Question

On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month:

1. Sharon Matthews transferred cash from a personal bank account to an account to be used for the business, $27,000.
2. Paid rent on office and equipment for the month, $5,050.
3. Purchased supplies on account, $1,490.
4. Paid creditor on account, $550.
5. Earned fees, receiving cash, $22,950.
6. Paid automobile expenses (including rental charge) for month, $1,400, and miscellaneous expenses, $940.
7. Paid office salaries, $2,940.
8. Determined that the cost of supplies used was $830.
9. Withdrew cash for personal use, $1,350.

Required:
1. Journalize entries for transactions Jan. 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 January 31, 2019.
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 January.
5. Determine the increase or decrease in owner’s equity for January.

Answer 1

1) JOURNAL ENTRIES

1 Debit Bank $27,000 Credit Capital $27,000

2 Debit Rent expense $5,050 Credit Bank $5,050

3 Debit Supplies Account $1,490 Credit Accounts payable $1,490

4 Debit Accounts payable $550 Credit Bank $550

5 Debit Bank $22,950 credit Service Revenue $22,950

6 Debit Debit Automobile Expenses $1,400 Debit Miscellaneous expenses $940 Credit Bank 2,340

7 Debit Office salaries $2,940 Credit Bank $2,940

8 Supplies expense $830 Credit Supplies Account $830

9 Debit Drawings $1,350 Credit Bank $1,350

2 T ACCOUNTS

Capital

01 bank $27,000

Drawings

09 Bank $1,350

Bank

01 Capital $27,000 02 Rent expense $5,050

04 Accounts payable $550

05 Service revenue $22,950 06 Automobile expense $1,400

Miscellaneous costs $940

07 Salaries expense $2,940

09 Drawings $1,350

31 Balance C/D $37,720

$49950 $49950

Accounts payable

04 Bank $550 03 Supplies Account $1,490

31 Balance c/d $940

Supplies Account

03 Account payable $1,490 08 Supplies expense $830

31 Balance c/d $660

NOMINAL Accounts section

Service Revenue

05 Bank $22,950

Rent Expense

02 Bank $5,050

Automobile Expense

06 Bank $1,400

Miscellaneous Expense

06 Bank $940

Office Salaries

07 Bank $2,940

Supplies expense

08 Supplies Account $830

3 TRIAL BALANCE Debit Credit

Balance Sheet

Capital $27,000

Drawings $1,350

Bank $37,720

Accounts Payable $940

Supplies Account $660

Nominal Section

Service Revenue $22,950

Rent expense $5,050

Automobile expense $1,400

Miscellaneous Expense $940

Office Salaries $2,940

Supplies expense $830

$50,890 $50,890

a) Total Revenue = $22,950

b) Total expense = 5050+1400+940+2940+830 = $11,160

c) Net income = 22950-11160= $11,790

5 Changes in Equity = Capital + net income - drawings

= 27000+11790-1350 = $37,440

Step-by-step explanation: