Problem 02-03A

PR 2-3A Journal entries and trial balance Obj. 1, 2, 3, 4 On November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs. During the month, Kris completed the following transactions related to the business: Nov. 1. Kris transferred cash froma personal bank account to an account to be used forthe business in exchange for common stock, $36,000. Paid rent for period of November 1 to end of month, $4,000. 1. Purchased office equipment on account, $16,000. Purchased a truck for $43,000 paying $4,300 cash and giving a note payable forthe remainder. Purchased supplies for cash, $1,860. Received cash for job completed, $8,000. Paid annual premiums on property and casualty insurance, $2,400 Recorded jobs completed on account and sent invoices to customers, $15,500. Received an invoice for truck expenses, to be paid in November, $1,250 6. 8. 10. 12 15. 23. 24 Enter the following transactions on Page 2 of the two-column journal Paid utilities expense, $3,660. Paid miscellaneous expenses, $1,700. Received cash from customers on account, $10,500 29. 29. 30. Paid wages of employees, $4,750. Paid areditor a portion of the amount owed for equipment purchased on November 6, $4,000. Paid dividends, $1,600. 30. 30. 30. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the fol- lowing chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted. 11 Cash 31 Common Stock 33 Dividends 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck 21 Notes Payable 22 Accounts Payable 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense 2. Post 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. 3. Prepare an unadjusted trial balance for Modern Designs as of November 30, 2018 4. Determine the excess of revenues over expenses for November. 5. Can you think of any reason why the amount determined in (4) might not be the net income for November