Question

2 HW Problem Show Me How business, $40,000 3 Purchased supplies on account, $3,200 4 Paid creditor on account $1,750 $420 8 Determined that the cost of supplies used was $1,400 9 Withdrew cash for

Answer 1

Requirement 1: Journal entries

Jan, 2019

1 . Cash ac Dr 40000

To Capital ac 40000

(Being capital introduced into business by Sharon)

2. Rent on office building ac Dr . 6000

To Cash ac 6000

(Being rent on office equipment paid)

3. Supplies on hand ac Dr. 3200

To Accounts payable 3200

(Being supplies purchased on account)

4. Accounts payable . Dr . 1750

To Cash. 1750

( Being accounts payable settled in cash to the extent of $1750)

5. Cash ac Dr 18250

To Earned fees ac 18250

( Being fees earned and received received in cash)

6. Automobile expense ac. Dr. 1880

Miscellaneous expense ac. Dr. 420

To Cash ac 2300

(Being expenses paid)

7. Salaries ac. Dr. 5000

To Cash ac. 5000

( Being salary paid in cash)

8. Profit and loss ac. Dr 1400

To Supplies on hand ac. 1400

(Being cost of supplies ascertained and charged to profit and loss account assumed to be passed on 8th itself)

9. Capital ac. Dr. 2000

To Cash ac. 2000

( Being cash withdrawn by owner)

Note: profit and loss account means income statement

Requirement 2: Ledger accounts

Cash Account

Jan 2019		$	Jan 2019		$
1	To capital	40000	2	By rent on office equipment	6000
5	To Earned fees	18250	4	By accounts payable	1750
			6	By automobile expenses	1880
			6	By miscellaneous expenses	420
			7	By salary	5000
			9	By capital	2000
			31	By balance c/d	41200
		58250			58250

Capital account

Jan 2019		$	Jan 2019		$
9	to cash	2000	1	by cash	40000
31	to balance c/d	38000
		40000			40000

Rent on office building

Jan 2019		$	jan 2019		$
	To Cash	6000

Supplies on hand account

Jan 2019		$	jan 2019		$
3	to accounts payable	3200	8	by profit and loss account	1400
				By balance cd	1800
		3200			3200

Accounts payable account

Jab 2019		$	Jan 2019		$
4	to cash	1750	3	by supplies	3200
31	to balance cd	1450
		3200			3200

Earned fees account

Jan 2019		$	Jan 2019		$
			5	by cash	18250

Automobile expense account

Jan 2019		$	Jan 2019		$
6	To Cash	1880

Miscellaneous expenses account

Jan 2019		$	Jan 2019		$
	To Cash	420

Salary account

Jan 2019		$	Jan 2019		$
	To Cash	5000

Requirement 3: unadjusted trial balance

	Dr	Cr
Cash	41200
Capital		38000
Supplies	3200
Accounts payable		1450
Rent on office equipment	6000
Earned fees		18250
Automobile expenses	1880
Miscellaneous expenses	420
Salary	5000
Total	57700	57700

Requirement 4:

A. Total revenue recorded in ledger= earned fees= $18250

B . Total expense recorded in ledger= 6000+ 1400+ 1880+ 420+ 5000= $14700

C. Net income= A-B= $3550

Note the cost of supplies is taken to calculate the expenses. Closing balance of supplies does not apply to this period.

Requirement 5: there is only a withdrawal of $2000. Therefore owners equity has a balance of $38000 now.