Faith Schultz established Heavenly Realty

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PR 2-2A Journal entries and trial balance

On October 1, 2012, Faith Schultz established Heavenly Realty, which completed the following
transactions during the month:

a. Faith Schultz transferred cash from a personal bank account to an account to be used
for the business, $20,000.

b. Paid rent on office and equipment for the month, $3,750.

c. Purchased supplies on account, $1,100.

d. Paid creditor on account, $400.

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

f. Paid automobile expenses (including rental charge) for month, $1,000, and miscellaneous
expenses, $700.

g. Paid office salaries, $2,150.

h. Determined that the cost of supplies used was $600.

i. Withdrew cash for personal use, $1,000.
Instructions

1. Journalize entries for transactions (a) through (i), using the following account titles:
Cash; Supplies; Accounts Payable; Faith Schultz, Capital; Faith Schultz, 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 October 31, 2012.

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 October.

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