Question

Instructions Chart of Accounts Journal T Accounts Unadjusted Trial Balance Final Questions Instructions On October 1, 2018, Jay Crowley established Affordable Realty, which completed the following transactions during the month: Oct 1 2 3 4 5 6 Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $40,000. Paid rent on office and equipment for the month, $4,800. Purchased supplies on account, $2,150. Paid creditor on account, $1,100. Earned sales commissions, receiving cash, $18,750. Paid automobile expenses (including rental charge) for month, $1,580, and miscellaneous expenses, $800. Paid office salaries, $3,500. Determined that the cost of supplies used was $1,300. Paid dividends, $1,500. 7 8 9 1. Journalize entries for transactions Oct. 1 through 9. Refer to the Chart of Accounts for exact wording of account titles. 2. Post the journal entries to the T accounts, selecting the appropriate date to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete Accounts containing only a single entry do not need a balance. 3. Prepare an unadjusted trial balance as of October 31, 2018 4. Determine the following: a. Amount of total revenue recorded in the ledger b. Amount of total expenses recorded in the ledger c Amount of net income for October 5. Determine the increase or decrease in retained earnings for October

Answer 1

Requirement 1:

Journal				Accounting Equation
Date	Account title and Explanation	Debit	Credit	Assets	Liabilities	Equity
Oct.1	Cash	$40,000		+
	Common stock		$40,000			+
	[To record issuance of common stock]
Oct.2	Rent expense	$4,800				+
	Cash		$4,800	-
	[To record payment of rent expense]
Oct.3	Supplies	$2,150		+
	Accounts payable		$2,150		-
	[To record purchase of office supplies on account]
Oct.4	Accounts payable	$1,100			-
	Cash		$1,100	-
	[To record payment to creditors]
Oct.5	Cash	$18,750		+
	Sales commissions		$18,750			+
	[To record revenue]
Oct.6	Automobile expense	$1,580				-
	Miscellaneous expense	$800				-
	Cash		$2,380	-
	[To record payment of expenses]
Oct.7	Office salaries expense	$3,500				-
	Cash		$3,500	-
	[To record payment of office salaries expense]
Oct.8	Supplies expense	$1,300				-
	Supplies		$1,300	-
	[To record supplies used]
Oct.9	Dividends	$1,500				-
	Cash		$1,500	-
	[To record payment of dividends]

Requirement 2:

Cash
Oct.1	$40,000	Oct.2	$4,800
Oct.5	$18,750	Oct.4	$1,100
		Oct.6	$2,380
		Oct.7	$3,500
		Oct.9	$1,500
Bal.	$45,470
Supplies
Oct.3	$2,150	Oct.8	$1,300
Bal.	$850
Accounts pyable
Oct.4	$1,100	Oct.3	$2,150
		Bal.	$1,050
Common stock
		Oct.1	$40,000
Dividends
Oct.9	$1,500
Sales commissions
		Oct.5	$18,750
Rent expense
Oct.2	$4,800
Office salaries expense
Oct.7	$3,500
Automobile expense
Oct.6	$1,580
Supplies expense
Oct.8	$1,300
Miscellaneous expense
Oct.6	$800

Requirement 3:

UNADJUSTED TRIAL BALANCE
October 31,2018
Account title	Debit	Credit
Cash	$45,470
Supplies	$850
Accounts payable		$1,050
Common stock		$40,000
Dividends	$1,500
Sales commissions		$18,750
Rent expense	$4,800
Office Salaries expense	$3,500
Automobile expense	$1,580
Supplies expense	$1,300
Miscellaneous Expense	$800
Totals	$59,800	$59,800

Requirement 4:

a	Revenues:
	Sales commissions	$18,750
	Total Revenues		$18,750
b	Expenses:
	Rent expense	$4,800
	Office Salaries expense	$3,500
	Automobile expense	$1,580
	Supplies expense	$1,300
	Miscellaneous Expense	$800
	Total Expenses		$11,980
c	Net income (a-b)		$6,770

Requirement 5:

Net increase in retained earnings is $6,770