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On October 1, 20Y6, Jay Crowley established Affordable Realty, which completed the following transactions during the month:
Oct. 1 Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $30,600.
Oct. 2 Paid rent on office and equipment for the month, $2,750.
Oct. 3 Purchased supplies on account, $2,350.
Oct. 4 Paid creditor on account, $890.
Oct. 5 Earned sales commissions, receiving cash, $15,800.
Oct. 6 Paid automobile expenses (including rental charge) for month, $1,600, and miscellaneous expenses, $680.
Oct. 7 Paid office salaries, $2,000.
Oct. 8 Determined that the cost of supplies used was $1,150.
Oct. 9 Paid dividends, $2,800.
Required –
1. Journalize entries for transactions Oct. 1 through 9. Refer to the Chart of Accounts for exact wording of account titles.
2. Post the journal entries to the T accounts, selecting the appropriate date to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance.
3. Construct an unadjusted trial balance as of October 31, 20Y6.
4. Determine the following:
a. Amount of total revenue recorded in the ledger.
b. Amount of total expenses recorded in the ledger.
c. Amount of net income for October.
5. Determine the increase or decrease in retained earnings for October.

Respuesta :

anthougo

Answer:

Affordable Realty

1. Journal Entries:

Oct. 1 Debit Cash $30,600

Credit Common Stock $30,600

To record the capital contribution of Jay Crowley.

Oct. 2 Debit Rent Expense $2,750

Credit Cash $2,750

To record the payment for monthly rent.

Oct. 3 Debit Supplies $2,350

Credit Accounts Payable $2,350

To record the purchase of supplies on account.

Oct. 4 Debit Accounts Payable $890

Credit Cash $890

To record the payment on account.

Oct. 5 Debit Cash $15,800

Credit Service Revenue $15,800

To record the receipt of sales commission for cash.

Oct. 6 Debit Automobile expenses $1,600

Debit Miscellaneous expenses, $680

Credit Cash $2,280

To record the payment of expenses.

Oct. 7 Debit Office salaries expenses $2,000

Credit Cash $2,000

To record the payment of office salaries for the month.

Oct. 8 Debit Supplies Expense $1,150

Credit Supplies $1,150

To record the supplies expenses for the month.

Oct. 9 Debit Cash Dividends, $2,800

Credit Cash $2,800

To record the payment of dividends.

2. T-accounts:

Cash

Date     Account Titles              Debit     Credit

Oct. 1   Common Stock       $30,600

Oct. 2  Rent Expense                            $2,750

Oct. 4  Accounts Payable                           890

Oct. 5  Service Revenue       15,800

Oct. 6  Automobile expenses                 1,600

Oct. 6  Miscellaneous expenses              680

Oct. 7  Office salaries expense             2,000

Oct. 9  Cash Dividends                          2,800

Oct. 31 Balance                                  $35,680

Common Stock

Date     Account Titles              Debit     Credit

Oct. 1   Cash                                          $30,600

Supplies

Date     Account Titles              Debit     Credit

Oct. 3  Accounts Payable     $2,350

Oct. 8  Supplies Expense                        $1,150

Oct. 31 Balance                                       $1,200

Accounts Payable

Date     Account Titles              Debit     Credit

Oct. 3   Supplies                                     $2,350

Oct. 4   Cash                             $890

Oct. 31  Balance                     $1,460

Service Revenue

Date     Account Titles              Debit     Credit

Oct. 5   Cash                                         $15,800

Rent Expense

Date     Account Titles              Debit     Credit

Oct. 2   Cash                           $2,750

Supplies Expense

Date     Account Titles              Debit     Credit

Oct. 8   Supplies                      $1,150

Automobile Expense

Date     Account Titles              Debit     Credit

Oct. 6   Cash                             $1,600

Miscellaneous Expense

Date     Account Titles              Debit     Credit

Oct. 6   Cash                             $680

Office Salaries Expense

Date     Account Titles              Debit     Credit

Oct. 7   Cash                         $2,000

Cash Dividends

Date     Account Titles              Debit     Credit

Oct. 9   Cash                           $2,800

3. Unadjusted Trial Balance as of October 31, 20Y6

Account Titles                  Debit       Credit

Cash                             $35,680

Supplies                            1,200

Common stock                             $30,600

Accounts payable                              1,460

Service revenue                              15,800

Rent expense                   2,750

Supplies expense              1,150

Automobile expense        1,600

Miscellaneous expense     680

Office salaries expense 2,000

Cash dividends              2,800

Total                           $47,860   $47,860

4. a. Amount of total revenue recorded in the ledger = $15,800

b. Amount of total expenses = $10,980

c. Amount of net income for October = $4,820 ($15,800 - $10,980)

5. Increase in retained earnings for October = $2,020 ($4,820 - $2,800)

Explanation:

a) Data and Analysis:

Oct. 1 Cash $30,600 Common Stock $30,600

Oct. 2 Rent Expense $2,750 Cash $2,750

Oct. 3 Supplies $2,350 Accounts Payable $2,350

Oct. 4 Accounts Payable $890 Cash $890

Oct. 5 Cash $15,800 Service Revenue $15,800

Oct. 6 Automobile expenses $1,600 Miscellaneous expenses, $680 Cash $2,280

Oct. 7 Office salaries expense, $2,000 Cash $2,000

Oct. 8 Supplies Expense $1,150 Supplies $1,150

Oct. 9 Cash Dividends, $2,800 Cash $2,800

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