70.2K

Verified Solution

Link Copied!

On November 1, 2016, Patty Cosgrove established an interior decorating business, Classic Designs. During the month, Patty completed the following transactions related to the business:

Nov.	1	Patty transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $26,000.
	1	Paid rent for period of November 1 to end of month, $4,000.
	6	Purchased office equipment on account, $12,820.
	8	Purchased a truck for $31,750 paying $6,900 cash and giving a note payable for the remainder.
	10	Purchased supplies for cash, $1,760.
	12	Received cash for job completed, $8,000.
	15	Paid annual premiums on property and casualty insurance, $2,300.
	23	Recorded jobs completed on account and sent invoices to customers, $12,120.
	24	Received an invoice for truck expenses, to be paid in November, $1,250.

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

Nov.	29	Paid utilities expense, $3,460.
	29	Paid miscellaneous expenses, $1,800.
	30	Received cash from customers on account, $7,500.
	30	Paid wages of employees, $4,750.
	30	Paid creditor a portion of the amount owed for equipment purchased on November 6, $6,040.
	30	Paid dividends, $2,000.

	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.) Refer to the Chart of Accounts for exact wording of account titles.
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 Classic Designs as of November 30, 2016.
4.	Determine the excess of revenues over expenses for November.
5. Can you think of any reason why the amount determined in (4) might not be the net income for November? 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.) Refer to the Chart of Accounts for exact wording of account titles. JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 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. LEDGER Account: Cash11Account No. Account: Accounts Receivable12Account No. Account: Supplies13Account No. Account: Prepaid Insurance14Account No. Account: Equipment16Account No. Account: Truck18Account No. Account: Notes Payable21Account No. Account: Accounts Payable22Account No. Account: Common Stock31Account No. Account: Dividends33Account No. Account: Fees Earned41Account No. Account: Wages Expense51Account No. Account: Rent Expense53Account No. Account: Utilities Expense54Account No. Account: Truck Expense55Account No. Account: Miscellaneous Expense59Account No. 3. Prepare an unadjusted trial balance for Classic Designs as of November 30, 2016. Classic Designs UNADJUSTED TRIAL BALANCE November 30, 2016 ACCOUNT TITLE DEBIT CREDIT 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Insurance 5 Equipment 6 Truck 7 Notes Payable 8 Accounts Payable 9 Common Stock 10 Dividends 11 Fees Earned 12 Wages Expense 13 Rent Expense 14 Utilities Expense 15 Truck Expense 16 Miscellaneous Expense 17 Totals 4. Determine the excess of revenues over expenses for November. 5. Can you think of any reason why the amount determined in (4) might not be the net income for November? Some supplies used during November, but supplies expense recorded.

Answer & Explanation Solved by verified expert

See Answer