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, $35,000.
	1	Paid rent for period of June 1 to end of month, $4,750.
	6	Purchased office equipment on account, $14,100.
	8	Purchased a van for $28,500 paying $4,500 cash and giving a note payable for the remainder.
	10	Purchased supplies for cash, $2,380.
	12	Received cash for job completed, $12,200.
	15	Paid annual premiums on property and casualty insurance, $3,600.
	23	Recorded jobs completed on account and sent invoices to customers, $11,900.
	24	Received an invoice for van expenses, to be paid in June, $1,500.

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

June	29	Paid utilities expense, $3,100.
	29	Paid miscellaneous expenses, $950.
	30	Received cash from customers on account, $7,330.
	30	Paid wages of employees, $5,070.
	30	Paid creditor a portion of the amount owed for equipment purchased on June 6, $6,825.
	30	Withdrew cash for personal use, $1,600.

	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

Prepare journal entries as follows:

Date	Account Titles	Debit	Credit
Jun. 01	Cash	$35,000
	Kris, capital		$35,000
Jun. 01	Rent Expense	$4,750
	Cash		$4,750
Jun. 06	Office Equipment	$14,100
	Accounts payable		$14,100
Jun. 08	Van	$28,500
	Cash		$4,500
	Notes payable		$24,000
Jun. 10	Supplies	$2,380
	Cash		$2,380
Jun. 12	Cash	$12,200
	Fees Earned		$12,200
Jun. 15	Prepaid Insurance	$3,600
	Cash		$3,600
Jun. 23	Accounts Receivable	$11,900
	Fees Earned		$11,900
Jun. 24	Van Expense	$1,500
	Cash		$1,500

Date	Account Titles	Debit	Credit
Jun. 29	Utility Expense	$3,100
	Cash		$3,100
Jun. 29	Miscellaneous Expense	$950
	Cash		$950
Jun. 30	Cash	$7,330
	Accounts Receivable		$7,330
Jun. 30	Wages Expense	$5,070
	Cash		$5,070
Jun. 30	Accounts payable	$6,825
	Cash		$6,825
Jun. 30	Kris, Withdrawals	$1,600
	Cash		$1,600

_______________________________________________________

Trial Balance
Cash	$20,255
Accounts receivable	$4,570
Supplies	$2,380
Prepaid Insurance	$3,600
Equipment	$14,100
Van	$28,500
Notes payable		$24,000
Accounts payable		$7,275
Kris, capital		$35,000
Kris, Withdrawals	$1,600
Fees Earned		$24,100
Wages Expense	$5,070
Rent Expense	$4,750
Utility Expense	$3,100
Miscellaneous Expense	$950
Van Expense	$1,500
	$90,375	$90,375

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Compute Excess of revenue over expenes:

Fees Earned		$24,100
Less: Expenses
Wages Expense	$5,070
Rent Expense	$4,750
Utility Expense	$3,100
Miscellaneous Expense	$950
Van Expense	$1,500	$15,370
Excess revenue over expense		$8,730

____________________________________________________

5.)

Net Income will be calculated after adjustment entries like depreciation, supplies expense, insurance expense etc. Therefore the above Income is not correct.