Exercise 1.

Transactions for the Hartman Company for the month of November 2018 are presented below.
Journalize each transaction and identify each transaction by number. You may omit journal
explanations.
1. Stockholders invested an additional $40,000 cash in the business.
2. Purchased land costing $18,000 for cash.
3. Purchased equipment costing $45,000 for $4,500 cash and the remainder on credit.
4. Purchased supplies on account for $800.
5. Paid $3,000 for a one-year insurance policy.
6. Received $2,000 cash for services performed.
7. Received $5,000 for services previously performed on account.
8. Paid wages to employees for $2,500.
9. Paid dividends to stockholders of $400.
HARTMAN COMPANY
Journal Transaction
For The Month of November 2018

Dr Cr
1 Cash $40,000
Owners Equity $40,000

2 Land 18,000
Cash 18,000

3 Equipment 45,000
Cash 4,500
A/P 40,500

4 Supplies 800
A/P 800

5 Prepaid Insurance 3,000

Cash 3,000

6 Cash 2,000
Service Revenue 2,000

7 Cash 5,000
A/R 5,000

8 Wages Expense 2,500

Cash 2,500

9 Dividend Expense 400

Exercise 2.
Cash 400
The income statement of Garska Co. for the month of July shows net income of $2,000 based on
Service Revenue $5,500; Salaries and Wages Expense $2,100; Supplies Expense $900; and Utilities
Expense $500. In reviewing the statement, you discover the following:
1. Insurance expired during July of $350 was omitted.
2. Supplies expense includes $200 of supplies that are still on hand at July 31.
3. Depreciation on equipment of $150 was omitted.
4. Accrued but unpaid wages at July 31 of $360 were not included.
5. Services performed but unrecorded totaled $700. Instructions Prepare a correct income
statement for July 2018.

GARSKA CO.
Income Statement
For The Month of July 2018

Service Revenue $5,500

Expenses
Salaries and Wages $2,100
Supplies Expense 900
Utilities Expense 500
Total Expense 3,500

Net Profit 2,000

GARSKA CO.
Adjustment Journal
For The Month of July 2018

Dr Cr
1 Insurance Expense $350
Perpaid Insurance $350

2 Supplies 200
Supplies Expense 200

3 Depreciation Expense 150

Accumlated Depreciation 150

4 Wages Expense 360

Wages Payable 360

5 Cash 700
Service Revenue 700
 GARSKA CO.
Income Statement
For The Month of July 2018

Service Revenue $6,200

Expenses
Salaries and Wages $2,100
Supplies Expense 700
Utilities Expense 500
Insurance Expense 350
Depreciation Expense 150
Wages Expense 360
Total Expense 4,160

Net Profit 2,040