Question: On July 1, 2006, Leon Cruz established an interior decorating business, Ingres Designs. During the remainder of the month, Leon Cruz completed the following transactions related to the business:
July 1 Leon transferred cash from a personal bank account to an account to be used for the business in exchange for capital stock, $18,000.
5 Paid rent for the period of July 5 to the end of the month, $1,500.
10 Purchased a truck for $15,000, paying $5,000 cash and giving a note payable for the remainder.
13 Purchased equpment on account, $4,500.
14 Purchased supplies for cash, $975.
15 Paid annual premiums on property and casualty insurance, $3,000.
15 Received cash for job completed, $4,100.
21 Paid creditor a portion of the amount owed for equipment purchased on July 13, $2,400.
24 Recorded jobs completed on account and sent invoices to customers, $6,100.
26 Received an invoice for truck expenses, to be paid in August, $580.
27 Paid utilities expense, $950.
27 Paid miscellaneous expense, $315.
29 Received cash from customers on account, $3,420.
30 Paid wages of employees, $2,500.
31 Paid dividends, $2,000.
Instructions
1. Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited.
Cash Capital Stock
Accounts Receivable Dividends
Supplies Fees Earned
Prepaid Insurance Wages Expense
Equipment Rent Expense
Truck Utilities Expense
Notes Payable Truck Expense
Accounts Payable Miscellaneous Expense
2. Post the journal to a ledger of T accounts. For accounts with more than one posting, determine the account balance.
3. Prepare a trial balance for Ingres Designs as of July 31, 2006.