Journal Entries and Trial Balance

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:

Oct.	1.	Jay transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $18,000.
	4.	Paid rent for period of October 4 to end of month, $3,000.
	10.	Purchased a used truck for $23,750, paying $3,750 cash and giving a note payable for the remainder.
	13.	Purchased equipment on account, $10,500.
	14.	Purchased supplies for cash, $2,100.
	15.	Paid annual premiums on property and casualty insurance, $3,600.
	15.	Received cash for job completed, $8,950.

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

	21.	Paid creditor a portion of the amount owed for equipment purchased on October 13, $2,000.
	24.	Recorded jobs completed on account and sent invoices to customers, $14,150.
	26.	Received an invoice for truck expenses, to be paid in November, $700.
	27.	Paid utilities expense, $2,240.
	27	Paid miscellaneous expenses, $1,100.
	29.	Received cash from customers on account, $7,600.
	30.	Paid wages of employees, $4,800.
	31.	Paid dividends, $3,500.

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.

11	Cash	31	Common Stock
12	Accounts Receivable	33	Dividends
13	Supplies	41	Fees Earned
14	Prepaid Insurance	51	Wages Expense
16	Equipment	53	Rent Expense
18	Truck	54	Utilities Expense
21	Notes Payable	55	Truck Expense
22	Accounts Payable	59	Miscellaneous Expense

General Journal				Page 1
Date	Description	Post. Ref.	Debit	Credit
2018
Oct. 1
Oct. 4
Oct. 10
Oct. 13
Oct. 14
Oct. 15-Insurance
Oct. 15-Fees

General Journal				Page 2
Date	Description	Post. Ref.	Debit	Credit
2018
Oct. 21
Oct. 24
Oct. 26
Oct. 27-Utilities
Oct. 27-Misc.
Oct. 29
Oct. 30
Oct. 31

2. Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references 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.

General Ledger
Account:	Cash				Account No.	11
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 1
Oct. 4
Oct. 10
Oct. 14
Oct. 15
Oct. 15
Oct. 21
Oct. 27
Oct. 27
Oct. 29
Oct. 30
Oct. 31

Account:	Accounts Receivable				Account No.	12
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 24
Oct. 29

Account:	Supplies				Account No.	13
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 14

Account:	Prepaid Insurance				Account No.	14
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 15

Account:	Equipment				Account No.	16
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 13

Account:	Truck				Account No.	18
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 10

Account:	Notes Payable				Account No.	21
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 10

Account:	Accounts Payable				Account No.	22
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 13
Oct. 21
Oct. 26

Account:	Common Stock				Account No.	31
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 1

Account:	Dividends				Account No.	33
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 31

Account:	Fees Earned				Account No.	41
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 15
Oct. 24

Account:	Wages Expense				Account No.	51
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 30

Account:	Rent Expense				Account No.	53
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 4

Account:	Utilities Expense				Account No.	54
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 27

Account:	Truck Expense				Account No.	55
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 26

Account:	Miscellaneous Expense				Account No.	59
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 27

3. Prepare an unadjusted trial balance for Pioneer 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.

Pioneer Designs Unadjusted Trial Balance October 31, 2018
	Account No.	Debit Balances	Credit Balances
Totals

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.