Question

On October 1, 2018, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business:

Oct.	1	Jay transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $32,800.
	4	Paid rent for period of October 4 to end of month, $3,180.
	10	Purchased a used truck for $27,000, paying $3,000 cash and giving a note payable for the remainder.
	13	Purchased equipment on account, $12,790.
	14	Purchased supplies for cash, $2,200.
	15	Paid annual premiums on property and casualty insurance, $4,920.
	15	Received cash for job completed, $13,780.

Enter the following transactions on Page 2 of the two-column journal:

	21	Paid creditor a portion of the amount owed for equipment purchased on October 13, $4,560.
	24	Recorded jobs completed on account and sent invoices to customers, $15,680.
	26	Received an invoice for truck expenses, to be paid in November, $1,440.
	27	Paid utilities expense, $1,640.
	27	Paid miscellaneous expenses, $590.
	29	Received cash from customers on account, $6,560.
	30	Paid wages of employees, $4,360.
	31	Paid dividends, $3,640.

Required:

1. Journalize and insert the posting references for each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. For a compound transaction, if an amount box does not require an entry, leave it blank.

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

General Journal				Page 1
Date	Description	Post. Ref.	Debit	Credit
2018
Oct. 1	Cash
	Common Stock
Oct. 4	Rent Expense
	Cash
Oct. 10	Truck
	Cash
	Notes Payable
Oct. 13	Equipment
	Accounts Payable
Oct. 14	Supplies
	Cash
Oct. 15
Oct. 15

General Journal				Page 2
Date	Description	Post. Ref.	Debit	Credit
2018
Oct. 21
Oct. 24
Oct. 26
Oct. 27
Oct. 27
Oct. 29
Oct. 30
Oct. 31

2. Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in the general journal as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. If an amount box does not require an entry, leave it blank.

General Ledger
Account	Cash				ACCOUNT NO.	11
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 1		1
Oct. 4		1
Oct. 10		1
Oct. 14		1
Oct. 15		1
Oct. 15		1
Oct. 21		2
Oct. 27		2
Oct. 27		2
Oct. 29		2
Oct. 30		2
Oct. 31		2

Account	Accounts Receivable				ACCOUNT NO.	12
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 24		2
Oct. 29		2

Account	Supplies				ACCOUNT NO.	13
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 14		1

Account	Prepaid Insurance				ACCOUNT NO.	14
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 15		1

Account	Equipment				ACCOUNT NO.	16
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 13		1

Account	Truck				ACCOUNT NO.	18
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 10		1

Account	Notes Payable				ACCOUNT NO.	21
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 10		1

Account	Accounts Payable				ACCOUNT NO.	22
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 13		1
Oct. 21		2
Oct. 26		2

Account	Common Stock				ACCOUNT NO.	31
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 1		1

Account	Dividends				ACCOUNT NO.	33
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 31		2

Account	Fees Earned				ACCOUNT NO.	41
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 15		1
Oct. 24		2

Account	Wages Expense				ACCOUNT NO.	51
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 30		2

Account	Rent Expense				ACCOUNT NO.	53
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 4		1

Account	Utilities Expense				ACCOUNT NO.	54
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 27		2

Account	Truck Expense				ACCOUNT NO.	55
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 26		2

Account	Miscellaneous Expense				ACCOUNT NO.	59
					Balance
Date	Item	Post. Ref.	Debit	Credit	Debit	Credit
2018
Oct. 27		2

Feedback

1. Identify which accounts are affected in each transaction. Keep in mind that every transaction involves at least two accounts. Determine whether the account increases or decreases and record each increase or decrease following the rules of debit and credit. Use the Posting Reference column to enter the corresponding account number from the general ledger account. Remember total debits should equal total credits in your entries.

2. See the illustration in Exhibit 4 below. The 4-column accounts ledger is a more formal presentation of the T accounts. The Posting Reference column should have the page number from the journal where the transaction is found. The debits and credits for each journal entry are posted to the accounts in the order in which they occur in the journal. After each entry, subtotal the 4-column ledger, making sure to maintain the correct normal balance and double-checking any non-normal balances to see if they are valid or possible.

	Journal Entry Account
Common Transaction Terminology	Debit	Credit
Received cash for services provided	Cash	Fees Earned
Services provided on account	Accounts Receivable	Fees Earned
Received cash on account	Cash	Accounts Receivable
Purchased on account	Asset account	Accounts Payable
Paid on account	Accounts Payable	Cash
Paid cash	Asset or expense account	Cash
Issued common stock	Cash and/or other assets	Common Stock
Paid dividends	Dividends	Cash

Learning Objective 1, Learning Objective 2, Learning Objective 3 and Learning Objective 4.

3. Prepare an unadjusted trial balance for Intrex Designs 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. The first two account titles are filled in as an example.

Pioneer Designs Unadjusted Trial Balance October 31, 2018
	Debit Balances	Credit Balances
Cash
Accounts Receivable
Totals

4. Determine the excess of revenues over expenses for October.
$

Answer 1

Date       Particulars                 Post ref.               Dr.            Cr.

Oct. 1:   Cash                            11                    Dr. 32800                     

              Common Stock            31                                      Cr. 32800

Oct.4 : Rent Expense               53                  dr. 3180

              Cash                               11                                        cr. 3180

Oct. 10: Truck                             18                      dr. 30000

               Cash                              11                                          cr. 3000

               Notes payable             21                                          cr. 27000

Oct. 13: Equipment                    16                       Dr. 12790

               Account payable          22                                cr. 12790

Oct. 14 : Supplies                        13                       dr. 2200

               Cash                               11                                   cr. 2200

Oct. 15 : Prepaid Insurace         14                       dr. 4920

               Cash                               11                                   cr. 4920

Oct. 15 : Cash                               11                       dr. 13780

              Fees Earned                    41               cr. 13780

Oct. 21: Account payable         22                dr. 4560

               Cash                               11                        cr. 4560

Oct. 24   Accounts receivable    12         Dr. 15680

               Fees earned                  41                      Cr. 15680

Oct. 26   Truck Expense              55                          Dr. 1440

                Account payable         22                                     Cr.1440

Oct 27   Utilities Expense           54                  Dr. 1640

                 Cash                              11                            Cr. 1640

Oct. 27   Misc. Expenses            59                    Dr. 590

                 Cash                             11                                  Cr. 590

Oct. 29   Cash                               11                      Dr. 6560

                Account rececivable   12                                Cr. 6560

Oct. 30 Wages                          51                     Dr. 4360

                Cash                              11                               Cr. 4360

Oct. 31   Dividends                     33                         Dr. 3640

               Cash                               11                                 Cr. 3640

General Ledger Account Cash ACCOUNT NO. 11 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 1 Common Stock 12 32800 Oct. 4 Rent Expense 53 3180 Oct. 10 Truck 18 3000 Oct. 14 Supplies 13 2200 Oct. 15 Prepaid Insurance 14 4920 Oct. 15 Fee earned 41 13780 Oct. 21 Accounts Payable 22 4560 Oct. 27 Utilities Expense 54 1640 Oct. 27 Miscellaneous Expense 27 590 Oct. 29 Accounts Receivable 29 6560 0 Oct. 30 Wages Expense 30 4360 Oct. 31 Dividends 31 3640 25050 53140 28090 Account Accounts Receivable ACCOUNT NO. 12 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 24 Fees Earned 41 15680 Oct. 29 Cash 11 6560 9120 Account Supplies ACCOUNT NO. 13 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 14 Cash 13 2200 2200 Account Prepaid Insurance ACCOUNT NO. 14 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 15 Cash 11 4920 4920 Account Equipment ACCOUNT NO. 16 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Accounts Payable 22 12790 12790 Oct. 13 1 Account Truck ACCOUNT NO. 18 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 10 Cash 11 3000 Oct. 10 Notes Payable 21 27000 30000 Account Notes Payable ACCOUNT NO. 21 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 10 truck 18 27000 27000 Account Accounts Payable ACCOUNT NO. 22 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 13 Equipment 16 12790 Oct. 21 Cash 11 4560 Oct. 26 Truck Expense 55 1440 9670 Account Common Stock ACCOUNT NO. 31 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 1 Cash 11 32800 32800 Account Dividends ACCOUNT NO. 33 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 31 Cash 11 3640 3640 Account Fees Earned ACCOUNT NO. 41 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 15 Cash 11 13780 Oct. 24 Accounts Receivable 12 15680 29460 Account Wages Expense ACCOUNT NO. 51 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 30 Cash 11 4360 4360 Account Rent Expense ACCOUNT NO. 53 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 4 Cash 11 3180 3180 Account Utilities Expense ACCOUNT NO. 54 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 27 Cash 11 1640 1640 Account Truck Expense ACCOUNT NO. 55 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 26 Accounts Payable 22 1440 0 1440 0 Account Miscellaneous Expense ACCOUNT NO. 59 Balance Date Item Post. Ref. Debit Credit Debit Credit 2018 Oct. 27 Cash 11 590 590
5) Excess of revenue over expenditure is fee earned minus supplies, utilities, rent, wages, misc. exp, truck expenses = 16050 (dividend is not considered as its is not an expenditure but an appropriation of profits)
Trial Balance Dr. Cr. Cash 25050 Truck 30000 Account receivable 9120 Prepaid Insurance 4920 Equipment 12790 Common stock 32800 Account payable 9670 Notes payable 27000 Truck Exp 1440 Misc. Exp 590 Utilities 1640 Supplies 2200 Dividend 3640 Rent 3180 Wages 4360 Fee earned 29460 98930 98930