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:
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, $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. |
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, $4,560. | |
24 | Recorded jobs completed on account and sent invoices to customers, $15,680. | |
26 | Received an invoice for truck expenses, to be paid in November, $1,440. | |
27 | Paid utilities expense, $1,640. | |
27 | Paid miscellaneous expenses, $590. | |
29 | Received cash from customers on account, $6,560. | |
30 | Paid wages of employees, $4,360. | |
31 | Paid dividends, $3,640. |
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 | Cash | |||
Common Stock | ||||
Oct. 4 | Rent Expense | |||
Cash | ||||
Oct. 10 | Truck | |||
Cash | ||||
Notes Payable | ||||
Oct. 13 | Equipment | |||
Accounts Payable | ||||
Oct. 14 | Supplies | |||
Cash | ||||
Oct. 15 | ||||
Oct. 15 | ||||
General Journal | Page 2 | |||
---|---|---|---|---|
Date | Description | Post. Ref. | Debit | Credit |
2018 | ||||
Oct. 21 | ||||
Oct. 24 | ||||
Oct. 26 | ||||
Oct. 27 | ||||
Oct. 27 | ||||
Oct. 29 | ||||
Oct. 30 | ||||
Oct. 31 | ||||
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.
General Ledger | ||||||
---|---|---|---|---|---|---|
Account | Cash | ACCOUNT NO. | 11 | |||
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 1 | 1 | |||||
Oct. 4 | 1 | |||||
Oct. 10 | 1 | |||||
Oct. 14 | 1 | |||||
Oct. 15 | 1 | |||||
Oct. 15 | 1 | |||||
Oct. 21 | 2 | |||||
Oct. 27 | 2 | |||||
Oct. 27 | 2 | |||||
Oct. 29 | 2 | |||||
Oct. 30 | 2 | |||||
Oct. 31 | 2 |
Account | Accounts Receivable | ACCOUNT NO. | 12 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 24 | 2 | |||||
Oct. 29 | 2 |
Account | Supplies | ACCOUNT NO. | 13 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 14 | 1 |
Account | Prepaid Insurance | ACCOUNT NO. | 14 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 15 | 1 |
Account | Equipment | ACCOUNT NO. | 16 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 13 | 1 |
Account | Truck | ACCOUNT NO. | 18 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 10 | 1 |
Account | Notes Payable | ACCOUNT NO. | 21 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 10 | 1 |
Account | Accounts Payable | ACCOUNT NO. | 22 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 13 | 1 | |||||
Oct. 21 | 2 | |||||
Oct. 26 | 2 |
Account | Common Stock | ACCOUNT NO. | 31 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 1 | 1 |
Account | Dividends | ACCOUNT NO. | 33 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 31 | 2 |
Account | Fees Earned | ACCOUNT NO. | 41 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 15 | 1 | |||||
Oct. 24 | 2 |
Account | Wages Expense | ACCOUNT NO. | 51 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 30 | 2 |
Account | Rent Expense | ACCOUNT NO. | 53 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 4 | 1 |
Account | Utilities Expense | ACCOUNT NO. | 54 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 27 | 2 |
Account | Truck Expense | ACCOUNT NO. | 55 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 26 | 2 |
Account | Miscellaneous Expense | ACCOUNT NO. | 59 | |||
---|---|---|---|---|---|---|
Balance | ||||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
2018 | ||||||
Oct. 27 | 2 |
Feedback
1. Identify which accounts are affected in each transaction. Keep in mind that every transaction involves at least two accounts. Determine whether the account increases or decreases and record each increase or decrease following the rules of debit and credit. Use the Posting Reference column to enter the corresponding account number from the general ledger account. Remember total debits should equal total credits in your entries.
2. See the illustration in Exhibit 4 below. The 4-column accounts ledger is a more formal presentation of the T accounts. The Posting Reference column should have the page number from the journal where the transaction is found. The debits and credits for each journal entry are posted to the accounts in the order in which they occur in the journal. After each entry, subtotal the 4-column ledger, making sure to maintain the correct normal balance and double-checking any non-normal balances to see if they are valid or possible.
Journal Entry Account | ||
Common Transaction Terminology | Debit | Credit |
Received cash for services provided | Cash | Fees Earned |
Services provided on account | Accounts Receivable | Fees Earned |
Received cash on account | Cash | Accounts Receivable |
Purchased on account | Asset account | Accounts Payable |
Paid on account | Accounts Payable | Cash |
Paid cash | Asset or expense account | Cash |
Issued common stock | Cash and/or other assets | Common Stock |
Paid dividends | Dividends | Cash |
Learning Objective 1, Learning Objective 2, Learning Objective 3 and Learning Objective 4.
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.
Pioneer Designs Unadjusted Trial Balance October 31, 2018 | ||
---|---|---|
Debit Balances | Credit Balances | |
Cash | ||
Accounts Receivable | ||
Totals |
4. Determine the excess of revenues over expenses for October. $
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