John\'s House Painting Company has the following transactions for the year 1. De
ID: 2659598 • Letter: J
Question
John's House Painting Company has the
following transactions for the year
1. December 1 - Issued capital stock for $100,000 to start a
house painting business.
2. December 1 - Paid one year insurance
premium costing $4,800.
3. December 1 - Paid gas expense $200.
4. December 1 - Purchased equipment costing $4,800 on credit.
5. December 12 - Purchased supplies costing $800 on credit.
6.December 18 - Painted three houses totaling $12,000 and billed
customers.
7. December 23 - Painted three rooms and billed
customers $500.
8. December 28 - Received $2,000 for houses painted
in #6.
9. December 31 - Paid for equipment purchased in #4.
10.December 31 - Received $1,000 for a job to paint a house in January
next year.
11. December 31 - Paid a $1,000 dividend.
Required:
1. Prepare journal entries for the above transactions.
2. Post the above transactions to T Accounts.
3. Prepare a Trial Balance.
4. Prepare adjusting entries in journal format and post to T Accounts.
Supplies on Hand December 31 was $400.
The Equipment is to be depreciated over 48 months starting with December. (HINT; Record
one month depreciation expense).
Wages owed but not paid on December 31 was $200. One month of insurance has expired.
5. Prepare an Adjusted Trial Balance.
6. Prepare an Income Statement, Statement of Retained Earnings and a Balance Sheet.
7. Prepare closing entries in journal format and post to the T Accounts.
8. Prepare a Post-Closing Trial Balance.
Explanation / Answer
Trial Balance 31st December Debit Credit Common Stock $ 100,000.00 Account Recievable $ 10,500.00 Accounts Payable $ 800.00 Equipment $ 4,800.00 Prepaid Insurance $ 4,400.00 Cash $ 92,200.00 Insurance Expenses $ 400.00 Gas Expenses $ 200.00 Purchase $ 800.00 Sale/ Gross Reciept $ 12,500.00 Dividend $ 1,000.00 Advance from Debtor $ 1,000.00 Total $ 114,300.00 $ 114,300.00
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