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On October 1, 2019, 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, $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. 27. Paid miscellaneous expenses, $1,100. Oct. 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. 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, 2019. 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?

BuyFind

Financial Accounting

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

Financial Accounting

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

Solutions

Chapter
Section
Chapter 2, Problem 3PB
Textbook Problem

On October 1, 2019, 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, $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.

27.    Paid miscellaneous expenses, $1,100.

Oct. 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. 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.

Chapter 2, Problem 3PB, On October 1, 2019, Jay Pryor established an interior decorating business, Pioneer Designs. During , 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 Pioneer Designs as of October 31, 2019.
  3. 4. Determine the excess of revenues over expenses for October.
  4. 5. Chapter 2, Problem 3PB, On October 1, 2019, Jay Pryor established an interior decorating business, Pioneer Designs. During , example  2 Can you think of any reason why the amount determined in (4) might not be the net income for October?

Expert Solution

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 Cash1118,000 
October1    Person JP, Capital31 18,000
  (To record the transfer of cash from personal bank account to business account)   
 
 4Rent expense533,000 
      Cash11 3,000
  (To record the payment of rent for the month of June)   
 
 10Truck1823,750 
      Cash11 3,750
      Notes payable21 20,000
  (To record the purchase of truck by cash and on account)   
 
 13Equipment   1610,500 
      Accounts payable22 10,500
  (To record the purchase of equipment on account)   
      
 
 14Supplies132,100 
      Cash11 2,100
  (To record the purchase of supplies)   
 
 15Prepaid insurance143,600 
      Cash11 3,600
  (To record the payment made for insurance premiums)   
 
 15Cash118,950 
   &...
Expert Solution

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.

Expert Solution

3.

To determine

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

Expert Solution

4.

To determine

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

Expert Solution

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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