On November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs. During the month, Kris completed the following transactions related to the business:
Nov. | 1 | Kris transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $36,000. |
1 | Paid rent for period of November 1 to end of month, $4,000. | |
6 | Purchased office equipment on account, $16,000. | |
8 | Purchased a truck for $43,000 paying $4,300 cash and giving a note payable for the remainder. | |
10 | Purchased supplies for cash, $1,860. | |
12 | Received cash for job completed, $8,000. | |
15 | Paid annual premiums on property and casualty insurance, $2,400. | |
23 | Recorded jobs completed on account and sent invoices to customers, $15,500. | |
24 | Received an invoice for truck expenses, to be paid in November, $1,250. |
Enter the following transactions on Page 2 of the two-column journal:
Nov. | 29 | Paid utilities expense, $3,660. |
29 | Paid miscellaneous expenses, $1,700. | |
30 | Received cash from customers on account, $10,500. | |
30 | Paid wages of employees, $4,750. | |
30 | Paid creditor a portion of the amount owed for equipment purchased on November 6, $4,000. | |
30 | Paid dividends, $1,600. |
using the |
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||
Modern Designs | |||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||
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******Question
Determine the excess of revenues over expenses for November. |
1)
Journal Entries: | |||
Date | Accounts Titles and Explanations | Debit | Credit |
Nov. 1 | Cash | $36,000 | |
Common Stock | $36,000 | ||
(To record the cash invested into the business to start up) | |||
Nov. 1 | Prepaid Rent | $4,000 | |
Cash | $4,000 | ||
(To record the prepayment of rent) | |||
Nov. 6 | Office Equipment | $16,000 | |
Accounts Payable | $16,000 | ||
(To record the purchase of equipment on account) | |||
Nov. 8 | Truck | $43,000 | |
Cash | $4,300 | ||
Note Payable ($43,000 - $4,300) | $38,700 | ||
(To record the purchase of Truck by cash and by credit) | |||
Nov. 10 | Supplies | $1,860 | |
Cash | $1,860 | ||
(To record the purchase of supplies for cash) | |||
Nov. 12 | Cash | $8,000 | |
Fees Earned | $8,000 | ||
(To record the receipt of cash on completion of job) | |||
Nov. 15 | Prepaid Insurance | $2,400 | |
Cash | $2,400 | ||
(To record the annual payment of insurance expense) | |||
Nov. 23 | Accounts Receivable | $15,500 | |
Fees Earned | $15,500 | ||
(To record the completion of jobs and sent invoices to customers) | |||
Nov. 24 | Truck Expense | $1,250 | |
Accounts Payable | $1,250 | ||
(To record the truck expenses on account) | |||
Nov. 29 | Utilities Expense | $3,660 | |
Cash | $3,660 | ||
(To record the payment of utilities expense) | |||
Nov. 29 | Miscellaneous Expense | $1,700 | |
Cash | $1,700 | ||
(To record the payment of miscellaneous expense) | |||
Nov. 30 | Cash | $10,500 | |
Accounts Receivable | $10,500 | ||
(To record the collection of receivables from customers) | |||
Nov. 30 | Wage Expenses | $4,750 | |
Cash | $4,750 | ||
(To record the payment of wage expenses) | |||
Nov. 30 | Accounts Payable | $4,000 | |
Cash | $4,000 | ||
(To record payment for the amount owed for equipment purchased) | |||
Nov. 30 | Dividends | $1,600 | |
Cash | $1,600 | ||
(To record the payment of dividends by cash) |
2)
Ledger Accounts:
Cash Account No. 11 | Balance | |||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
Nov. 1 | Common Stock | $36,000 | $36,000 | |||
Nov. 1 | Prepaid Rent | $4,000 | $32,000 | |||
Nov. 8 | Truck | $4,300 | $27,700 | |||
Nov. 10 | Supplies | $1,860 | $25,840 | |||
Nov. 12 | Fees Earned | $8,000 | $33,840 | |||
Nov. 15 | Prepaid Insurance | $2,400 | $31,440 | |||
Nov. 29 | Utilities Expenses | $3,660 | $27,780 | |||
Nov. 29 | Miscellaneous Expense | $1,700 | $26,080 | |||
Nov. 30 | Accounts Receivable | $10,500 | $36,580 | |||
Nov. 30 | Wage Expenses | $4,750 | $31,830 | |||
Nov. 30 | Accounts Payable | $4,000 | $27,830 | |||
Nov. 30 | Dividends | $1,600 | $26,230 | |||
Accounts Receivable Account No. 12 | Balance | |||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
Nov. 23 | Fees Earned | $15,500 | $15,500 | |||
Nov. 30 | Cash | $10,500 | $5,000 | |||
Supplies Account No. 13 | Balance | |||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
Nov. 10 | Cash | $1,860 | $1,860 | |||
Prepaid Insurance Account No. 13 | Balance | |||||
Date | Item | Post. Ref. | Debit | Credit | Debit | Credit |
Nov. 15 | Cash | $2,400 | $2,400 |
Fees Earned ($8,000 + $15,500) | $23,500 |
Less: Expenses: | |
Truck Expenses | $1,250 |
Utilities Expenses | $3,660 |
Miscellaneous Expense | $1,700 |
Wage Expenses | $4,750 |
Dividends | $1,600 |
Rent Expense | $4,000 |
Insurance Expense ($2,400 / 12) | $200 |
Net Income | $6,340 |
The excess of revenues are $6,340 over the expenses.
On November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs. During the month,...
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