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, $27,250.
	1	Paid rent for period of June 1 to end of month, $3,100.
	6	Purchased office equipment on account, $12,700.
	8	Purchased a van for $31,450 paying $6,300 cash and giving a note payable for the remainder.
	10	Purchased supplies for cash, $1,660.
	12	Received cash for job completed, $9,000.
	15	Paid annual premiums on property and casualty insurance, $2,500.
	23	Recorded jobs completed on account and sent invoices to customers, $12,440.
	24	Received an invoice for van expenses, to be paid in June, $1,390.

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

June	29	Paid utilities expense, $3,660.
	29	Paid miscellaneous expenses, $1,580.
	30	Received cash from customers on account, $8,200.
	30	Paid wages of employees, $4,600.
	30	Paid creditor a portion of the amount owed for equipment purchased on June 6, $6,160.
	30	Withdrew cash for personal use, $2,100.

	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?

Answer 1

Answer 1.
					Journal			Page 1
	Date		Description			Post Ref.	Debit	Credit
	2019
	June	1	Cash A/c			11	27,250
			Kris Storey Capital A/c			31		27,250
		1	Rent A/c			53	3,100
			Cash A/c			11		3,100
		6	Equipment A/c			16	12,700
			Accounts Payable A/c			22		12,700
		8	Van A/c			18	31,450
			Cash A/c			11		6,300
			Notes Payable A/c			21		25,150
		10	Supplies A/c			13	1,660
			Cash A/c			11		1,660
		12	Cash A/c			11	9,000
			Fees Earned A/c			41		9,000
		15	Prepaid Insurance A/c			14	2,500
			Cash A/c			11		2,500
		23	Accounts Receivable A/c			12	12,440
			Fees Earned A/c			41		12,440
		24	Van Expense A/c			55	1,390
			Accounts Payable A/c			22		1,390
					Journal			Page 2
	Date		Description			Post Ref.	Debit	Credit
	2019
	June	29	Utilities Expense A/c			54	3,660
			Cash A/c			11		3,660
		29	Miscellaneous Expense			59	1,580
			Cash A/c			11		1,580
		30	Cash A/c			11	8,200
			Accounts Receivable			12		8,200
		30	Wages Expense A/c			51	4,600
			Cash			11		4,600
		30	Accounts payable A/c			22	6,160
			Cash A/c			11		6,160
		30	Kris Storey Drawing A/c			32	2,100
			Cash A/c			11		2,100
Answer 2.					GENERAL LEDGER
	Account: Cash					Account No.	11
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	1		1	27,250		27,250
		1		1		3,100	24,150
		8		1		6,300	17,850
		10		1		1,660	16,190
		12		1	9,000		25,190
		15		1		2,500	22,690
		29		2		3,660	19,030
		29		2		1,580	17,450
		30		2	8,200		25,650
		30		2		4,600	21,050
		30		2		6,160	14,890
		30		2		2,100	12,790
	Account: Accounts Receivable					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	23		1	12,440		12,440
		30		2		8,200	4,240
	Account: Supplies					Account No.	13
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	10		1	1660		1660
	Account: Prepaid Insurance					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	15	1		2500		2500
	Account: Equipment					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	6	1		12700		12700
	Account: Van					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	8	1		31450		31450
	Account: Notes Payable					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	8	1			25150		25150
	Account: Accounts Payable					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	6		1		12700		12700
		24		1		1390		14090
		30		2	6160			7930
	Account: Kris Storey Capital					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	1		1		27250		27250
	Account: Kris Storey Drawing					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	30		2	2100		2100
	Account: Fees Earned					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	12		1		9000		9000
		23		1		12440		21440
	Account: Wages Expense					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	30		2	4600		4600
	Account: Rent Expense					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	1		1	3100		3100
	Account: Untility Expense					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	29		2	3660		3660
	Account: Van Expense					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	24		1	1390		1390
	Account: Miscellaneous Expense					Account No.	12
	Date		Item	Post Ref.	Debit	Credit	Balance
							Debit	Credit
	2019
	June	29		2	1580		1580

Answer 3.		ECO-CENTRIC DESIGNS Unadjusted Trial Balance June 30, 2019
		Description		Account No.	Debit Balance	Credit Balance
		Cash		11	12790
		Accounts Receivable		12	4240
		Supplies		13	1660
		Prepaid Insurance		14	2500
		Equipment		15	12700
		Van		18	31450
		Notes Payable		21		25150
		Accounts Payable		22		7930
		Kris Storey Capital		31		27250
		Kris Storey Drawings		32	2100
		Fees Earned		41		21440
		Wages Expenses		51	4600
		Rent Expense		53	3100
		Utilities Expense		54	3660
		Van Expense		55	1390
		Miscellaneous Expenses		59	1580
					81770	81770
Answer 4.		Description	Amount (USD)
		Fees Earned	21440
	Minus	Wages Expenses	4600
	Minus	Rent Expense	3100
	Minus	Utilities Expense	3660
	Minus	Van Expense	1390
	Minus	Miscellaneous Expenses	1580
		excess of revenues over expenses for June	7110

Answer 5. Because some of the supplies have been used during the month of June but no supplies expense has been recorded.