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

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.