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
Oct. 4
Oct. 10
Oct. 13
Oct. 14
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

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.
$

5. Why the amount determined in above might not be the net income for October?

Because the dividends are declared but not paid

Because the cash balance is incorrect.

Because the closing inventory balance is missing

Because necessary adjustment to expenses, like depreciation has not been made.

Answer 1

Answer 1.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1-Oct	Cash	32,800.00
	Common Stock		32,800.00
	(Record the common Stock issued)
4-Oct	Rent Expense	3,180.00
	Cash		3,180.00
	(Record the rent paid)
10-Oct	Truck	27,000.00
	Cash		3,000.00
	Notes Payable		24,000.00
	(record the purcahse of truck)
13-Oct	Equipment	12,790.00
	Accounts Payable		12,790.00
	(Record the purchase of equipment)
14-Oct	Supplies	2,200.00
	Cash		2,200.00
	(record the supplies purcahsed)
15-Oct	Prepaid Insurance	4,920.00
	Cash		4,920.00
	(Record the insurance paid)
15-Oct	Cash	13,780.00
	Fees Earned		13,780.00
	(record the fees earned)
21-Oct	Accounts Payable	4,560.00
	Cash		4,560.00
	(Record the cash paid)
24-Oct	Accounts Receivable	15,680.00
	Fees Earned		15,680.00
	(record the fees earned)
26-Oct	Truck Expense	1,440.00
	Accounts Payable		1,440.00
	(record the truck expense)
27-Oct	Utilities Expense	1,640.00
	Cash		1,640.00
	(record the utilities expense)
27-Oct	Miscellaneous Expense	590.00
	Cash		590.00
	(record the Misc. expense)
29-Oct	Cash	6,560.00
	Accounts Receivable		6,560.00
	(record the cash recd)
30-Oct	Wages Expense	4,360.00
	Cash		4,360.00
	(record the wages expense)
31-Oct	Dividends	3,640.00
	Cash		3,640.00
	(record the dividends paid)

Answer 2.

Cash

Accounts Receivable

Supplies

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

1-Oct

32,800.00

32,800.00

Dr.

24-Oct

15,680.00

15,680.00

Dr.

14-Oct

2,200.00

2,200.00

Dr.

4-Oct

3,180.00

29,620.00

Dr.

29-Oct

6,560.00

9,120.00

Dr.

10-Oct

3,000.00

26,620.00

Dr.

14-Oct

2,200.00

24,420.00

Dr.

15-Oct

4,920.00

19,500.00

Dr.

15-Oct

13,780.00

33,280.00

Dr.

21-Oct

4,560.00

28,720.00

Dr.

27-Oct

1,640.00

27,080.00

Dr.

27-Oct

590.00

26,490.00

Dr.

29-Oct

6,560.00

33,050.00

Dr.

30-Oct

4,360.00

28,690.00

Dr.

31-Oct

3,640.00

25,050.00

Dr.

Prepaid Insurance

Equipment

Truck

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

15-Oct

4,920.00

4,920.00

Dr.

13-Oct

12,790.00

12,790.00

Dr.

10-Oct

27,000.00

27,000.00

Dr.

Notes Payable

Accounts Payable

Common Stock

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

10-Oct

24,000.00

24,000.00

Cr.

13-Oct

12,790.00

12,790.00

Cr.

1-Oct

32,800.00

32,800.00

Cr.

24,000.00

Cr.

21-Oct

4,560.00

8,230.00

Cr.

32,800.00

Cr.

24,000.00

Cr.

26-Oct

1,440.00

9,670.00

Cr.

32,800.00

Cr.

Dividends

Fees Earned

Wages Expense

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

31-Oct

3,640.00

3,640.00

Dr.

15-Oct

13,780.00

13,780.00

Cr.

30-Oct

4,360.00

4,360.00

Dr.

3,640.00

Dr.

24-Oct

15,680.00

29,460.00

Cr.

4,360.00

Dr.

Rent Expense

Utilities Expense

Truck Expense

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

Date

Debit

Credit

Balance

4-Oct

3,180.00

3,180.00

Dr.

27-Oct

1,640.00

1,640.00

Dr.

26-Oct

1,440.00

1,440.00

Dr.

Miscellaneous Expense

Date

Debit

Credit

Balance

27-Oct

590.00

590.00

Dr.

Answer 3.
Pioneer Designs
Unadjusted Trial Balance
As of Oct 31, 2018
	Debit	Credit
Cash	25,050.00
Accounts Receivable	9,120.00
Supplies	2,200.00
Prepaid Insurance	4,920.00
Equipment	12,790.00
Truck	27,000.00
Notes Payable		24,000.00
Accounts Payable		9,670.00
Common Stock		32,800.00
Dividends	3,640.00
Fees Earned		29,460.00
Wages Expense	4,360.00
Rent Expense	3,180.00
Utilities Expense	1,640.00
Truck Expense	1,440.00
Miscellaneous Expense	590.00
Totals	95,930.00	95,930.00
		-
Answer 4.
Income Statement
For the Month Ended Oct 21, 2018
Revenue
Fees Earned		29,460.00
Expense
Wages Expense	4,360.00
Rent Expense	3,180.00
Utilities Expense	1,640.00
Truck Expense	1,440.00
Miscellaneous Expense	590.00	11,210.00
Net Operating Income		18,250.00
Answer 5.
Because necessary adjustment to expenses, like depreciation has not been made.