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On June 1, 2019, Kris Storey established an interior decorating business, Eco-Centric Designs. During the month, Kris completed the following transactions related to the business: June 1. Kris transferred cash from a personal bank account to an account to be used for the business, $35,000. 1. Paid rent for period of June 1 to end of month, $4,750. 6. Purchased office equipment on account, $14,100. 8. Purchased a van for $28,500 paying $4,500 cash and giving a note payable for the remainder. 10. Purchased supplies for cash, $2,380. 12. Received cash for job completed, $12,200. 15. Paid annual premiums on property and casualty insurance, $3,600. 23. Recorded jobs completed on account and sent invoices to customers, $11,900. 24. Received an invoice for van expenses, to be paid in June, $1,500. Enter the following transactions on Page 2 of the two-column journal: June 29. Paid utilities expense, $3,100. 29. Paid miscellaneous expenses, $950. 30. Received cash from customers on account, $7,330. 30. Paid wages of employees, $5,070. 30. Paid creditor a portion of the amount owed for equipment purchased on June 6, $6,825. 30. Withdrew cash for personal use, $1,600. 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.) Explanations may be omitted. 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 Eco-Centric Designs as of June 30, 2019. 4. Determine the excess of revenues over expenses for June. 5. Can you think of any reason why the amount determined in (4) might not be the net income for June?

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 2, Problem 3PA
Textbook Problem
860 views

On June 1, 2019, Kris Storey established an interior decorating business, Eco-Centric Designs. During the month, Kris completed the following transactions related to the business:

June 1. Kris transferred cash from a personal bank account to an account to be used for the business, $35,000.

1.    Paid rent for period of June 1 to end of month, $4,750.

6.    Purchased office equipment on account, $14,100.

8.    Purchased a van for $28,500 paying $4,500 cash and giving a note payable for the remainder.

10.    Purchased supplies for cash, $2,380.

12.    Received cash for job completed, $12,200.

15.    Paid annual premiums on property and casualty insurance, $3,600.

23.    Recorded jobs completed on account and sent invoices to customers, $11,900.

24.    Received an invoice for van expenses, to be paid in June, $1,500.

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

June 29. Paid utilities expense, $3,100.

29.    Paid miscellaneous expenses, $950.

30.    Received cash from customers on account, $7,330.

30.    Paid wages of employees, $5,070.

30.    Paid creditor a portion of the amount owed for equipment purchased on June 6, $6,825.

30.    Withdrew cash for personal use, $1,600.

Instructions

  1. 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.) Explanations may be omitted.

Chapter 2, Problem 3PA, On June 1, 2019, Kris Storey established an interior decorating business, Eco-Centric Designs. , example  1

  1. 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.
  2. 3. Prepare an unadjusted trial balance for Eco-Centric Designs as of June 30, 2019.
  3. 4. Determine the excess of revenues over expenses for June.
  4. 5. Chapter 2, Problem 3PA, On June 1, 2019, Kris Storey established an interior decorating business, Eco-Centric Designs. , example  2 Can you think of any reason why the amount determined in (4) might not be the net income for June?

1.

To determine

Journalize the transactions in a two column journal beginning on Page 1.

Explanation of Solution

Journal:

Journal is the book of original entry. Journal consists of the day today financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

Journalize each transaction in a two column journal beginning on Page 1.

                                                   Journal                                           Page          1    
DateDescriptionPost. RefDebit ($)Credit ($)
2019 Cash1135,000 
June1    Storey K, Capital31 35,000
  (To record the transfer of cash from personal bank account to business account)   
 
 1Rent expense534,750 
      Cash11 4,750
  (To record the payment of rent for the month of June)   
      
 6Equipment   1614,100 
      Accounts payable22 14,100
  (To record the purchase of equipment on account)   
 
 8Van1828,500 
      Cash11 4,500
      Notes payable21 24,000
  (To record the purchase of van by cash and on account)   
 
 10Supplies132,380 
      Cash11 2,380
  (To record the purchase of supplies)   
 
 12Cash1112,200 
       Fees earned41 12,200
  (To record the receipt of cash for the completed job)   
 
 15Prepaid insurance143,600 
      Cash11 

2.

To determine

Post the journal to a ledger of four-column accounts with appropriate post references, and the balances after each transaction is posted.

3.

To determine

Prepare an unadjusted trial balance of EC Designs as of June 30, 2019.

4.

To determine

Calculate the excess of revenues over expenses for the month of June.

5.

To determine

Discuss the reason behind the amount determined in (4) might not be the net income for June.

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Chapter 2 Solutions

Financial Accounting
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