On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month:

On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month:

a. Sharon Matthews transferred cash from a personal bank account to an account to be used for the business, $40,000.

b. Paid rent on office and equipment for the month, $6,000.

c. Purchased supplies on account, $3,200.

d. Paid creditor on account, $1,750.

e. Earned fees, receiving cash, $18,250.

f. Paid automobile expenses (including rental charge) for month, $1,880, and miscellaneous expenses, $420.

g. Paid office salaries, $5,000.

h. Determined that the cost of supplies used was $1,400.

i. Withdrew cash for personal use, $2,000.

Instructions

1. Journalize entries for transactions (a) through (i), using the following account titles: Cash; Supplies; Accounts Payable; Sharon Matthews, Capital; Sharon Matthews, Drawing; Fees Earned; 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, 2019.

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:

1. (a) Cash40,000         

Sharon Matthews, Capital40,000         

(b) Rent Expense6,000           

Cash6,000           

(c) Supplies3,200           

Accounts Payable3,200           

(d) Accounts Payable1,750           

Cash1,750           

(e) Cash18,250         

Fees Earned18,250         

(f) Automobile Expense1,880           

Miscellaneous Expense420              

Cash2,300           

(g) Office Salaries Expense5,000           

Cash5,000           

(h) Supplies Expense1,400           

Supplies1,400           

(i) Sharon Matthews, Drawing 2,000           

Cash2,000 2.

(a) 40,000        (b) 6,000          (e) 18,250       

(e) 18,250        (d) 1,750         

 (f) 2,300         

 (g) 5,000         (b) 6,000         

 (i) 2,000         

Bal. 41,200       

(c) 3,200          (h) 1,400         (g) 5,000         

Bal. 1,800         

(d) 1,750          (c) 3,200         (f) 1,880         

 Bal. 1,450         

 (a) 40,000       (h) 1,400         

(i) 2,000         (f) 420

3.

Cash41,200

Supplies1,800

Accounts Payable1,450

Sharon Matthews, Capital40,000

Sharon Matthews, Drawing2,000

Fees Earned18,250

Rent Expense6,000

Office Salaries Expense5,000

Automobile Expense1,880

Supplies Expense1,400

Miscellaneous Expense420

4. a. $18,250

b. $14,700 ($6,000 + $5,000 + $1,880 + $1,400 + $420)

c. $3,550 ($18,250 – $14,700)

5. $41,550, which is the initial investment of $40,000 plus net income of $3,550 minus

the withdrawals of $2,000.