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.

2.	Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in both the journal and the ledger as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted.

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

LEDGER

Account: Cash Account No.11

	DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
						DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12

Accounts receivable account nr 12

DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
					DEBIT	CREDIT
1
2

Supplies 13

DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
					DEBIT	CREDIT
1

prepaid insurance 14

DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
					DEBIT	CREDIT
1

Equipment 16

1 row

Truck 18

1 row

Notes Payable 21

1 row

Accounts Payable 22

3 rows

Common Stock 31

1 row

Dividends 33

1row

Fees Earned 41

3 rows

Wages Expense 51

1row

Rent Expense 53

1row

Utilities Expense 54

1row

Truck Expense 55

1row

Miscellaneous Expense 59

1row

Answer 1

Modern Designs Journal Enteries Debit in $ Credit in $ Particulars Date 1.11.2018 Cash a/c 36000 Dri To Common Stock 36000 (Common Stock issued for cash) 1.11.2018 Rent Expense a/c Dr. 4000 To Cash 4000 (Rent paid in cash) 5.11.2018 Office Equipment a/c Dr 16000 To Accounts Payable 16000 (Purchased office Equip. on account) 8.11.2018 Truck a/c 43000 Dr. To Cash 4300 To Note Payable 38700 (Truck Purchased) 10.11.2018 Supplies a/c 1860 Dr. To Cash 1860 (Supplies purchased for cash) 12.11.2018 Cash a/c 8000 Dr To Service Revenue 8000 (Service provided for cash) 15.11.2018 Prepaid Insurance a/c Dr 2400 To Cash 2400 (Annual insurance paid) 23.11.2018 Accounts Receivable a/c Dr. 15500 To Service Revenue 15500 (Services provided on account) 24.11.2018 Truck Expenses a/c To Accounts Payable Dr 1250 1250 (Truck expense accrued) 29.11.2018 Utilities Expense a/c Dr 3660 To Cash 3660 (Utilities Expenses paid) 29.11.2018 Miscellaneous Expense a/c Dr. 1700 To Cash 1700 (Miscellaneous expense paid) 30.11.2018 Cash a/c Dr 10500 To Accounts Receivable 10500 (Cash received from debtors) 30.11.2018 Wages Expense a/c 4750 Dr To Cash 4750 Wages paid in cash) 30.11.2018 Accounts Payable a/c Dr. 4000 To Cash 4000 (Creditors paid) 30.11.2018 Dividends a/c Dr. 1600 1600 (Dividends paid in cash)

Trial Balance For the period ending 30.11.2018 Debit in $ Credit in $ Particulars Cash 26230 Accounts Receivable 5000 Prepaid Insurance 2400 Supplies 1860 Truck 43000 Office Equipment 16000 Accounts Payable Note Payable 13250 38700 36000 Common Stock Dividends 1600 Service Revenue 23500 Rent Expense 4000 Truck Expenses 1250 Utilities Expense 3660 Miscellaneous Expense 1700 Wages Expense 4750 Totals 111450 111450

Cash 36000 Rent Expense 8000 Truck 10500 Supplies Common Stock 4000 4300 Service Revenue Accounts Receivable 1860 Prepaid Insurance 2400 Utilities Expense Miscellaneous Expense 3660 1700 Wages Expense Accounts Payable Dividends 4750 4000 1600 Bal. 26230 54500 54500 Accounts Receivable 15500 Cash 10500 Service Revenue Bal. 5000 15500 15500 Prepaid Insurance Cash 2400 Bal 2400 2400 2400 Supplies Cash 1860 Bal 1860 1860 1860 Truck 4300 Cash Note Payable 38700 Bal. 43000 43000 43000 Office Equipment Accounts Payable 16000 Bal 16000 16000 16000 Accounts Payable 4000 Office Equipment 16000 Cash 13250 Truck Expenses Bal. 1250 17250 17250 Note Payable Truck 38700 Bal. 38700 38700 38700 Common Stock Cash 36000 Bal. 36000 36000 36000 Dividends 1600 Cash Bal 1600 1600 1600

Service Revenue Cash 8000 23500 Accounts Receivable Bal 15500 23500 23500 Rent Expense Cash 4000 Bal 4000 4000 4000 Truck Expenses Accounts Payable 1250 Bal. 1250 1250 1250 Utilities Expense Cash 3660 Bal. 3660 3660 3660 Miscellaneous Expense 1700 Cash Bal 1700 1700 1700 Wages Expense Cash 4750 Bal 4750 4750 4750