Question

Journal Entries and Trial Balance

On August 1, 20Y7, Rafael Masey established Planet Realty, which completed the following transactions during the month:

1. Rafael Masey transferred cash from a personal bank account to an account to be used for the business in exchange for Common Stock, $18,000.
2. Purchased supplies on account, $980.
3. Earned sales commissions, receiving cash, $15,120.
4. Paid rent on office and equipment for the month, $3,330.
5. Paid creditor on account, $360.
6. Paid dividends, $890.
7. Paid automobile expenses (including rental charge) for month, $920, and miscellaneous expenses, $620.
8. Paid office salaries, $1,940.
9. Determined that the cost of supplies used was $540.

Required:

1. Journalize entries for transactions (a) through (i), using the following account titles: Cash, Supplies, Accounts Payable, Common Stock, Dividends, Sales Commissions, Rent Expense, Office Salaries Expense, Automobile Expense, Supplies Expense, Miscellaneous Expense. If an amount box does not require an entry, leave it blank.

a.
b.
c.
d.
e.
f.
g.
h.
i.

2. Prepare T accounts, using the account titles in (1). Post (in chronological order) the journal entries to these accounts, selecting the appropriate letter 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.

Cash
Bal.

Supplies
Bal.

Accounts Payable
		Bal.

Common Stock

Dividends

Sales Commissions

Rent Expense

Office Salaries Expense

Automobile Expense

Supplies Expense

Miscellaneous Expense

3. Prepare an unadjusted trial balance as of August 31, 20Y7. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. For those boxes in which no entry is required, leave the box blank.

Planet Realty
Unadjusted Trial Balance
August 31, 20Y7
	Debit Balances	Credit Balances

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 August.
$

5. Determine the increase or decrease in retained earnings for August.
$    

Answer 1

1
(a)	Cash	$18,000
	Common Stock		$18,000
(b)	Supplies	$980
	Accounts Payables		$980
(c)	Cash	$15,120
	Sales Commission		$15,120
(d)	Rent Expense	$3,330
	Cash		$3,330
(e)	Accounts Payables	$360
	Cash		$360
(f)	Dividends	$890
	Cash		$890
(g)	Automobile Expense	$920
	Miscellaneus Expense	$620
	Cash		$1,540
(h)	Office Salaries Expense	$1,940
	Cash		$1,940
(i)	Supplies Expense	$540
	Supplies		$540

2 CASH (a) $18,000 (d) $3,330 (c) $15,120 (e) $360 (f) $890 (g) $1,540 (h) $1,940 Bal. $25,060 Supplies (b) $980 (i) $540 Bal. $440 A/C Payables (e) $360 (b) $980 Bal. $620 Common Stock (a) $18,000 Dividends (f) $890 Sales Commission (c) $15,120 Rent Expense (d) $3,330 Office Salaries Exp. (h) $1,940 Automobile Exp. (g) $920 Supplies Exp. (i) $540 Miscellaneous Exp. (g) $620

3	Planet Realty Unadjusted Trial Balance August 31, 20Y7
		Debit Balances	Credit Balances
	Assets
	Cash	$25,060
	Supplies	$440
	Liabilities
	Accounts Payables		$620
	Shareholders' Equity
	Common Stock		$18,000
	Dividends	$890
	Revenues
	Sales Commissions		$15,120
	Expenses
	Rent Exp.	$3,330
	Office Salaries Exp.	$1,940
	Automobile Exp.	$920
	Supplies Exp.	$540
	Miscellaneous Exp.	$620
	TOTALS	$33,740	$33,740
4
(a)	Total Revenue
	Sales Commission	$15,120
(b)	Total Expense
	Rent Exp.	$3,330
	Office Salaries Exp.	$1,940
	Automobile Exp.	$920
	Supplies Exp.	$540
	Miscellaneous Exp.	$620
		$7,350
(c)	Net Income
	Total Revenue	$15,120
	Total Expense	$7,350
		$7,770
5	Changes in Retained Earnings
	Net Income	$7,770
	Dividend Distributed	$890
	Increase	$6,880