Question

During May, Artisan Stone and Brick laid a stone patio for Louise McCowan for a fee of $1200. The job took one full week, and was completed on May 15th. Artisan will be paid on June 1. Artisan's expenses associated with the job are as follows:
1. Decorative stones, $400. These stones were purchased on account on May 5th. They will be paid for on June 5th.
2. Cement, two $10 bags. The bags were purchased and paid for on April 20th.
3. Wages paid to assistants, $200. These wages were paid at the end of the week, May 15th.
In addition, Artisan spends approximately $600 per month, paid on May 1st for rent, utilities, and insurance for its office. (You can group all into one account, office expense.)

1. Record all transactions for the months of April, May and June.
2. Set up T Accounts for all accounts used in journal and determine the ending balance as of June 30
3. 4 column accounting paper and compute Artisan's profit on the job, using the matching principle. Be sure to properly label all items in the calculation. You can follow an Income Statement format.

Answer 1

		JOURNAL ENTRY
Ref	Date	Account	Debit	Credit
2	20 April	Raw material expense	$20
		Cash		$20
	30 April	Office expense	$600
		Accrued expense		$600
	1 May	Prepaid expense	$1,200
		Accrued expense	$600
		Cash		$1,800
1	5 May	Raw material expense	$400
		Accounts payable		$400
3	15 May	Wages expense	$200
		Cash		$200
	31 May	Office expense	$600
		Prepaid expense		$600
	June1	Cash	$1,200
		Revenue		$1,200
	June5	Accounts payable	$400
		Cash		$400
	30 June	Office expense	$600
		Prepaid expense		$600
		T- ACCOUNTS
		CASH
	Date	Account	Debit	Credit
	20 April	Raw material expense		$20
	1 May	Office expense		$1,800
	15 May	Wages expense		$200
	June1	Cash	$1,200
	June5	Accounts payable		$400
		Ending Balance		$1,220
		PREPAID EXPENSE
	Date	Account	Debit	Credit
	1 May	Cash	$1,200
	31 May	Office expense		$600
	30 June	Office expense		$600
		Endingb Balance	$0
		ACCOUNTS PAYABLE
	Date	Account	Debit	Credit
	5 May	Raw material expense		$400
	June5	Cash	$400
		Ending Balance		$0
		ACCRUED EXPENSE
	Date	Account	Debit	Credit
	30 April	Office expense		$600
	1 May	Cash	$600
		Ending Balance		$0
		RAW MATERIAL EXPENSE
	Date	Account	Debit	Credit
	20 April	Cash	$20
	5 May	Accounts payable	$400
		Ending Balance	$420
		WAGE EXPENSE
	Date	Account	Debit	Credit
	15 May	Cash	$200
		Ending Balance	$200
		OFFICE EXPENSE
	Date	Account	Debit	Credit
	30 April	Accrued expense	$600
	31 May	Prepaid expense	$600
	30 June	Prepaid expense	$600
		Ending Balance	$1,800
		REVENUE
	June1	Cash		$1,200
		Artisan's Profit on the job
		Revenue		$1,200
		Expenses:
		Raw Materials	$420
		Wages	$200
		Office expense	$1,800
		Total expenses		$2,420
		Net Profit/(Loss) on the job		($1,220)