Question

On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month:

Jan.	1	Sharon Matthews transferred cash from a personal bank account to an account to be used for the business, $31,500.
	2	Paid rent on office and equipment for the month, $2,750.
	3	Purchased supplies on account, $2,350.
	4	Paid creditor on account, $800.
	5	Earned fees, receiving cash, $16,160.
	6	Paid automobile expenses (including rental charge) for month, $1,640, and miscellaneous expenses, $450.
	7	Paid office salaries, $2,400.
	8	Determined that the cost of supplies used was $1,150.
	9	Withdrew cash for personal use, $2,000.

Required:

1.	Journalize entries for transactions Jan. 1 through 9. Refer to the Chart of Accounts for exact wording of account titles.
2.	Post the journal entries to the T accounts, selecting the appropriate date to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance.
3.	Prepare an unadjusted trial balance as of January 31, 2019.
4.	Determine the following: a. Amount of total revenue recorded in the ledger. b. Amount of total expenses recorded in the ledger. c. Amount of net income for January.
5.	Determine the increase or decrease in owner’s equity for January.

Answer 1

Solution 1:

Journal Entries - Tri City Reality
Date	Particulars	Debit	Credit
1-Jan	Cash Dr	$31,500.00
	To Owner's capital		$31,500.00
	(To record cash invested in business)
2-Jan	Rent Expense Dr	$2,750.00
	To Cash		$2,750.00
	(To record payment of rent)
3-Jan	Supplies Dr	$2,350.00
	To Accounts payable		$2,350.00
	(To record purchase of supplies on account)
4-Jan	Accounts payable Dr	$800.00
	To Cash		$800.00
	(To record payment to creditors)
5-Jan	Cash Dr	$16,160.00
	To Fees earned		$16,160.00
	(To record cash received for fees)
6-Jan	Automobile expenses Dr	$1,640.00
	Miscellenous expenses Dr	$450.00
	To Cash		$2,090.00
	(To record expenses)
7-Jan	Salaries Expense Dr	$2,400.00
	To Cash		$2,400.00
	(To record office salaries)
8-Jan	Supplies expense Dr	$1,150.00
	To Supplies		$1,150.00
	(To record supplies consumed)
9-Jan	Owner Drawings Dr	$2,000.00
	To Cash		$2,000.00
	(To record cash withdrawl for personal use)

Solution 2:

Cash
Date	Debit	Date	Credit
1-Jan	$31,500.00	2-Jan	$2,750.00
5-Jan	$16,160.00	4-Jan	$800.00
		6-Jan	$2,090.00
		7-Jan	$2,400.00
		9-Jan	$2,000.00
		Ending Balance	$37,620.00
Total	$47,660.00	Total	$47,660.00

Rent Expense
Date	Debit	Date	Credit
2-Jan	$2,750.00

Owner's Capital
Date	Debit	Date	Credit
		1-Jan	$31,500.00

Supplies
Date	Debit	Date	Credit
3-Jan	$2,350.00	8-Jan	$1,150.00
		Ending Balance	$1,200.00
Total	$2,350.00	Total	$2,350.00

Accounts payable
Date	Debit	Date	Credit
4-Jan	$800.00	3-Jan	$2,350.00
Ending Balance	$1,550.00
Total	$2,350.00	Total	$2,350.00

Fees Earned
Date	Debit	Date	Credit
		5-Jan	$16,160.00

Automobile Expenses
Date	Debit	Date	Credit
6-Jan	$1,640.00

Miscellenous Expenses
Date	Debit	Date	Credit
6-Jan	$450.00

Salaries expenses
Date	Debit	Date	Credit
7-Jan	$2,400.00

Supplies Expense
Date	Debit	Date	Credit
8-Jan	$1,150.00

Owner Drawings
Date	Debit	Date	Credit
9-Jan	$2,000.00

Solution 3:

Tricity Reality
Unadjusted Trial Balance
As on January 31, 2019
Account title	Debit	Credit
Cash	$37,620.00
Owner's Capital		$31,500.00
Owner's Drawings	$2,000.00
Rent expense	$2,750.00
Supplies	$1,200.00
Accounts payable		$1,550.00
Fees Earned		$16,160.00
Automobile Expense	$1,640.00
Miscellenous expense	$450.00
Salaries Expense	$2,400.00
Supplies expense	$1,150.00
Total	$49,210.00	$49,210.00

Solution 4:

Amount of total revenue = $16,160

Amount of total expenses = $2,750 + $1,640 + $450 + $2,400 + $1,150

= $8,390

Net Income = Revenue - expenses = $16,160 - $8,390 = $7,770

Solution 5:

Increase or decrease in owner's equity = Net Income - drawings = $7,770 - $2,000 - $5,770 increase