Question

Journal Entries and Trial Balance

On October 1, 20Y6, 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, $27,600.
	4.	Paid rent for period of October 4 to end of month, $2,680.
	10.	Purchased a used truck for $23,000, paying $2,000 cash and giving a note payable for the remainder.
	13.	Purchased equipment on account, $10,760.
	14.	Purchased supplies for cash, $1,850.
	15.	Paid annual premiums on property and casualty insurance, $4,140.
	15.	Received cash for job completed, $11,590.

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

Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 20Y6. For those boxes in which no entry is required, leave the box blank. The first two account titles are filled in as an example.

Pioneer Designs Unadjusted Trial Balance October 31, 20Y6
	Debit Balances	Credit Balances

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3. The trial balance is prepared from the ending balances of the ledger accounts. Be careful to put the debit balances in the Debit column and the credit balances in the Credit column. Remember the trial balance column totals should be equal.

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?

1. Fees earned includes some fees earned in the month of October that have not been received.
2. Utilities expense includes expenses incurred for the month of October than have not yet been paid.
3. Some supplies may have been used during October but no supplies expense has been recorded.
4. Additions to capital has been wrongly recorded as drawings.

	21.	Paid creditor a portion of the amount owed for equipment purchased on October 13, $3,840.
	24.	Recorded jobs completed on account and sent invoices to customers, $13,190.
	26.	Received an invoice for truck expenses, to be paid in November, $1,210.
	27.	Paid utilities expense, $1,380.
	27.	Paid miscellaneous expenses, $500.
	29.	Received cash from customers on account, $5,520.
	30.	Paid wages of employees, $3,670.
	31.	Withdrew cash for personal use, $3,060.

Answer 1

Post ref Debit Credit Pioneer Designs Journal entries Date Description Page 1 1-Oct Cash Jay Pryor, Capital GL1 $ 27,600 GL1 $ 27,600 4-Oct GL1 $ 2,680 Rent Expense Cash GL1 $ 2,680 GL1 $ 23,000 10-Oct Truck Cash Notes Payable GL1 $ 2,000 $ 21,000 GL1 $ 10,760 13-Oct Equipment Accounts Payable GL1 GL1 $ 10,760 $ 1,850 14-Oct Supplies Cash GL1 GL1 $ 1,850 GL1 $ 4,140 15-Oct Prepaid Insurance Cash GL1 $ 4,140 GL1 $ 11,590 GL1 $ 11,590 15-Oct Cash Fees Earned Page 2 21-Oct Accounts Payable Cash GL2 $ 3,840 GL2 $ 3,840 GL2 $ 13,190 24-Oct Accounts Receivable Fees Earned GL2 $ 13,190 $ 1,210 26-Oct Truck Expense Accounts Payable GL2 GL2 $ 1,210 GL2 $ 1,380 27-Oct Utilities Expense Cash GL2 $ 1,380 GL2 $ 500 27-Oct Miscellaneous Expense Cash GL2 $ 500 GL2 $ 5,520 29-Oct Cash Accounts Receivable GL2 $ 5,520 $ 3,670 30-Oct Wages Expense Cash GL2 GL2 $ 3,670 $ 3,060 31-Oct Jay Pryor, Drawing Cash GL2 GL2 $ 3,060

Balance Debit Credit Credit Date Item Balance Post Ref Debit Credit Debit Credit Accounts Receivable ✓ $ GL2 $ 13,190 $ 13,190 GL2 $ 5,520 $ 7,670 - 1-Oct Balance 24-Oct Fees Earned 29-Oct Cash $ 7,670 Pioneer Designs T Accounts Date Item Post Ref Debit Cash 1-Oct Balance ✓ 1-Oct Jay Pryor, Capital GL1 $ 27,600 4-Oct Rent Expense GL1 10-Oct Truck GL1 14-Oct Supplies GL1 15-Oct Prepaid Insurance GL1 15-Oct Fees Earned GL1 $ 11,590 21-Oct Accounts Payable GL2 27-Oct Utilities Expense GL2 27-Oct Miscellaneous Expense GL2 29-Oct Accounts Receivable GL2 $ 5,520 30-Oct Wages Expense GL2 31-Oct Jay Pryor, Drawing GL2 Supplies 1-Oct Balance V 14-Oct Cash GL1 $ 1,850 $ - $ 27,600 $ 2,680 $ 24,920 $ 2,000 $22,920 $ 1,850 $21,070 $ 4,140 $ 16,930 $ 28,520 $ 3,840 $ 24,680 $ 1,380 $23,300 $ 500 $ 22,800 $ 28,320 $ 3,670 $ 24,650 $ 3,060 $ 21,590 1-Oct Balance $ - $ 1,850 $ 1,850 Prepaid Insurance ✓ GL1 $ 4,140 15-Oct Cash $ $ 4,140 $ 4,140 Equipment 1-Oct Balance 13-Oct Accounts Payable $ $ 10,760 $ $ 23,000 GL1 $ 10,760 Notes Payable V 1-Oct Balance 10-Oct Truck GL1 $ 21,000 $ - $ 10,760 $ 6,920 $ 8,130 1-Oct Balance 1-Oct Cash Jay Pryor, Capital ✓ GL1 Truck 1-Oct Balance ป 10-Oct Cash & Notes Payable GL1 $ 23,000 Accounts Payable $ 1-Oct Balance ✓ $ 21,000 13-Oct Equipment GL1 $ 10,760 21-Oct Cash GL2 $ 3,840 26-Oct Truck Expense GL2 $ 1,210 Jay Pryor, Drawing $ 1-Oct Balance ป $ 27,600 31-Oct Cash GL2 $ 3,060 Wages Expense $ $ 1-Oct Balance ป $11,590 30-Oct Cash GL2 $ 3,670 $ 24,780 Utilities Expense 1-Oct Balance ✓ 27-Oct Cash GL2 $ 1,380 Miscellaneous Expense 1-Oct Balance ป 27-Oct Cash GL2 $ 500 $ $ 3,060 $ 27,600 Fees Earned V 1-Oct Balance GL1 15-Oct Cash 24-Oct Accounts Receivable $ 11,590 $ 13,190 $ - $ 3,670 $ 3,670 1-Oct Balance 4-Oct Cash GL2 Rent Expense ✓ GL1 $ 2,680 Truck Expense ป GL2 $ 1,210 $ $ 2,680 GL2 $ $ 1,380 1-Oct Balance 26-Oct Accounts Payable $ $ 1,210 $ $ 500

Pioneer Designs Account Names Cash Accounts Receivable Supplies Prepaid Insurance Equipment Truck Notes Payable Accounts Payable Jay Pryor, Capital Jay Pryor, Drawing Fees Earned Wages Expense Rent Expense Utilities Expense Truck Expense Miscellaneous Expense Totals Unadjusted TB Debit Credit 21,590 7,670 1,850 4,140 10,760 23,000 21,000 8,130 27,600 3,060 24,780 3,670 2,680 1,380 1,210 500 81,510 81,510

24,780 Pioneer Designs Income Statement For the Month Ended October 31, 2016 Fees Earned Expenses Wages Expense Rent Expense Utilities Expense Truck Expense Miscellaneous Expense Total Expenses Net Income 3,670 2,680 1,380 1,210 500 9,440 15,340 Determine the excess of revenues over expenses for October 15,340 Why the amount determined in above might not be the net income for October? 3. Some supplies may have been used during October but no supplies has been recorded