Reference no: EM132875116
Problem - Journal entries and trial balance - On July 1, 2012, Kim Wheeler established an interior decorating business, Aztec Designs. During the month, Kim completed the following transactions related to the business:
July 1. Kim transferred cash from a personal bank account to an account to be used for the business, $21,000.
July 4. Paid rent for period of July 4 to end of month, $2,750.
July 10. Purchased a used truck for $18,000, paying $4,000 cash and giving a note payable for the remainder.
July 13. Purchased equipment on account, $9,000.
July 14. Purchased supplies for cash, $1,500.
July 15. Paid annual premiums on property and casualty insurance, $3,600.
July 15. Received cash for job completed, $12,000.
Enter the following transactions on Page 2 of the two-column journal.
July 21. Paid creditor a portion of the amount owed for equipment purchased on July 13, $2,000.
July 24. Recorded jobs completed on account and sent invoices to customers, $9,800.
July 26. Received an invoice for truck expenses, to be paid in August, $700.
July 27. Paid utilities expense, $1,000.
July 27. Paid miscellaneous expenses, $300.
July 29. Received cash from customers on account, $4,600.
July 30. Paid wages of employees, $2,800.
July 31. Withdrew cash for personal use, $2,500.
Instructions -
1. Journalize 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. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted.
2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted.
3. Prepare an unadjusted trial balance for Aztec Designs as of July 31, 2012.
4. Determine the excess of revenues over expenses for July.
5. Can you think of any reason why the amount determined in (4) might not be the net income for July?