On November 1, 2016, Patty Cosgrove established an interior decorating business,

Question

On November 1, 2016, Patty Cosgrove established an interior decorating business, Classic Designs. During the month, Patty completed the following transactions related to the business:

Enter the following transactions on Page 2 of the two-column journal:

Nov. 1 Patty transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $26,000. 1 Paid rent for period of November 1 to end of month, $3,800. 6 Purchased office equipment on account, $12,710. 8 Purchased a truck for $30,400 paying $6,100 cash and giving a note payable for the remainder. 10 Purchased supplies for cash, $1,920. 12 Received cash for job completed, $8,300. 15 Paid annual premiums on property and casualty insurance, $2,200. 23 Recorded jobs completed on account and sent invoices to customers, $12,220. 24 Received an invoice for truck expenses, to be paid in November, $1,010.

Explanation / Answer

Journal Entries

Unadjusted Trail Balance

Fees Earned                                                             $20,520

less:expenses:

Rent expense                    3,800

Truck expense                 1,010

Utility expense                3,510

Miscellaneous exepnse 1,650

Wage expense                 4,550                      (14,520)

net income                                                        6,000

No this is not true income since some year end adjustments need to be done like depreciation expense, insurance expenses and supplies expense.

Date Description Debit Credit Nov 1 Cash $26,000 To Captial Stock $26,000 Nov 1 Rent expense $3,800 To cash $3,800 Nov 6 Office Equipemnt $12,710 To accounts payable $12,710 Nov 8 Truck 30,400 To cash 6,100 to Notes payable    300 Nov 10 Supplies $1,920 To Cash $1,920 Nov 12 Cash $8,300 To Fees earned $8,300 Nov 15 Prepaid insurance $2,200 To Cash $2,200 Nov 23 Account receivable $12,220 To fees Earned $12,220 Nov 24 Truck expense $1,010 To Accounts payable $1010 Nov 29 Utiltiies expense $3,510 To Cash $3,510

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