Ken Jones, an architect, opened an office on April 1, 2019. During the month, he completed the following transactions connected with his professional practice:
a. Transferred cash from a personal bank account to an account to be used for the business, $18,000.
b. Purchased used automobile for $19,500, paying $2,500 cash and giving a note payable for the remainder.
c. Paid April rent for office and workroom, $3,150.
d. Paid cash for supplies, $1,450.
e. Purchased office and computer equipment on account, $6,500.
f. Paid cash for annual insurance policies on automobile and equipment, $2,400.
g. Received cash from a client for plans delivered, $12,000.
h. Paid cash to creditors on account, $1,800.
i. Paid cash for miscellaneous expenses, $375.
j. Received invoice for blueprint service, due in May, $2,500.
k. Recorded fees earned on plans delivered, payment to be received in May, $15,650.
l. Paid salary of assistant, $2,800.
m. Paid cash for miscellaneous expenses, $200.
n. Paid $300 on note payable.
o. Paid gas, oil, and repairs on automobile for April, $550.
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; Ken Jones, Capital; Professional Fees; Rent Expense; Salary Expense; Blueprint Expense; Automobile Expense; Miscellaneous Expense. To the left of each 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 Ken Jones, Architect, as of April 30, 2019.
4. Determine the net income or net loss for April.
Answer:
1. and 2.
(a) 18,000 (b) 2,500 (n) 300 (b) 17,000
(g) 12,000 (c) 3,150 Bal. 16,700
(d) 1,450
(f) 2,400
(h) 1,800 (a) 18,000
(i) 375
(l) 2,800
(m) 200 (g) 12,000
(n) 300 (k) 15,650
(o) 550 Bal. 27,650
Bal. 14,475
(k) 15,650 (c) 3,150
(d) 1,450 (l) 2,800
(f) 2,400 (j) 2,500
(b) 19,500 (o) 550
(e) 6,500 (i) 375
(h) 1,800 (e) 6,500
(j) 2,500
Bal. 7,200
3.
Debit Credit
Balances Balances
Cash14,475
Accounts Receivable15,650
Supplies1,450
Prepaid Insurance2,400
Automobiles19,500
Equipment6,500
Accounts Payable7,200
Notes Payable16,700
Ken Jones, Capital18,000
Professional Fees27,650
Rent Expense3,150
Salary Expense2,800
Blueprint Expense2,500
Automobile Expense550
Miscellaneous Expense575
69,550 69,550
4. Net income, $18,075 ($27,650 – $3,150 – $2,800 – $2,500 – $550 – $575)