Question

In: Accounting

On June 1, 2019, Kris Storey established an interior decorating business, Eco-Centric Designs. During the month,...

On June 1, 2019, Kris Storey established an interior decorating business, Eco-Centric Designs. During the month, Kris completed the following transactions related to the business:

June 1 Kris transferred cash from a personal bank account to an account to be used for the business, $35,000.
1 Paid rent for period of June 1 to end of month, $4,750.
6 Purchased office equipment on account, $14,100.
8 Purchased a van for $28,500 paying $4,500 cash and giving a note payable for the remainder.
10 Purchased supplies for cash, $2,380.
12 Received cash for job completed, $12,200.
15 Paid annual premiums on property and casualty insurance, $3,600.
23 Recorded jobs completed on account and sent invoices to customers, $11,900.
24 Received an invoice for van expenses, to be paid in June, $1,500.

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

June 29 Paid utilities expense, $3,100.
29 Paid miscellaneous expenses, $950.
30 Received cash from customers on account, $7,330.
30 Paid wages of employees, $5,070.
30 Paid creditor a portion of the amount owed for equipment purchased on June 6, $6,825.
30 Withdrew cash for personal use, $1,600.
Required:
1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the post reference numbers until you have posted the entry to the general ledger in part 2.)
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.
3. Prepare an unadjusted trial balance for Eco-Centric Designs as of June 30, 2019.
4. Determine the excess of revenues over expenses for June.
5. Can you think of any reason why the amount determined in (4) might not be the net income for June?
CHART OF ACCOUNTS
Eco-Centric Designs
General Ledger
ASSETS
11 Cash
12 Accounts Receivable
13 Supplies
14 Prepaid Insurance
16 Equipment
18 Van
LIABILITIES
21 Notes Payable
22 Accounts Payable
EQUITY
31 Kris Storey, Capital
32 Kris Storey, Drawing
REVENUE
41 Fees Earned
EXPENSES
51 Wages Expense
53 Rent Expense
54 Utilities Expense
55 Van expense
59 Miscellaneous Expense

1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the post reference numbers until you have posted the entry to the general ledger in part 2.)

How does grading work?

PAGE 1

JOURNAL

ACCOUNTING EQUATION

Score: 228/257

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

?

?

?

?

2

?

?

?

3

?

?

?

?

4

?

?

?

5

?

?

?

?

6

?

?

?

7

?

?

?

?

8

?

?

?

9

?

?

?

10

?

?

?

?

11

?

?

?

12

?

?

?

?

13

?

?

?

14

?

?

?

?

15

?

?

?

16

?

?

?

?

17

?

?

?

18

?

19

?

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.

Question not attempted.

LEDGER

Score: 0/376

Account: Cash11Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

11

12

Account: Accounts Receivable12Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

2

Account: Supplies13Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Prepaid Insurance14Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Equipment16Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Van18Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Notes Payable21Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Accounts Payable22Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

2

3

Account: Kris Storey, Capital31Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Kris Storey, Drawing32Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Fees Earned41Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

2

Account: Wages Expense51Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Rent Expense53Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Utilities Expense54Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Van expense55Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

Account: Miscellaneous Expense59Account No.

DATE ITEM POST. REF. DEBIT CREDIT BALANCE
DEBIT CREDIT

1

3. Prepare an unadjusted trial balance for Eco-Centric Designs as of June 30, 2019.

Question not attempted.

Eco-Centric Designs

UNADJUSTED TRIAL BALANCE

Score: 0/67

June 30, 2019

ACCOUNT TITLE DEBIT CREDIT

1

Cash

2

Accounts Receivable

3

Supplies

4

Prepaid Insurance

5

Equipment

6

Van

7

Notes Payable

8

Accounts Payable

9

Kris Storey, Capital

10

Kris Storey, Drawing

11

Fees Earned

12

Wages Expense

13

Rent Expense

14

Utilities Expense

15

Van expense

16

Miscellaneous Expense

17

Totals

4. Determine the excess of revenues over expenses for June.

Points:

0 / 1

5. Can you think of any reason why the amount determined in (4) might not be the net income for June?

Check all that apply.

Additions to capital has been wrongly recorded as drawings.

Fees earned includes some fees earned in the month of June that have not been received.

Utilities expense includes expenses incurred for the month of June than have not yet been paid.

Some supplies may have been used during June but no supplies expense has been recorded.

Solutions

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