Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business, $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.
Oct. 27. Paid miscellaneous expenses, $1,100.
29. Received cash from customers on account, $7,600.
30. Paid wages of employees, $4,800.
31. Withdrew cash for personal use, $3,500.
Instructions
1. Journalize 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.
(Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted.
11 Cash 31 Jay Pryor, Capital
12 Accounts Receivable 32 Jay Pryor, Drawing
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
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 Pioneer Designs as of October 31, 2014.
4. Determine the excess of revenues over expenses for October.
5. Can you think of any reason why the amount determined in (4) might not be the net income for October?
Answer:
1.
Date Description
Post.
Ref. Debit Credit
2014
Oct. 1 Cash 11 18,000
Jay Pryor, Capital 31 18,000
4 Rent Expense 53 3,000
Cash 11 3,000
10 Truck 18 23,750
Cash 11 3,750
Notes Payable 21 20,000
13 Equipment 16 10,500
Accounts Payable 22 10,500
14 Supplies 13 2,100
Cash 11 2,100
15 Prepaid Insurance 14 3,600
Cash 11 3,600
15 Cash 11 8,950
Fees Earned 41 8,950
JOURNAL
JOURNAL
Page 1
Page 2
Date Description
Post.
Ref. Debit Credit
2014
Oct. 21 Accounts Payable 22 2,000
Cash 11 2,000
24 Accounts Receivable 12 14,150
Fees Earned 41 14,150
26 Truck Expense 55 700
Accounts Payable 22 700
27 Utilities Expense 54 2,240
Cash 11 2,240
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
27 Miscellaneous Expense 59 1,100
Cash 11 1,100
29 Cash 11 7,600
Accounts Receivable 12 7,600
30 Wages Expense 51 4,800
Cash 11 4,800
31 Jay Pryor, Drawing 32 3,500
Cash 11 3,500
2.
Account: Cash
GENERAL LEDGER
Account No. 11
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 1 1 18,000 18,000
4 1 3,000 15,000
10 1 3,750 11,250
14 1 2,100 9,150
15 1 3,600 5,550
15 1 8,950 14,500
21 2 2,000 12,500
27 2 2,240 10,260
27 2 1,100 9,160
29 2 7,600 16,760
30 2 4,800 11,960
31 2 3,500 8,460
Account: Accounts Receivable Account No. 12
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 24 2 14,150 14,150
29 2 7,600 6,550
Account: Supplies
Account: Prepaid Insurance
Account: Equipment
Account No. 13
Account No. 14
Account No. 16
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 13 1 10,500 10,500
Account: Truck Account No. 18
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 10 1 23,750 23,750
Account: Notes Payable
Account: Accounts Payable
Account No. 21
Account No. 22
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 13 1 10,500 10,500
21 2 2,000 8,500
26 2 700 9,200
Account: Jay Pryor, Capital Account No. 31
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 31 2 3,500 3,500
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 1 1 18,000 18,000
Account: Jay Pryor, Drawing
Account: Fees Earned
Account No. 32
Account No. 41
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 15 1 8,950 8,950
24 2 14,150 23,100
Account: Wages Expense Account No. 51
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 30 2 4,800 4,800
Account: Rent Expense Account No. 53
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 4 1 3,000 3,000
Account: Utilities Expense Account No. 54
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 27 2 2,240 2,240
Account: Truck Expense
Account: Miscellaneous Expense
Account No. 55
Account No. 59
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 27 2 1,100 1,100
3. PIONEER DESIGNS
Unadjusted Trial Balance
October 31, 2014
Debit
Balances
Credit
Balances
Cash 8,460
Accounts Receivable 6,550
Supplies 2,100
Prepaid Insurance 3,600
Equipment 10,500
Truck 23,750
Notes Payable 20,000
Accounts Payable 9,200
Jay Pryor, Capital 18,000
Jay Pryor, Drawing 3,500
Fees Earned 23,100
Wages Expense 4,800
Rent Expense 3,000
Utilities Expense 2,240
Truck Expense 700
Miscellaneous Expense 1,100
70,300 70,300
4. $11,260 ($23,100 – $4,800 – $3,000 – $2,240 – $700 – $1,100)
5. As will be discussed in Chapter 3, various adjustments are normally required at
the end of the accounting period. For example, adjustments for supplies used,
insurance expired, and depreciation would probably be required.