Question

On October 1, 2018, Jay Crowley established Affordable Realty, which completed the following transactions during the month: Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for Common Stock, $27,000. Paid rent on office and equipment for the month, $4,870. Purchased supplies on account, $1,440. Paid creditor on account, $530. Earned sales commissions, receiving cash, $22,140. Paid automobile expenses (including rental charge) for month, $1,350, and miscellaneous expenses, $910. Paid office salaries, $2,830. Determined that the cost of supplies used was $800. Paid dividends, $1,310. Required: 1. Journalize entries for transactions (a) through (i) (in chronological order), 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. For a compound transaction, 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 the journal entries to these T accounts, selecting the appropriate letter to the left of each amount to identify the transactions. Determine the account balances of the T accounts (when required), after all posting is complete. Accounts containing a single entry only (such as Common Stock) 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 October 31, 2018. 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. Affordable Realty Unadjusted Trial Balance October 31, 2018 Debit Balances Credit Balances 4. As a result of the January transactions (a-i), 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 October. $ 5. Determine the increase or decrease in retained earnings for October. $

Answer 1

Affordable Realty
Req 1
Journal entries
Date	Account	Debit	Credit
a	Cash	$     27,000
	Common Stock		$     27,000
b	Rent expense	$        4,870
	Cash		$        4,870
c	Supplies	$        1,440
	Accounts Payable		$        1,440
d	Accounts Payable	$           530
	Cash		$           530
e	Cash	$     22,140
	Sales Commissions		$     22,140
f	Automobile Expense	$        1,350
	Miscellaneous Expense	$           910
	Cash		$        2,260
g	Office Salaries Expense	$        2,830
	Cash		$        2,830
h	Supplies Expense	$           800
	Supplies		$           800
i	Dividends	$        1,310
	Cash		$        1,310

Req 3	Unadjusted TB
Account Names	Debit	Credit
Cash	37,340
Supplies	640
Accounts Payable		910
Common Stock		27,000
Dividends	1,310
Sales Commissions		22,140
Rent Expense	4,870
Office Salaries Expense	2,830
Automobile Expense	1,350
Supplies Expense	800
Miscellaneous Expense	910
Totals	50,050	50,050

	Affordable Realty
Req 4a	Amount of total revenue recorded in the ledger
	Sales Commissions	22,140
Req 4b	Amount of total expenses recorded in the ledger
	Rent Expense	4,870
	Office Salaries Expense	2,830
	Automobile Expense	1,350
	Supplies Expense	800
	Miscellaneous Expense	910
	Amount of total expenses recorded in the ledger	10,760
Req 4c	Amount of net income for October
	Total Revenue	22,140
	Total Expenses	(10,760)
	Amount of net income for October	11,380
Req 5	Increase or decrease in retained earnings for Oct
	Net Income	11,380
Less	Dividends	(1,310)
	Increase or decrease in retained earnings for Oct	10,070