John’s House Painting Company has the following transactions for the year 1. Dec
ID: 2452166 • Letter: J
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 gas expense $500.
3. December 1 - Paid one year insurance premium costing $3,600.
4. December 1 - Received $3,000 for a job to paint a house in January next year.
5. December 1 - Painted three houses totaling $15,000 and billed customers.
6. December 1 - Purchased equipment costing $8,400 on credit.
7. December 12 - Purchased supplies costing $900 on credit.
8. December 23 - Painted three rooms and billed customers $1,500.
9. December 31 - Paid for equipment purchased in #6.
10. December 28 - Received $2,000 for houses painted in #5.
11. December 31 - Paid a $2,000 dividend.
Required:
1. Prepare journal entries for the above transactions.
2. Post the above transactions to T Accounts.
3. Prepare a Trial Balance.
4. Prepare adjusting entries in journal format and post to T Accounts. Supplies on Hand December 31 was $400. The Equipment is to be depreciated over 48 months starting with December. (HINT; Record one month depreciation expense). Wages owed but not paid on December 31 was $600. One month of insurance has expired.
5. Prepare an Adjusted Trial Balance.
6. Prepare an Income Statement, Statement of Retained Earnings and a Balance Sheet.
7. Prepare closing entries in journal format and post to the T Accounts.
8. Prepare a Post-Closing Trial Balance.
Explanation / Answer
1. Journal Entries
Date Particulars Debit Credit 1.12 Bank A/C Dr. $100000 To Capital A/c $100000 (Being Capital Introduced) 1.12 Gas Expenses A/c Dr. $500 To Bank A/c $500 (Being gas expenses paid) 1.12 Insurance expenses A/c Dr. $3600 To Bank A/c $3600 (Being insurance expenses paid) 1.12 Bank A/c Dr. $3000 To Advance against paint job $3000 (Being advance recieved against paint job) 1.12 Debtors A/c Dr. $15000 To Revenue from Paint jobs A/c $15000 (Being Revenue recognised) 1.12 Equipment A/c Dr. $8400 To Supplier A/c $8400 (Being equipment purchased on credit) 12.12 Purchases A/c Dr, $900 To creditors A/c $900 23.12 Debtors A/c Dr. $1500 To Revenue from paint jobs $1500 ( being revenue recognised) 31.12 Supplier A/c Dr. $8400 To Bank A/c $8400 (being amount paid to supplier for equipment) 28.12 Bank A/c Dr $2000 To Debtors A/c $2000 (Being amount recieved from debtors) 31.12 Profit and loss A/c Dr. $2000 To Bank A/c $2000 (Being dividend paid)Related Questions
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