On January 1, 2014, Alicia Masingale established Leopard Realty, which completed the following transactions during the month

On January 1, 2014, Alicia Masingale established Leopard Realty, which completed the following transactions during the month:

a. Alicia Masingale transferred cash from a personal bank account to an account to be used for the business, $23,500.

b. Paid rent on office and equipment for the month, $4,000.

c. Purchased supplies on account, $1,800.

d. Paid creditor on account, $675.

e. Earned sales commissions, receiving cash, $16,750.

f. Paid automobile expenses (including rental charge) for month, $1,000, and miscellaneous expenses, $800.

g. Paid office salaries, $2,150.

h. Determined that the cost of supplies used was $925.

i. Withdrew cash for personal use, $1,600.


Instructions

1. Journalize entries for transactions (a) through (i), using the following account titles: Cash; Supplies; Accounts Payable; Alicia Masingale, Capital; Alicia Masingale, Drawing; Sales Commissions; Rent Expense; Office Salaries Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. Explanations may be omitted.

2. Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance.

3. Prepare an unadjusted trial balance as of January 31, 2014.

4. Determine the following:

a. Amount of total revenue recorded in the ledger.

b. Amount of total expenses recorded in the ledger.

c. Amount of net income for January.

5. Determine the increase or decrease in owner’s equity for January.


Answer:



Cash 23,500
Alicia Masingale, Capital 23,500
Rent Expense 4,000
Cash 4,000
Supplies 1,800
Accounts Payable 1,800
Accounts Payable 675
Cash 675
Cash 16,750
Sales Commissions 16,750
Automobile Expense 1,000
Miscellaneous Expense 800
Cash 1,800
Office Salaries Expense 2,150
Cash 2,150
Supplies Expense 925
Supplies 925
Alicia Masingale, Drawing 1,600
Cash 1,600

Cash Sales Commissions
(a) 23,500 (b) 4,000 (e) 16,750
(e) 16,750 (d) 675
(f) 1,800 Rent Expense
Bal. 30,025
(g) 2,150 (b) 4,000
(i) 1,600
Supplies Office Salaries Expense
(c) 1,800 (h) 925 (g) 2,150
Bal. 875
Accounts Payable
Alicia Masingale, Capital
Automobile Expense
Supplies Expense
(a) 23,500 (h) 925
Alicia Masingale, Drawing Miscellaneous Expense
(i) 1,600 (f) 800

3.
LEOPARD REALTY
Unadjusted Trial Balance
January 31, 2014
Debit
Balances
Credit
Balances
Cash 30,025
Supplies 875
Accounts Payable 1,125
Alicia Masingale, Capital 23,500
Alicia Masingale, Drawing 1,600
Sales Commissions 16,750
Rent Expense 4,000
Office Salaries Expense 2,150
Automobile Expense 1,000
Supplies Expense 925
Miscellaneous Expense 800
41,375 41,375


4. a. $16,750
b. $8,875 ($4,000 + $2,150 + $1,000 + $925 + $800)
c. $7,875 ($16,750 – $8,875)

5. $29,775, which is the initial investment of $23,500 plus the excess of net income of $7,875 over the withdrawals of $1,600.