Journal Entries and Trial Balance
On January 1, 2014, Faith Schultz established Heavenly Realty, which completed the following transactions during the month:
Faith Schultz transferred cash from a personal bank account to an account to be used for the business, $27,000.
Paid rent on office and equipment for the month, $5,110.
Purchased supplies on account, $1,510.
Paid creditor on account, $560.
Earned sales commissions, receiving cash, $23,220.
Paid automobile expenses (including rental charge) for month, $1,420, and miscellaneous expenses, $950.
Paid office salaries, $2,970.
Determined that the cost of supplies used was $840.
Withdrew cash for personal use, $1,370.
Required:
1. Journalize entries for transactions (a) through (i) (in chronological order), using the following account titles: Cash; Supplies; Accounts Payable; Faith Schultz, Capital; Faith Schultz, Drawing; Sales Commissions; Rent Expense; Office Salaries Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. For a compound transaction, if an amount box does not require an entry, leave it blank.
2. Prepare T accounts, using the account titles in (1). Post the journal entries to these T accounts, selecting the appropriate letter to the left of each amount to identify the transactions. Determine the account balances (when required), after all posting is complete, for all accounts having two or more debits or credits.
Cash Bal.
Supplies Bal.
Accounts Payable Bal.
Faith Schultz, Capital
Faith Schultz, Drawing
Sales Commissions
Rent Expense
Office Salaries Expense
Automobile Expense
Supplies Expense
Miscellaneous Expense
3. Prepare an unadjusted trial balance as of January 31, 2014. For those boxes in which no entry is required, leave the box blank.
Heavenly Realty
Unadjusted Trial Balance
January 31, 2014
Debit Balances
Credit Balances
4. As a result of the January transactions (a-i), 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 total increase or decrease in owner's equity for January.