On June 1, 2019, Kris Storey established an interior decorating business, Eco-Ce

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.

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

Required:

1. Journalize each transaction in a two-column journal, beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. For a compound transaction, if an amount box does not require an entry, leave it blank.

59 Miscellaneous Expense

2. Post (in chronological order) the journal to a ledger of four-column accounts, inserting appropriate posting references in the general journal as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. If an amount box does not require an entry, leave it blank.

3. Prepare an unadjusted trial balance for Eco-Centric Designs as of June 30, 2019. For those boxes in which no entry is required, leave the box blank. The first two account titles are filled in as an example.

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?

1. Fees earned includes some fees earned in the month of June that have not been received.

2. Utilities expense includes expenses incurred for the month of June than have not yet been paid

3. Some supplies may have been used during June but no supplies expense has been recorded.

4. Additions to capital has been wrongly recorded as drawings.

June 1. Kris transferred cash from a personal bank account to an account to be used for the business, $24,500. 4. Paid rent for period of June 4 to end of month, $2,380. 6. Purchased a truck for $20,000, paying $2,000 cash and giving a note payable for the remainder. 8. Purchased equipment on account, $9,560. 10. Purchased supplies for cash, $1,640. 12. Paid annual premiums on property and casualty insurance, $3,680. 15. Received cash for job completed, $10,290.

Explanation / Answer

SOLUTION:- JOURNAL IN THE BOOKS OF KRIS STOREY:-

BANK A/C

TIO CAPITAL A/C

BRING CAPITAL INTRODUCED IN THE BUSINESS.

RENT A/C

TO BANK

Beinf rent paid in cash

Truck A/C

TO Bank

To note payable  

being truck purchased for the business.

2000

18000

Equipment A/C

To creditors

being equipment purchaed on account

purchases a/c

to cash

being goods purchased on cash

premium expenses a/c

to cash

being premium expenses of property and casualty expenses paid in cash

cash a/c

to sales

being cash received for job completed.

creditors a/c

to cash

being creditors of the equipment paid in cash

debtors a/c

to sales

being sales made on credit

truck expenses a/c

to truck expenses outstanding

expenses a/c

to cash

being expenses paid in cash

miscellaneous expenses a/c

to cash

being miscellaneous expenses paid in cash

cash a/c

to debtors

being cash received from customers

wages a/c

to cash

being wages paid in cash

drawings a/c

to cash

being cash withdrew for personal use

DATE PARTICULARS DEBIT CREDIT JUNE 1

BANK A/C

TIO CAPITAL A/C

BRING CAPITAL INTRODUCED IN THE BUSINESS.

24500 24500 JUNE 4

RENT A/C

TO BANK

Beinf rent paid in cash

2380 2380 June 6

Truck A/C

TO Bank

To note payable  

being truck purchased for the business.

20000

2000

18000

June 8

Equipment A/C

To creditors

being equipment purchaed on account

9560 9560 June 10

purchases a/c

to cash

being goods purchased on cash

1640 1640 June 12

premium expenses a/c

to cash

being premium expenses of property and casualty expenses paid in cash

3680 3680 June 15

cash a/c

to sales

being cash received for job completed.

10290 10290 June 23

creditors a/c

to cash

being creditors of the equipment paid in cash

3410 3410 June 24

debtors a/c

to sales

being sales made on credit

11710 11710 June 25

truck expenses a/c

to truck expenses outstanding

1080 1080 June 26

expenses a/c

to cash

being expenses paid in cash

1230 1230 June 27

miscellaneous expenses a/c

to cash

being miscellaneous expenses paid in cash

440 440 June 28

cash a/c

to debtors

being cash received from customers

4900 4900 June 29

wages a/c

to cash

being wages paid in cash

3260 3260 June 30

drawings a/c

to cash

being cash withdrew for personal use

2720 2720

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