Journal entries and trial balance
On November 1.2019, Lexi Martin established an interior decorating
business, Heritage Designs During the month. Lexi completed the
following transactions related to the business:
Nov. 1. Lexi transferred cash from a personal bank account to an
account to be used for the business in exchange for common stock,
$50,000.
1. Paid rent for period of November 1 to end of month, $4,000.
6. Purchased office equipment on account $ 15.000.
8. Purchased a truck for $38,500 paying 55,000 cash and giving a note
payable for the remainder.
10. Purchased supplies for cash, $1.750.
12. Received cash for job completed, $11.500.
15. Paid annual premiums on property and casualty insurance, $2,400.
23. Recorded jobs completed on account and sent invoices to
customers, $22,300.
24. Received an invoice for truck expenses, to be paid in November,
$1,250.
Enter the following transactions on Page 2 of the tow-column journal:
29. Paid utilities expense, $4,500
29. Paid miscellaneous expenses, $1,000.
30. Received cash from customers on account $9,000.
30. Paid wages of employees, $6,800.
30. Paid creditor a portion of the amount owed for equipment
purchased on November 6, $3,000.
30. Paid dividends, $2,500.
Instructions
1. Journalize each transaction in a two-column journal beginning on
Page I. 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.) Explanations may he omitted.
11 Cash
12 Accounts Receivable
13 Supplies
14 Prepaid Insurance 16 Equipment
18 Truck
21 Notes Payable
22 Accounts Payable
31 Common Stock
33 Dividends
41 Fees Earned
51 Wages Expense
53 Rent Expense
54 Utilities Expense
55 Truck Expense
59 Miscellaneous Expense
2. Post lite journal to a ledger of four-column accounts, inserting
appropriate posting references 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 Heritage Designs as of
November 30. 2019.
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?