles of accounting are explained as follows:

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