Connie Young, an architect, opened an office on October 1, 2019. During the month, she completed the following transactions connected with her professional practice:
a. Transferred cash from a personal bank account to an account to be used for the business, $36,000.
b. Paid October rent for office and workroom, $2,400.
c. Purchased used automobile for $32,800, paying $7,800 cash and giving a note payable for the remainder.
d. Purchased office and computer equipment on account, $9,000.
e. Paid cash for supplies, $2,150.
f. Paid cash for annual insurance policies, $4,000.
g. Received cash from client for plans delivered, $12,200.
h. Paid cash for miscellaneous expenses, $815.
i. Paid cash to creditors on account, $4,500.
j. Paid $5,000 on note payable.
k. Received invoice for blueprint service, due in November, $2,890.
l. Recorded fees earned on plans delivered, payment to be received in November, $18,300.
m. Paid salary of assistants, $6,450.
n. Paid gas, oil, and repairs on automobile for October, $1,020.
Instructions
1. Record these transactions directly in the following T accounts, without journalizing: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Automobiles; Equipment; Accounts Payable; Notes Payable; Connie Young, Capital; Professional Fees; Salary Expense; Blueprint Expense; Rent Expense; Automobile Expense; Miscellaneous Expense. To the left of the amount entered in the accounts, place the appropriate letter to identify the transaction.
2. Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance.
3. Prepare an unadjusted trial balance for Connie Young, Architect, as of October 31, 2019.
4. Determine the net income or net loss for October.
Answer:
1. and 2.
(a) 36,000 (b) 2,400 (d) 9,000
(g) 12,200 (c) 7,800
(e) 2,150
(f) 4,000 (i) 4,500 (d) 9,000
(h) 815 (k) 2,890
(i) 4,500 Bal. 7,390
(j) 5,000
(m) 6,450
(n) 1,020 (j) 5,000 (c) 25,000
Bal. 14,065 Bal. 20,000
(l) 18,300 (a) 36,000
(e) 2,150 (g) 12,200
(f) 4,000 (m) 6,450
(c) 32,800 (k) 2,890
(b) 2,400
(n) 1,020
(h) 815
3.
Debit Credit
Balances Balances
Cash14,065
Accounts Receivable18,300
Supplies2,150
Prepaid Insurance4,000
Automobiles32,800
Equipment9,000
Accounts Payable7,390
Notes Payable20,000
Connie Young, Capital36,000
Professional Fees30,500
Salary Expense6,450
Blueprint Expense2,890
Rent Expense2,400
Automobile Expense1,020
Miscellaneous Expense815
93,890 93,890
4. Net income, $16,925 ($30,500 – $6,450 – $2,890 – $2,400 – $1,020 – $815)