On November 1, 20Y9, Lexi Martin established an interior decorating business, Heritage Designs. During the month, Lexi completed the following transactions related to the business: Nov. 1 Lexi transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $50,000. 1 Paid rent for period of November 1 to end of month, $4,000. 6 Purchased office equipment on account, $15,000. 8 Purchased a truck for $38,500 paying $5,000 cash and giving a note payable for the remainder. 10 Purchased supplies for cash, $1,750. 12 Received cash for job completed, $11,500. 15 Paid annual premiums on property and casualty insurance, $2,400. 23 Recorded jobs completed on account and sent invoices to customers, $22,300. 24 Received an invoice for truck expenses, to be paid in November, $1,250. Enter the following transactions on Page 2 of the two-column journal: Nov. 29 Paid utilities expense, $4,500. 29 Paid miscellaneous expenses, $1,000. 30 Received cash from customers on account, $9,000. 30 Paid wages of employees, $6,800. 30 Paid creditor a portion of the amount owed for equipment purchased on November 6, $3,000. 30 Paid dividends, $2,500. Required: 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the post reference numbers until you have posted the entry to the general ledger in part 2.) Refer to the Chart of Accounts for exact wording of account titles. 2. Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in both the journal and the ledger 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 Heritage Designs as of November 30, 20Y9. 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

On November 1, 20Y9, Lexi Martin established an interior decorating business, Heritage Designs. During the month, Lexi completed the following transactions related to the business: Nov. 1 Lexi transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $50,000. 1 Paid rent for period of November 1 to end of month, $4,000. 6 Purchased office equipment on account, $15,000. 8 Purchased a truck for $38,500 paying $5,000 cash and giving a note payable for the remainder. 10 Purchased supplies for cash, $1,750. 12 Received cash for job completed, $11,500. 15 Paid annual premiums on property and casualty insurance, $2,400. 23 Recorded jobs completed on account and sent invoices to customers, $22,300. 24 Received an invoice for truck expenses, to be paid in November, $1,250. Enter the following transactions on Page 2 of the two-column journal: Nov. 29 Paid utilities expense, $4,500. 29 Paid miscellaneous expenses, $1,000. 30 Received cash from customers on account, $9,000. 30 Paid wages of employees, $6,800. 30 Paid creditor a portion of the amount owed for equipment purchased on November 6, $3,000. 30 Paid dividends, $2,500. Required: 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the post reference numbers until you have posted the entry to the general ledger in part 2.) Refer to the Chart of Accounts for exact wording of account titles. 2. Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in both the journal and the ledger 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 Heritage Designs as of November 30, 20Y9. 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

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter2: Analyzing Transactions

Section: Chapter Questions

Problem 3PB: On October 1, 2019, Jay Pryor established an interior decorating business, Pioneer Designs. During...

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On November 1, 20Y9, Lexi Martin established an interior decorating business, Heritage Designs. During the month, Lexi completed the following transactions related to the business:

Nov.	1	Lexi transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $50,000.
	1	Paid rent for period of November 1 to end of month, $4,000.
	6	Purchased office equipment on account, $15,000.
	8	Purchased a truck for $38,500 paying $5,000 cash and giving a note payable for the remainder.
	10	Purchased supplies for cash, $1,750.
	12	Received cash for job completed, $11,500.
	15	Paid annual premiums on property and casualty insurance, $2,400.
	23	Recorded jobs completed on account and sent invoices to customers, $22,300.
	24	Received an invoice for truck expenses, to be paid in November, $1,250.

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

Nov.	29	Paid utilities expense, $4,500.
	29	Paid miscellaneous expenses, $1,000.
	30	Received cash from customers on account, $9,000.
	30	Paid wages of employees, $6,800.
	30	Paid creditor a portion of the amount owed for equipment purchased on November 6, $3,000.
	30	Paid dividends, $2,500.

	Required:
1.	Journalize each transaction in a two-column journal beginning on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the post reference numbers until you have posted the entry to the general ledger in part 2.) Refer to the Chart of Accounts for exact wording of account titles.
2.	Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in both the journal and the ledger 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 Heritage Designs as of November 30, 20Y9.
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?

Expert Solution

Step 1 Journal Entries

Heritage Designs Journal Entries
Date	Account Title	Debit	Credit
Nov 1	Cash	$50,000
	Common Stock		$50,000
	(Being cash invested against Common Stock )
Nov 1	Rent Expense	$4,000
	Cash		$4,000
	(Being Rent Expense incurred and paid)
Nov 6	Equipment	$15,000
	Accounts payable		$15,000
	(Being office equipment purchased on account)
Nov 8	Truck	$38,500
	Cash		$5,000
	Notes payable		$33,500
	(Being Truck purchased)
Nov 10	Supplies	$1,750
	Cash		$1,750
	(Being supplies purchased by cash)
Nov 12	Cash	$11,500
	Fees Earned		$11,500
	(Being revenue earned)
Nov 15	Prepaid insurance	$2,400
	Cash		$2,400
	(Being insurance expense paid for an year)
Nov 23	Accounts Receivable	$22,300
	Fees Earned		$22,300
	(Being revenues earned on account)
Nov 24	Truck Expense	$1,250
	Cash		$1,250
	(Being Truck Expense paid )
Nov 29	Utilities Expense	$4,500
	Cash		$4,500
	(Being Utilities Expense paid)
Nov 29	Miscellaneous Expense	$1,000
	Cash		$1,000
	(Being Miscellaneous Expense paid)
Nov 30	Cash	$9,000
	Accounts Receivable		$9,000
	(Being amount received on account)
Nov 30	Wages Expense	$6,800
	Cash		$6,800
	(Being Wages Expense paid)
Nov 30	Accounts payable	$3,000
	Cash		$3,000
	(Being payment made on account)
Nov 30	Dividend	$2,500
	Cash		$2,500
	(Being Dividend paid)

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