Question

On October 1, 20Y6, Jay Crowley established Affordable Realty, which completed the following transactions during the month: Oct. 1 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. 2 Paid rent on office and equipment for the month, $4,800. 3 Purchased supplies on account, $2,150. 4 Paid creditor on account, $1,100. 5 Earned sales commissions, receiving cash, $18,750. 6 Paid automobile expenses (including rental charge) for month, $1,580, and miscellaneous expenses, $800. 7 Paid office salaries, $3,500. 8 Determined that the cost of supplies used was $1,300. 9 Paid dividends, $1,500.

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, 20Y6.

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

Answer:-

1.

(a)	Cash	40,000
	Common Stock		40,000
(b)	Rent Expense	4,800
	Cash		4,800
(c)	Supplies	2,150
	Accounts Payable		2,150
(d)	Accounts Payable	1,100
	Cash		1,100
(e)	Cash	18,750
	Sales Commissions		18,750
(f)	Automobile Expense	1,580
	Miscellaneous Expense	800
	Cash		2,380
(g)	Office Salaries Expense	3,500
	Cash		3,500
(h)	Supplies Expense	1,300
	Supplies		1,300
(i)	Dividends	1,500
	Cash		1,500

2.

Sales Commissions (e) 18,750 (a) (e) Cash 40,000 (b) 18,750 (d) (f) (g) (0) 45,470 4,800 1,100 2,380 3,500 1,500 Rent Expense 4,800 (b) Bal. Office Salaries Expense 3,500 1,300 (c) Bal. (9) Supplies 2,150 (h) 850 Accounts Payable 1,100 (c) Bal. Common Stock (d) Automobile Expense 1,580 (1) 2,150 1,050 T(a) 40,000 (h) Supplies Expense 1,300 Miscellaneous Expense 800 Dividends 1,500 (1)

3.

	Affordable Realty Unadjusted Trial Balance October 31, 20Y6
		Debit Balances	Credit Balances
	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
		59,800	59,800

4.

a. $18,750

$11,980 ($4,800 + $3,500 + $1,580 + $1,300 + $800)

$6,770 ($18,750 – $11,980)

5.

$5,270, which is the excess of net income of $6,770 over the dividends of $1,500.