Question

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, $26,350.

1 Paid rent for period of June 1 to end of month, $4,000.

6 Purchased office equipment on account, $12,700.

8 Purchased a van for $32,150 paying $6,900 cash and giving a note payable for the remainder.

10 Purchased supplies for cash, $1,760.

12 Received cash for job completed, $8,000.

15 Paid annual premiums on property and casualty insurance, $2,300.

23 Recorded jobs completed on account and sent invoices to customers, $12,000.

24 Received an invoice for van expenses, to be paid in June, $1,190.

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

June 29 Paid utilities expense, $3,560.

29 Paid miscellaneous expenses, $1,700.

30 Received cash from customers on account, $7,500.

30 Paid wages of employees, $4,750.

30 Paid creditor a portion of the amount owed for equipment purchased on June 6, $6,040.

30 Withdrew cash for personal use, $2,000. 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.) 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 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?

Answer 1

Ans 1

	Journal			Page-1
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)
2019
Jun-01	Cash A/c                 Dr.		26350
	To Kris. Capital			26350
Jun-01	Rent Expenses A/c                Dr.		4000
	To Cash A/c			4000
Jun-06	Equipment A/c                      Dr.		12700
	To Accounts Payable A/c			12700
Jun-08	Van A/c                                       Dr.		32150
	To Cash A/c			6900
	To Notes Payable			25250
Jun-10	Supplies A/c                              Dr.		1760
	To Cash			1760
Jun-12	Cash A/c                                     Dr.		8000
	To Fees Earned A/c			8000
Jun-15	Prepaid Insurance A/c           Dr.		2300
	To Cash A/c			2300
Jun-23	Accounts Receivable A/c      Dr.		12000
	To Fees Earned A/c			12000
Jun-24	Van Expenses A/c                    Dr.		1190
	To Accounts Payable			1190
	Journal			Page-2
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)
2019
Jun-29	Utilities Expense A/c             Dr.		3560
	To Cash			3560
Jun-29	Miscelleneous Expenses A/c Dr.		1700
	To Cash A/c			1700
Jun-30	Cash A/c                                  Dr.		7500
	To Accounts Receivable A/c			7500
Jun-30	Wages Expenses A/c            Dr.		4750
	To Cash A/c			4750
Jun-30	Accounts Payable A/c           Dr.		6040
	To Cash A/c			6040
Jun-30	Kris. Drawing A/c                    Dr.		2000
	To Cash A/c			2000

Ans 2

cash Account               Account No.
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)	Balance (Rs.)
2019
Jun-01	Kris. Capital	1	26350		26350
Jun-01	Rent Expenses	1		4000	22350
Jun-08	Van	1		6900	15450
Jun-10	Supplies	1		1760	13690
Jun-12	Fees Earned	1	8000		21690
Jun-15	Prepaid Insurance	1		2300	19390
Jun-29	Utilities Expenses	2		3560	15830
Jun-29	Miscellenous Expenses	2		1700	14130
Jun-30	Accounts Receivable	2	7500		21630
Jun-30	Wages	2		4750	16880
Jun-30	Account Payable	2		6040	10840
Jun-30	Kris. Drawing	2		2000	8840
	Balance				8840
Account Receivalbe             Account No.
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)	Balance (Rs.)
2019
Jun-23	Fees Earned	1	12000		12000
Jun-30	Cash	2		7500	4500
Supplies             Account No.
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)	Balance (Rs.)
2019
Jun-10	Cash	1	1760		1760
Prepaid Insurance             Account No.
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)	Balance (Rs.)
2019
Jun-15	Cash	1	2300		2300
Equipment             Account No.
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)	Balance (Rs.)
2019
Jun-06	Accounts Payable	1	12700		12700
Van             Account No.
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)	Balance (Rs.)
2019
Jun-08	Cash	1	6900		6900
	Notes Payable	1	25250		32150
Notes Payable            Account No.
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)	Balance (Rs.)
2019
Jun-08	Van	1		25250	-25250
					25250
Accounts Payable            Account No.
Date	Description	Ref	Dr. Amount (Rs.)	Cr. Amount (Rs.)	Balance (Rs.)
2019
Jun-06	Equipment	1		12700	-12700
Jun-24	Van Expenses	1		1190	-13890
Jun-30	Cash	2	6040		-7850

Note- Due to limitation of 65000 Characters I am adding remainning answer as Images

Capital Description Account No. Ref Dr. Amount (Rs.) Cr. Amount (Rs.) Balance (Rs.) Date 2019 Jun-01 CAsh 26350 -26350 -26350 Drawing Description Account No. Ref Dr. Amount (Rs.) Cr. Amount (Rs.) Balance (Rs.) Date 2019 Jun-30 Cash 21 2000 2000 2000 Account No. Dr. Amount (Rs.) Cr. Amount (Rs.) Balance (Rs.) Fees Earned Date Description Ref 2019 Jun-12 Fees Earned Jun-23 Accounts Receivable 1 8000 12000 -8000 -20000 Wages Expenses Account No. Description Ref Dr. Amount (Rs.) Cr. Amount (Rs.) | Balance (Rs.) Date 2019 Jun-30 Cash | 2 4750 4750 4750 Rent Expenses Account No. Description Ref Dr. Amount (Rs.) Cr. Amount (Rs.) Balance (Rs.) Date 2019 Jun-01 Cash 1 4000 4000 4000 Utility Expenses Account No. Description Ref Dr. Amount (Rs.) Cr. Amount (Rs.) | Balance (Rs.) Date 2019 Jun-29 Cash 213560 3560 3560 Van Expenses Description Ref Account No. Dr. Amount (Rs.) Cr. Amount (Rs.) Balance (Rs.) Date 2019 Jun-24 Cash 1190 1 1190 1190 Misscleneous Expenses Account No. Description Ref Dr. Amount (Rs.) Cr. Amount (Rs.) Balance (Rs.) Date 2019 Jun-29 Cash 2 1700 1700 1700

Ans 3

Trial Balance Account No. Credit Balance Debit Balance 8840 4500 1760 2300 12700 32150 Cash Account Receivable Supplies Prepaid Insurance Equipment Van Notes Payable Account Payable Kris. Capital Kris. Drawing Fees Earned Wages Expenses Rent Expenses Utilities Expenses Van Expenses Miscellaneous Expenses 25250 7850 26350 2000 20000 4750 4000 3560 1190 1700 Total 79450 79450

Ans 4

Fees Earned 20000 Less: Wages 4750 Rent 4000 Utilities 3560 Van 1190 Miscelleneous 1700 -15200 Net Income 4800

Ans 5

Yes, we think net income calculated in Ans 4 is not correct because in this Values of insurance and Depreciation and as well as supplies are not used.

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