Question

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, $24,500.
	4.	Paid rent for period of June 4 to end of month, $2,380.
	6.	Purchased a truck for $20,000, paying $2,000 cash and giving a note payable for the remainder.
	8.	Purchased equipment on account, $9,560.
	10.	Purchased supplies for cash, $1,640.
	12.	Paid annual premiums on property and casualty insurance, $3,680.
	15.	Received cash for job completed, $10,290.

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

	23.	Paid creditor a portion of the amount owed for equipment purchased on June 13, $3,410.
	24.	Recorded jobs completed on account and sent invoices to customers, $11,710.
	25.	Received an invoice for truck expenses, to be paid in July, $1,080.
	26.	Paid utilities expense, $1,230.
	27.	Paid miscellaneous expenses, $440.
	28.	Received cash from customers on account, $4,900.
	29.	Paid wages of employees, $3,260.
	30.	Withdrew cash for personal use, $2,720.

Required:

1. Journalize 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. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. For a compound transaction, if an amount box does not require an entry, leave it blank.

11 Cash	31 Kris Storey, Capital
12 Accounts Receivable	32 Kris Storey, Drawing
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

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.

3. Prepare an unadjusted trial balance for Eco-Centric Designs as of June 30, 2019. For those boxes in which no entry is required, leave the box blank. The first two account titles are filled in as an example.

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?

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

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

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

4. Additions to capital has been wrongly recorded as drawings.

Answer 1

SOLUTION:- JOURNAL IN THE BOOKS OF KRIS STOREY:-

DATE	PARTICULARS	DEBIT	CREDIT
JUNE 1	BANK A/C TIO CAPITAL A/C BRING CAPITAL INTRODUCED IN THE BUSINESS.	24500	24500
JUNE 4	RENT A/C TO BANK Beinf rent paid in cash	2380	2380
June 6	Truck A/C TO Bank To note payable   being truck purchased for the business.	20000	2000 18000
June 8	Equipment A/C To creditors being equipment purchaed on account	9560	9560
June 10	purchases a/c to cash being goods purchased on cash	1640	1640
June 12	premium expenses a/c to cash being premium expenses of property and casualty expenses paid in cash	3680	3680
June 15	cash a/c to sales being cash received for job completed.	10290	10290
June 23	creditors a/c to cash being creditors of the equipment paid in cash	3410	3410
June 24	debtors a/c to sales being sales made on credit	11710	11710
June 25	truck expenses a/c to truck expenses outstanding	1080	1080
June 26	expenses a/c to cash being expenses paid in cash	1230	1230
June 27	miscellaneous expenses a/c to cash being miscellaneous expenses paid in cash	440	440
June 28	cash a/c to debtors being cash received from customers	4900	4900
June 29	wages a/c to cash being wages paid in cash	3260	3260
June 30	drawings a/c to cash being cash withdrew for personal use	2720	2720