On October 1, 2018, Jay Pryor established an interior decorating business, Pione
ID: 2430245 • Letter: O
Question
On October 1, 2018, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business:
Enter the following transactions on Page 2 of the two-column journal:
Required:
1. Journalize and insert the posting references for each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. For a compound transaction, if an amount box does not require an entry, leave it blank.
2. Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in the general journal as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. If an amount box does not require an entry, leave it blank.
3. Prepare an unadjusted trial balance for Intrex Designs as of October 31, 2018. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses.For those boxes in which no entry is required, leave the box blank. The first two account titles are filled in as an example.
4. Determine the excess of revenues over expenses for October.
$
5. Why the amount determined in above might not be the net income for October?
Because the dividends are declared but not paid
Because the cash balance is incorrect.
Because the closing inventory balance is missing
Because necessary adjustment to expenses, like depreciation has not been made.
Oct. 1 Jay transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $32,800. 4 Paid rent for period of October 4 to end of month, $3,180. 10 Purchased a used truck for $27,000, paying $3,000 cash and giving a note payable for the remainder. 13 Purchased equipment on account, $12,790. 14 Purchased supplies for cash, $2,200. 15 Paid annual premiums on property and casualty insurance, $4,920. 15 Received cash for job completed, $13,780.Explanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Oct Cash 32,800.00 Common Stock 32,800.00 (Record the common Stock issued) 4-Oct Rent Expense 3,180.00 Cash 3,180.00 (Record the rent paid) 10-Oct Truck 27,000.00 Cash 3,000.00 Notes Payable 24,000.00 (record the purcahse of truck) 13-Oct Equipment 12,790.00 Accounts Payable 12,790.00 (Record the purchase of equipment) 14-Oct Supplies 2,200.00 Cash 2,200.00 (record the supplies purcahsed) 15-Oct Prepaid Insurance 4,920.00 Cash 4,920.00 (Record the insurance paid) 15-Oct Cash 13,780.00 Fees Earned 13,780.00 (record the fees earned) 21-Oct Accounts Payable 4,560.00 Cash 4,560.00 (Record the cash paid) 24-Oct Accounts Receivable 15,680.00 Fees Earned 15,680.00 (record the fees earned) 26-Oct Truck Expense 1,440.00 Accounts Payable 1,440.00 (record the truck expense) 27-Oct Utilities Expense 1,640.00 Cash 1,640.00 (record the utilities expense) 27-Oct Miscellaneous Expense 590.00 Cash 590.00 (record the Misc. expense) 29-Oct Cash 6,560.00 Accounts Receivable 6,560.00 (record the cash recd) 30-Oct Wages Expense 4,360.00 Cash 4,360.00 (record the wages expense) 31-Oct Dividends 3,640.00 Cash 3,640.00 (record the dividends paid) Answer 2. Cash Accounts Receivable Supplies Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance 1-Oct 32,800.00 32,800.00 Dr. 24-Oct 15,680.00 15,680.00 Dr. 14-Oct 2,200.00 2,200.00 Dr. 4-Oct 3,180.00 29,620.00 Dr. 29-Oct 6,560.00 9,120.00 Dr. 10-Oct 3,000.00 26,620.00 Dr. 14-Oct 2,200.00 24,420.00 Dr. 15-Oct 4,920.00 19,500.00 Dr. 15-Oct 13,780.00 33,280.00 Dr. 21-Oct 4,560.00 28,720.00 Dr. 27-Oct 1,640.00 27,080.00 Dr. 27-Oct 590.00 26,490.00 Dr. 29-Oct 6,560.00 33,050.00 Dr. 30-Oct 4,360.00 28,690.00 Dr. 31-Oct 3,640.00 25,050.00 Dr. Prepaid Insurance Equipment Truck Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance 15-Oct 4,920.00 4,920.00 Dr. 13-Oct 12,790.00 12,790.00 Dr. 10-Oct 27,000.00 27,000.00 Dr. Notes Payable Accounts Payable Common Stock Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance 10-Oct 24,000.00 24,000.00 Cr. 13-Oct 12,790.00 12,790.00 Cr. 1-Oct 32,800.00 32,800.00 Cr. 24,000.00 Cr. 21-Oct 4,560.00 8,230.00 Cr. 32,800.00 Cr. 24,000.00 Cr. 26-Oct 1,440.00 9,670.00 Cr. 32,800.00 Cr. Dividends Fees Earned Wages Expense Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance 31-Oct 3,640.00 3,640.00 Dr. 15-Oct 13,780.00 13,780.00 Cr. 30-Oct 4,360.00 4,360.00 Dr. 3,640.00 Dr. 24-Oct 15,680.00 29,460.00 Cr. 4,360.00 Dr. Rent Expense Utilities Expense Truck Expense Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance 4-Oct 3,180.00 3,180.00 Dr. 27-Oct 1,640.00 1,640.00 Dr. 26-Oct 1,440.00 1,440.00 Dr. Miscellaneous Expense Date Debit Credit Balance 27-Oct 590.00 590.00 Dr. Answer 3. Pioneer Designs Unadjusted Trial Balance As of Oct 31, 2018 Debit Credit Cash 25,050.00 Accounts Receivable 9,120.00 Supplies 2,200.00 Prepaid Insurance 4,920.00 Equipment 12,790.00 Truck 27,000.00 Notes Payable 24,000.00 Accounts Payable 9,670.00 Common Stock 32,800.00 Dividends 3,640.00 Fees Earned 29,460.00 Wages Expense 4,360.00 Rent Expense 3,180.00 Utilities Expense 1,640.00 Truck Expense 1,440.00 Miscellaneous Expense 590.00 Totals 95,930.00 95,930.00 - Answer 4. Income Statement For the Month Ended Oct 21, 2018 Revenue Fees Earned 29,460.00 Expense Wages Expense 4,360.00 Rent Expense 3,180.00 Utilities Expense 1,640.00 Truck Expense 1,440.00 Miscellaneous Expense 590.00 11,210.00 Net Operating Income 18,250.00 Answer 5. Because necessary adjustment to expenses, like depreciation has not been made.
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