Question

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
ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck LIABILITIES 21 Notes Payable 22 Accounts Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends	REVENUE 41 Fees Earned EXPENSES 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense

******Question

Determine the excess of revenues over expenses for November.

Answer 1

As per revenue recognition revenue should be recognized in period they are performed. (even if not paid)

expenses should be recorded when they are accrued.

REVENUE
Job revenue	$8000	November 12
	$15500	November 23
Expenses
Rent	4000$	November 1
Premium on property and casualty Insurance	$200	November 15 $2400 annual premium/12 months * 1 month november
Truck expense	$1250	November 24
Utility expense	$3660	Nov 29
Miscellaneous expense	$1700	Nov 29
wages	$4750	Nov 30
Net Revenue over expenses	$7940	[8000+15500-4000-200-1250-3660-1700-4750]