John’s House Painting Company has the following transactions for the year 1. D

Question

John’s House Painting Company has the following transactions for the year

1. December 1 – Issued capital stock for $100,000 to start a house painting business.

2. December 1 - Paid one year insurance premium costing $4,800.

3. December 1 - Paid gas expense $200.

4. December 1 - Purchased equipment costing $4,800 on credit.

5. December 12 - Purchased supplies costing $800 on credit.

6. December 18 - Painted three houses totaling $12,000 and billed customers.

7. December 23 - Painted three rooms and billed customers $500.

8. December 28 - Received $2,000 for houses painted in #6.

9. December 31 - Paid for equipment purchased in #4.

10. December 31 - Received $1,000 for a job to paint a house in January next year.

11. December 31 - Paid a $1,000 dividend.

Required:

5. Prepare an Adjusted Trial Balance.

6. Prepare an Income Statement, Statement of Retained Earnings and a Balance Sheet.

Explanation / Answer

1Dec Cash Dr 100,000 Issue of COmmon Stock Cr 100,000 1Dec Insu Prem Dr 4800 Cash Cr 4800 1Dec Gas exp Dr 200 Cash Cr 200 1Dec Eqpt A/C Dr 4800 Acct Payable Cr 4800 12Dec Supplis Dr 800 Acct Payable Cr 800 18Dec Acct Rxable Dr 12000 Paint Rev Cr 12000 23Dec Accr Rx Dr 500 Piant Rec Cr 500 28 Dec Cash Dr 2000 Acct Rx Cr 2000 31Dec Acct PayableDr 4800 Cash Cr 4800 31Dec Cash Dr 1000 Unearned Paint Rev Cr 1000 31Dec Dividen Dr 1000 Cash 10

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