Answer and Explanation:
1. According to the scenario, the journal entries are shown below:
Journal Entry
October 1 Cash A/c Dr. $40,000
To Common stock A/c $40,000
(Being the exchange for the common stock is recorded)
October 2 Rent expenses A/c Dr. $4,800
To Cash A/c $4,800
(Being the paid rent on office and equipment is recorded)
October 3 Supplies A/c Dr. $2,150
To Accounts payable A/c $2,150
(Being the purchase of supplies is recorded)
October 4 Accounts payable A/c Dr. $1,100
To Cash A/c $1,100
(Being the cash paid is recorded)
October 5 Cash A/c Dr. $18,750
To Sales commission A/c $18,750
(Being the earned sales commission is recorded)
October 6 Automobile expense A/c Dr. $1,580
Miscellaneous expense A/c Dr. $800
To Cash A/c $2,380
(Being the automobile and miscellaneous expenses paid is recorded)
October 7 Office salaries expense A/c Dr. $3,500
To Cash A/c $3,500
(Being the office salaries paid is recorded)
October 8 Supplies expense A/c Dr. $1,300
To Supplies A/c $1,300
(Being the cost of supplies is recorded)
October 9 Dividend A/c Dr. $1,500
To Cash A/c $1,500
(Being the dividend paid is recorded)
2. Now the posting of various accounts are as follows
T Accounts
Cash A/c
Particular Amount ($) Particular Amount ($)
Common stock 40,000 Rent expenses 4,800
Sales commission 18,750 Account payable 1,100
Automobile expense 1,580
Miscellaneous expense 800
Office salaries expense 3,500
Dividend expense 1,500
Supplies Account
Particular Amount ($) Particular Amount ($)
Accounts payable 2,150 Supplies expenses 1,300
Accounts Payable
Particular Amount ($) Particular Amount ($)
Cash 1,100 Supplies 2,150
Common Stock
Particular Amount ($) Particular Amount ($)
Cash 40,000
Dividends
Particular Amount ($) Particular Amount ($)
Cash 1,500
Sales Commission
Particular Amount ($) Particular Amount ($)
Cash 18,750
Rent expense
Particular Amount ($) Particular Amount ($)
Cash 4,800
Office Salaries expense
Particular Amount ($) Particular Amount ($)
Cash 3,500
Supplies Expenses
Particular Amount ($) Particular Amount ($)
Supplies 1,300
Automobile Expense
Particular Amount ($) Particular Amount ($)
Cash 1,580
Miscellaneous expense
Particular Amount ($) Particular Amount ($)
Cash 800
3. Now unadjusted trail balance is presented below:
Unadjusted Trial Balance
Particular Debit Amount ($) Particular Credit Amount ($)
Cash 45,470 Accounts payable 1,050
Supplies 850 Common stock 40,000
Dividends 1,500 Sales Commission 18,750
Rent expense 4,800
Office salaries expense 3,500
Automobile expense 1,580
Supplies expense 1,300
Miscellaneous expense 800
Total 59,800 Total 59,800
4
a).Amount of total revenue recorded in the ledger
Sales commissions = $18,750
b). Amount of total expenses recorded in the ledger
Particular Amount ($)
Rent expense 4,800
Office salaries expense 3,500
Automobile expense 1,580
Supplies expense 1,300
Miscellaneous expense 800
Amount of total expenses
recorded in the ledger 11,980
c).Amount of Net income for October is
= Total Revenue - Total Expenses
= $18,750 - $11,980
= $6,770
d) Increase or decrease in retained earnings for October is
= Net Income - Dividends
= $6,770 - $1,500
= $5,270
All assets, expenses and dividend contains normal debit balance while the liabilities, revenues, and the stockholder equity contains normal credit balance
