Question

On October 1, 2018, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business:
Oct. 1 Jay transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $32,800.
4 Paid rent for period of October 4 to end of month, $3,180.
10 Purchased a used truck for $27,000, paying $3,000 cash and giving a note payable for the remainder.
13 Purchased equipment on account, $12,790.
14 Purchased supplies for cash, $2,200.
15 Paid annual premiums on property and casualty insurance, $4,920.
15 Received cash for job completed, $13,780.
Enter the following transactions on Page 2 of the two-column journal:

21 Paid creditor a portion of the amount owed for equipment purchased on October 13, $4,560.
24 Recorded jobs completed on account and sent invoices to customers, $15,680.
26 Received an invoice for truck expenses, to be paid in November, $1,440.
27 Paid utilities expense, $1,640.
27 Paid miscellaneous expenses, $590.
29 Received cash from customers on account, $6,560.
30 Paid wages of employees, $4,360.
31 Paid dividends, $3,640.
Required:
1. Journalize and insert the posting references for each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. For a compound transaction, if an amount box does not require an entry, leave it blank.
11 Cash 31 Common Stock
12 Accounts Receivable 33 Dividends
13 Supplies 41 Fees Earned
14 Prepaid Insurance 51 Wages Expense
16 Equipment 53 Rent Expense
18 Truck 54 Utilities Expense
21 Notes Payable 55 Truck Expense
22 Accounts Payable 59 Miscellaneous Expense

Answer 1

Answer:

Pioneer Designs

Journal Entries:

Date     Account Titles               Debit       Credit

Oct. 1    11 Cash                       $32,800

            31 Common Stock                       $32,800

To record the transfer of cash for common stock.

Oct. 4  53 Rent Expense          $3,180

           11 Cash                                         $3,180

To record the payment of October rent.

Oct. 10 18 Truck                    $27,000

            11 Cash                                         $3,000

            21 Notes Payable                      $24,000

To record the purchase of truck for cash and with a note for the remainder.

Oct. 13  16 Equipment          $12,790

            22 Accounts Payable                   $12,790

To record the purchase of equipment on account.

Oct. 14 13 Supplies               $2,200

            11 Cash                                          $2,200

To record the purchase of supplies for cash.

Oct. 15 14 Prepaid Insurance  $4,920

            11 Cash                                          $4,920

To record the prepayment of annual insurance premium.

Oct. 15 11 Cash                       $13,780

           41 Fees Earned                            $13,780

To record the receipt of cash for job completed.

Page 2:

Oct. 21  22 Accounts Payable   $4,560

             11  Cash                                         $4,560

To record the part-payment on account.

Oct. 24 12 Accounts Receivable $15,680

            41 Fees Earned                               $15,680

To record the jobs completed and billed to customers.

Oct. 26 55 Truck Expense    $1,440

            22  Accounts Payable                      $1,440

To record the receipt of invoice for truck expenses.

Oct. 27 54 Utilities Expense  $1,640

             11 Cash                                       $1,640

To record the payment of utilities expense.

Oct 27  59 Miscellaneous Expense $590

             11 Cash                                           $590

To record the payment of miscellaneous expense.

Oct. 29  11 Cash                  $6,560

              12 Accounts Receivable              $6,560

To record the receipt of cash from customers on account.

Oct. 30   51 Wages Expense  $4,360

              11 Cash                                           $4,360

To record the payment of wages.

Oct. 31  33 Dividends          $3,640

             11 Cash                                           $3,640

To record the payment of dividends to stockholders.

Explanation:

a) Data and Calculations:

Chart of accounts:

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

b) Journal entries are used to record business transactions as they occur on a daily basis.  They show the accounts involved in each transaction and the ones to be debited and the ones to be credited as the case may be.