November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs. During the month, Kris completed tollowing transactions related to the business: CHART OF ACCOUNTS Modem Designs General Ledger 1 Kris transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $27,600 Paid rent for period of November 1 to end of month, $3,200 Nov 1 ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck REVENUE 6 Purchased office equipment on account, $12,860. 41 Fees Earned 10 12 15 23 24 Purchased a truck for 531,700 paying $6,200 cash and giving a note payable for the remainder Purchased supplies for cash, $1,400. Recelved cash for job completed, $3,400. Paid annual premiums on property and casualty insurance, $2,400. Recorded jobs completed on account and sent invoices to customers, $12,060. Received an invoice tor truck expenses, to be paid in November, $1,230. EXPENSES 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense LIABILITIES 21 Notes Payable 22 Accounts Payable ter the folloving transachions on Page 2 of he nvo-column jouVNEl: Modern Desiens UNADJUSTED TRIAL BALANCE November 30, 2018 Nov. 29 29 Paid miscellaneous expenses, $1.500 30 Received cash from customers on account, S7,400. 30 Paid wages of employees, $4,200. 30 Paid creditor a portion of the amount owed for equipment purchased on November 6, S6,190 30 Paid dividends, $2,200 Paid utilities expense, 53,590 EQUITY ACCOUNT TITLE 31 Common Stock 1 Cash 2 Accounts Receivable 3 Supplies 4Prepaid Insurance 33 DMidends Required: 1. Joumanze each transaction in a two-column ournsl beginning on Psge , refeming to the chert of eccounts in seiecting Equipment 6 Truck 7Notes Payable the acnts to bs dabited and credited. (Do not insert the past reference numbers untiv you have posted the entry to the general ledger in part 2) Refer to the Cnart or Accouts far exact wording of account mes 2. Post (in chranologicai order) the journal to a ledger or our-column accounta, inserting appropriare poating references h both the journal and the ledper as each item is posted. Extend the balances to the aparopriate balance columns atter Accounts Payable each fransaction is posted 3 Prepare an unacjusted ral balance for Modern Designs as of November 30, 2018 4 Determine the excees of revenues over expenses far November 5. Can you mink or any resson why the amount determined in (4) might not be he net income tor November? Common Stock 10 Dividends 11 Fees Eamed 12 Wages Expense 13 Rent Expense 1+ Utilities Expense s Truck Expense 16 Miscellaneous Expense 2. Post (n chranological crder) the journal to a leder of four-coumn counts, inserting appropriate posong references in both the joumal and the ledger as each item is posted. Extend the balanoes to the appropriate belance columns after each transacion is pasted 3. Prepare anunadjusted tial balance for Modem Designs as of November 30, 2018. 4 Determine the excess of RVES Over for November Totals 5. Can you think of any reason why the amount determined in (4) might not be the net income for November? Because necessary adjustment to expenses, like depreciation has not been made. Because the cash balance is incorrect Because the dvidends are declared but not paid Because the closing inventory balance is missing
