9/28/21, 8:03 PM Document

Journal entries and trial balance

Instructions

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, $31,500.

2 Paid rent on office and equipment for the month, $2,450.

3 Purchased supplies on account, $2,200.

4 Paid creditor on account, $860.

5 Earned sales commissions, receiving cash, $16,430.

6 Paid automobile expenses (including rental charge) for month, $1,650, and miscellaneous expenses,

$690.

7 Paid office salaries, $2,200.

8 Determined that the cost of supplies used was $1,100.

9 Paid dividends, $3,600.

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. Prepare 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.

Chart of Accounts

CHART OF ACCOUNTS

Affordable Realty
General Ledger

ASSETS REVENUE

11 Cash 41 Sales Commissions

12 Supplies

EXPENSES
LIABILITIES 51 Rent Expense

21 Accounts Payable 52 Office Salaries Expense

53 Automobile Expense

EQUITY 54 Supplies Expense

31 Common Stock 55 Miscellaneous Expense

33 Dividends

Journal

1. Journalize entries for transactions Oct. 1 through 9. Refer to the Chart of Accounts for exact wording of account titles.

How does grading work?

PAGE 1

JOURNAL Score: 238/238 ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

✔ ✔ ✔ ✔
1 Oct. 1 Cash   31,500.00 ↑
✔ ✔ ✔
2 Common Stock   31,500.00 ↑
✔ ✔ ✔ ✔
3 Oct. 2 Rent Expense   2,450.00 ↓

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DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
✔ ✔ ✔
4 Cash   2,450.00 ↓
✔ ✔ ✔ ✔
5 Oct. 3 Supplies   2,200.00 ↑
✔ ✔ ✔
6 Accounts Payable   2,200.00 ↑
✔ ✔ ✔ ✔
7 Oct. 4 Accounts Payable   860.00 ↓
✔ ✔ ✔
8 Cash   860.00 ↓
✔ ✔ ✔ ✔
9 Oct. 5 Cash   16,430.00 ↑
✔ ✔ ✔
10 Sales Commissions   16,430.00 ↑
✔ ✔ ✔ ✔
11 Oct. 6 Automobile Expense   1,650.00 ↓
✔ ✔ ✔
12 Miscellaneous Expense   690.00 ↓
✔ ✔ ✔
13 Cash   2,340.00 ↓
✔ ✔ ✔ ✔
14 Oct. 7 Office Salaries Expense   2,200.00 ↓
✔ ✔ ✔
15 Cash   2,200.00 ↓
✔ ✔ ✔ ✔
16 Oct. 8 Supplies Expense   1,100.00 ↓
✔ ✔ ✔
17 Supplies   1,100.00 ↓
✔ ✔ ✔ ✔
18 Oct. 9 Dividends   3,600.00 ↓
✔ ✔ ✔
19 Cash   3,600.00 ↓

Solution

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1 Oct. 1 Cash   31,500.00   ↑    

2   Common Stock     31,500.00     ↑
3 2 Rent Expense   2,450.00       ↓
4   Cash     2,450.00 ↓    
5 3 Supplies   2,200.00   ↑    
6   Accounts Payable     2,200.00   ↑  
7 4 Accounts Payable   860.00     ↓  
8   Cash     860.00 ↓    
9 5 Cash   16,430.00   ↑    
10   Sales Commissions     16,430.00     ↑
11 6 Automobile Expense   1,650.00       ↓
12   Miscellaneous Expense   690.00       ↓
13   Cash     2,340.00 ↓    
14 7 Office Salaries Expense   2,200.00       ↓
15   Cash     2,200.00 ↓    
16 8 Supplies Expense   1,100.00       ↓
17   Supplies     1,100.00 ↓    
18 9 Dividends   3,600.00       ↓
19   Cash     3,600.00 ↓    

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1. Identify which accounts are affected in each transaction. Keep in mind that every transaction involves at least two accounts. Determine whether the account increases or decreases and record each
rules of debit and credit. Remember total debits should equal total credits in your entries.

T Accounts

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 cont

balance.

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Cash

Oct. 1   31,500.00 ✔ Oct. 2   2,450.00 ✔

Oct. 5   16,430.00 ✔ Oct. 4   860.00 ✔
Oct. 6   2,340.00 ✔
Oct. 7   2,200.00 ✔
Oct. 9   3,600.00 ✔
Bal. 36,480.00 ✔

Supplies

Oct. 3   2,200.00 ✔ Oct. 8   1,100.00 ✔

Bal. 1,100.00 ✔

Accounts Payable

Oct. 4   860.00 ✔ Oct. 3   2,200.00 ✔

Bal. 1,340.00 ✔

Common Stock

Oct. 1   31,500.00 ✔

Dividends

Oct. 9   3,600.00 ✔

Sales Commissions

Oct. 5   16,430.00 ✔

Rent Expense

Oct. 2   2,450.00 ✔

Office Salaries Expense

Oct. 7   2,200.00 ✔

Automobile Expense

Oct. 6   1,650.00 ✔

Supplies Expense

Oct. 8   1,100.00 ✔

Miscellaneous Expense

Oct. 6   690.00 ✔

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2. Each increase or decrease recorded in the journal entries corresponds to a debit or credit in the T-accounts, following the rules of debit and credit. Net debits against credits to determine the balance

check to see if it is a normal balance for that account classification.

Unadjusted Trial Balance

3. Prepare an unadjusted trial balance as of October 31, 20Y6.

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Affordable Realty Score: 47/47

UNADJUSTED TRIAL BALANCE

October 31, 20Y6

ACCOUNT TITLE DEBIT CREDIT

✔
1 Cash 36,480.00
✔
2 Supplies 1,100.00
✔
3 Accounts Payable 1,340.00
✔
4 Common Stock 31,500.00
✔
5 Dividends 3,600.00
✔
6 Sales Commissions 16,430.00

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ACCOUNT TITLE DEBIT CREDIT
✔
7 Rent Expense 2,450.00
✔
8 Office Salaries Expense 2,200.00
✔
9 Automobile Expense 1,650.00
✔
10 Supplies Expense 1,100.00
✔
11 Miscellaneous Expense 690.00
✔ ✔
12 Totals 49,270.00 49,270.00

Solution

ACCOUNT TITLE DEBIT CREDIT

1 Cash 36,480.00  
2 Supplies 1,100.00  
3 Accounts Payable   1,340.00
4 Common Stock   31,500.00
5 Dividends 3,600.00  
6 Sales Commissions   16,430.00
7 Rent Expense 2,450.00  
8 Office Salaries Expense 2,200.00  
9 Automobile Expense 1,650.00  
10 Supplies Expense 1,100.00  

11 Miscellaneous Expense 690.00  

12 Totals 49,270.00 49,270.00

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3. Prepare the trial balance using the ending balances of the T-accounts. Again, double-check to see if each account has a normal balance for that account classification placed in the proper Debit or C

column totals should be equal.

Final Questions

4. Determine the following:

a. Amount of total revenue recorded in the ledger. $16,430.00 ✔

b. Amount of total expenses recorded in the ledger. $8,090.00 ✔
c. Amount of net income for October. $8,340.00 ✔

Points: 3/3

5. Determine the increase or decrease in retained earnings for October.

$4,740.00 ✔

Points: 1/1

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Explanation

4. b. $8,090 = $2,450 + $2,200 + $1,650 + $1,100+ $690

4. c. $8,340 = $16,430 – $8,090

5. $4,740, which is the excess of net income of $8,340 over the dividends of $3,600.

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