Lynn Cantwell, an architect, opened an office on July 1, 2014. During the month

Lynn Cantwell, an architect, opened an office on July 1, 2014. 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, $25,000.

b. Paid July rent for office and workroom, $2,750.

c. Purchased used automobile for $30,000, paying $4,000 cash and giving a note payable for the remainder.

d. Purchased office and computer equipment on account, $9,000.

e. Paid cash for supplies, $1,600.

f. Paid cash for annual insurance policies, $2,400.

g. Received cash from client for plans delivered, $11,150.

h. Paid cash for miscellaneous expenses, $300.

i. Paid cash to creditors on account, $3,500.

j. Paid installment due on note payable, $550.

k. Received invoice for blueprint service, due in August, $1,500.

l. Recorded fee earned on plans delivered, payment to be received in August, $17,300.

m. Paid salary of assistant, $2,200.

n. Paid gas, oil, and repairs on automobile for July, $815.


Instructions

1. Record the above transactions directly in the following T accounts, without journalizing: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Automobiles; Equipment; Notes Payable; Accounts Payable; Lynn Cantwell, Capital; Professional Fees; Rent Expense; Salary Expense; Blueprint 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 Lynn Cantwell, Architect, as of July 31, 2014.

4. Determine the net income or net loss for July.


Answer:


(m) 2,200 (i) 3,500 (d) 9,000
(n) 815 (k) 1,500
Bal. 18,035 Bal. 7,000
Accounts Receivable Lynn Cantwell, Capital
(l) 17,300 (a) 25,000
1. and 2.
Cash Equipment
(a) 25,000 (b) 2,750 (d) 9,000
(g) 11,150 (c) 4,000
(e) 1,600 Notes Payable
(f) 2,400 (j) 550 (c) 26,000
(h) 300 Bal. 25,450
(i) 3,500
(j) 550
Supplies
Accounts Payable
Professional Fees
(e) 1,600 (g) 11,150
(l) 17,300
Bal. 28,450
Prepaid Insurance Rent Expense
(f) 2,400 (b) 2,750
Automobiles Salary Expense
(c) 30,000 (m) 2,200
Blueprint Expense
(k) 1,500
Automobile Expense
(n) 815
Miscellaneous Expense
(h) 300
3.
LYNN CANTWELL, ARCHITECT
Unadjusted Trial Balance
July 31, 2014
Debit
Balances
Credit
Balances
Cash 18,035
Accounts Receivable 17,300
Supplies 1,600
Prepaid Insurance 2,400
Automobiles 30,000
Equipment 9,000
Notes Payable 25,450
Accounts Payable 7,000
Lynn Cantwell, Capital 25,000
Professional Fees 28,450
Rent Expense 2,750
Salary Expense 2,200
Blueprint Expense 1,500
Automobile Expense 815
Miscellaneous Expense 300
85,900 85,900
4. Net income, $20,885 ($28,450 – $2,750 – $2,200 – $1,500 – $815 – $300)