On August 1, 2019, Rafael Masey established Planet Realty, which completed the following transactions during the month:

On August 1, 2019, Rafael Masey established Planet Realty, which completed the following transactions during the month:

a. Rafael Masey transferred cash from a personal bank account to an account to be used for the business, $17,500.

b. Purchased supplies on account, $2,300.

c. Earned fees, receiving cash, $13,300.

d. Paid rent on office and equipment for the month, $3,000.

e. Paid creditor on account, $1,150.

f. Withdrew cash for personal use, $1,800.

g. Paid automobile expenses (including rental charge) for month, $1,500, and miscellaneous expenses, $400.

h. Paid office salaries, $2,800.

i. Determined that the cost of supplies used was $1,050.

Instructions

1. Journalize entries for transactions (a) through (i), using the following account titles: Cash; Supplies; Accounts Payable; Rafael Masey, Capital; Rafael Masey, Drawing; Fees Earned; Rent Expense; Office Salaries Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. Journal entry 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 August 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 August.

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

Answer:

1. (a) Cash17,500         

Rafael Masey, Capital 17,500         

(b) Supplies2,300           

Accounts Payable2,300           

(c) Cash13,300         

Fees Earned13,300         

(d) Rent Expense3,000           

Cash3,000           

(e) Accounts Payable1,150           

Cash1,150           

(f) Rafael Masey, Drawing1,800           

Cash1,800           

(g) Automobile Expense1,500           

Miscellaneous Expense400              

Cash1,900           

(h) Office Salaries Expense2,800           

Cash2,800           

(i) Supplies Expense1,050           

Supplies1,050

2.

(a) 17,500        (d) 3,000          (c) 13,300       

(c) 13,300        (e) 1,150         

 (f) 1,800         

 (g) 1,900         (d) 3,000        

 (h) 2,800         

Bal. 20,150       

(b) 2,300          (i) 1,050         (h) 2,800        

Bal. 1,250         

(e) 1,150          (b) 2,300         (g) 1,500        

 Bal. 1,150         

 (a) 17,500       (i) 1,050        

(f) 1,800         (g) 400

3.

Cash20,150

Supplies1,250

Accounts Payable1,150

Rafael Masey, Capital17,500

Rafael Masey, Drawing1,800

Fees Earned13,300

Rent Expense3,000

Office Salaries Expense2,800

Automobile Expense1,500

Supplies Expense1,050

Miscellaneous Expense400

4. a. $13,300

b. $8,750 ($3,000 + $2,800 + $1,500 + $1,050 + $400)

c. $4,550 ($13,300 – $8,750)

5. $20,250, which is the initial investment of $17,500 plus net income of $4,550 minus

 the withdrawals of $1,800.