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, $17,100.
	4	Paid rent for period of October 4 to end of month, $1,660.
	10	Purchased a used truck for $14,000, paying $1,000 cash and giving a note payable for the remainder.
	13	Purchased equipment on account, $6,670.
	14	Purchased supplies for cash, $1,150.
	15	Paid annual premiums on property and casualty insurance, $2,570.
	15	Received cash for job completed, $7,180.

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, $2,380.
	24	Recorded jobs completed on account and sent invoices to customers, $8,170.
	26	Received an invoice for truck expenses, to be paid in November, $750.
	27	Paid utilities expense, $860.
	27	Paid miscellaneous expenses, $310.
	29	Received cash from customers on account, $3,420.
	30	Paid wages of employees, $2,270.
	31	Paid dividends, $1,900.

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.

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 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.

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?

1. Because the dividends are declared but not paid
2. Because the cash balance is incorrect.
3. Because the closing inventory balance is missing
4. Because necessary adjustment to expenses, like depreciation has not been made.

Answer 1