Concept explainers
Journal entries and
Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 2016, follows:
The following business transactions were completed by Valley Realty during August 2016:
Aug. 1. | Purchased office supplies on account, $3, 150. |
2. | Paid rent on office for month, $7,200. |
3. | Received cash from clients on account, $83,900. |
Aug. 5. | Paid insurance premiums, $12,000. |
9. | Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, $400. |
17. | Paid advertising expense, $8,000. |
23. | Paid creditors on account, $13,750. |
Enter the following transactions on Page 19 of the two-column journal: | |
29. | Paid miscellaneous expenses, $1,700. |
30. | Paid automobile expense (including rental charges for an automobile), $2,500. |
31. | Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, $ 2,000. |
31. | Paid salaries and commissions for the month, $53,000. |
31. | Recorded revenue earned and billed to clients during the month, $183,500. |
31. | Purchased land for a future building site for $75,000, paying $7,500 in cash and giving a note payable for the remainder. |
31. | Withdrew cash for personal use, $1,000. |
31. | Rented land purchase on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of $5,000. |
Instructions
- 1. Record the August 1 balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark (✓) in the Posting Reference column.
- 2. Journalize the transactions for August in a two-column journal beginning on Page 18.
Journal entry explanations may be omitted. - 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.
- 4. Prepare an unadjusted trial balance of the ledger as of August 31, 2016.
- 5. Assume that the August 31 transaction for Cindy Getman’s cash withdrawal should have been $10,000. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?
2 and 3:
Journal:
Journal is the book of original entry. Journal consists of the day today financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.
Rules of debit and credit:
“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.
Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.
T-account:
An account is referred to as a T-account, because the alignment of the components of the account resembles the capital letter ‘T’. An account consists of the three main components which are as follows:
- The title of the account
- The left or debit side
- The right or credit side
Unadjusted trial balance:
The unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts before making adjusting journal entries.
Slide error:
A slide error occurs, when the decimal point of an amount has been misplaced.
To journalize: The transactions of August in a two column journal beginning on page 18.
Explanation of Solution
Journalize the transactions of August in a two column journal beginning on page 18.
Journal Page 18 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
2016 | Office supplies | 14 | 3,150 | ||
August | 1 | Accounts payable | 21 | 3,150 | |
(To record the purchase of supplies of account) | |||||
2 | Rent expense | 52 | 7,200 | ||
Cash | 11 | 7,200 | |||
(To record the payment of rent) | |||||
3 | Cash | 11 | 83,900 | ||
Accounts receivable | 12 | 83,900 | |||
(To record the receipt of cash from clients) | |||||
5 | Prepaid insurance | 13 | 12,000 | ||
Cash | 11 | 12,000 | |||
(To record the payment of insurance premium) | |||||
9 | Accounts payable | 21 | 400 | ||
Office supplies | 14 | 400 | |||
(To record the payment made to creditors on account) | |||||
17 | Advertising expense | 53 | 8,000 | ||
Cash | 11 | 8,000 | |||
(To record the payment of advertising expense) | |||||
23 | Accounts payable | 21 | 13,750 | ||
Cash | 11 | 13,750 | |||
(To record the payment made to creditors on account) |
Table (1)
Journal Page 19 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
2016 | 29 | Miscellaneous expense | 59 | 1,700 | |
August | Cash | 11 | 1,700 | ||
(To record the payment made for Miscellaneous expense) | |||||
30 | Automobile expense | 54 | 2,500 | ||
Cash | 11 | 2,500 | |||
(To record the payment made for automobile expense) | |||||
31 | Cash | 11 | 2,000 | ||
Salary and commission expense | 51 | 2,000 | |||
(To record the receipt of cash) | |||||
31 | Salary and commission expense | 51 | 53,000 | ||
Cash | 11 | 53,000 | |||
(To record the payment made for salary and commission expense) | |||||
31 | Accounts receivable | 12 | 183,500 | ||
Fees earned | 41 | 183,500 | |||
(To record the revenue earned and billed) | |||||
31 | Land | 16 | 75,000 | ||
Cash | 11 | 7,500 | |||
Notes payable | 23 | 67,500 | |||
(To record the purchase of land party for cash and party on signing a note) | |||||
31 | Person C’s Drawing | 32 | 1,000 | ||
Cash | 11 | 1,000 | |||
(To record the drawing made for personal use) | |||||
31 | Cash | 11 | 5,000 | ||
Unearned rent | 22 | 5,000 | |||
(To record the cash received for the service yet to be provide) |
Table (2)
1 and 3:
To record: The beginning balances of each accounts in the appropriate balance column of a four-column account, and post them to the ledger extending the account balance to the appropriate balance column after each posting.
Explanation of Solution
Account: Cash Account no. 11 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 52,500 | |||
2 | 18 | 7,200 | 45,300 | ||||
3 | 18 | 83,900 | 129,200 | ||||
5 | 18 | 12,000 | 117,200 | ||||
17 | 18 | 8,000 | 109,200 | ||||
23 | 18 | 13,750 | 95,450 | ||||
29 | 19 | 1,700 | 93,750 | ||||
30 | 19 | 2,500 | 91,250 | ||||
31 | 19 | 2,000 | 93,250 | ||||
31 | 19 | 53,000 | 40,250 | ||||
31 | 19 | 7,500 | 32,750 | ||||
31 | 19 | 1,000 | 31,750 | ||||
31 | 19 | 5,000 | 36,750 |
Table (3)
Account: Accounts Receivable Account no. 12 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 100,100 | |||
3 | 18 | 83,900 | 16,200 | ||||
31 | 19 | 183,500 | 199,700 |
Table (4)
Account: Prepaid Insurance Account no. 13 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 12,600 | |||
5 | 18 | 12,000 | 24,600 |
Table (5)
Account: Office Supplies Account no. 14 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 2,800 | |||
1 | 18 | 3,150 | 5,950 | ||||
9 | 18 | 400 | 5,550 |
Table (6)
Account: Land Account no. 16 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 31 | 19 | 75,000 | 75,000 |
Table (7)
Account: Accounts Payable Account no. 21 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 21,000 | |||
1 | 18 | 3,150 | 24,150 | ||||
9 | 18 | 400 | 23,750 | ||||
23 | 18 | 13,750 | 10,000 |
Table (8)
Account: Unearned Rent Account no. 22 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 31 | 19 | 5,000 | 5,000 |
Table (9)
Account: Notes Payable Account no. 23 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 31 | 19 | 67,500 | 67,500 |
Table (10)
Account: Person C’s Capital Account no. 31 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 87,500 |
Table (11)
Account: Person C’s Drawing Account no. 32 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 44,800 | |||
31 | 19 | 1,000 | 45,800 |
Table (12)
Account: Fees earned Account no. 41 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 591,500 | |||
31 | 19 | 183,500 | 775,000 |
Table (13)
Account: Salary and commission expense Account no. 51 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 385,000 | |||
31 | 19 | 2,000 | 383,000 | ||||
31 | 19 | 53,000 | 436,000 |
Table (14)
Account: Rent expense Account no. 52 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 49,000 | |||
2 | 18 | 7,200 | 56,200 |
Table (15)
Account: Advertising expense Account no. 53 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 32,200 | |||
17 | 18 | 8,000 | 40,200 |
Table (16)
Account: Automobile expense Account no. 54 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 15,750 | |||
30 | 19 | 2,500 | 18,250 |
Table (17)
Account: Miscellaneous expense Account no. 59 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
August | 1 |
|
✓ | 5,250 | |||
29 | 19 | 1,700 | 6,950 |
Table (18)
4.
To prepare: An unadjusted trial balance of Company V Realty at August 31, 2016.
Explanation of Solution
Prepare an unadjusted trial balance of Company V Realty at August 31, 2016 as follows:
Company V Realty Unadjusted Trial Balance August 31, 2016 |
|||
Particulars | Account No. |
Debit $ | Credit $ |
Cash | 11 | 36,750 | |
Accounts receivable | 12 | 199,700 | |
Prepaid insurance | 13 | 24,600 | |
Office supplies | 14 | 5,550 | |
Land | 16 | 75,000 | |
Accounts payable | 21 | 10,000 | |
Unearned rent | 22 | 5,000 | |
Notes payable | 23 | 67,500 | |
C’s Capital | 31 | 87,500 | |
C’s Drawings | 32 | 45,800 | |
Fees earned | 41 | 775,000 | |
Salaries and commission expense | 51 | 436,000 | |
Rent expense | 52 | 56,200 | |
Advertising expense | 53 | 40,200 | |
Automobile expense | 54 | 18,250 | |
Miscellaneous expense | 59 | 6,950 | |
Total | 945,000 | 945,000 |
Table (19)
The debit column and credit column of the unadjusted trial balance are agreed, both having balance of $945,000.
5. (a)
To explain: The reason behind the unadjusted trial balance in (4) balance.
Explanation of Solution
The unadjusted trial balance in (4) would still balance, since all the debits are equalized with the credit in the original journal entry.
(b)
To journalize: The correcting entry.
Explanation of Solution
The Correcting entry is as follows:
Journal Page 19 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
2016 | Person C’s drawing | 32 | 9,000 | ||
August | 31 | Cash | 11 | 9,000 | |
(To record the correcting entry) |
Table (20)
Working notes:
(c)
To identify: Whether the error made is a slide or transposition.
Explanation of Solution
The drawings account balance recorded as $10,000 instead of $1,000 is a slide error. Since the decimal point of the amount has been misplaced.
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Chapter 2 Solutions
EBK ACCOUNTING
- Journal entries and trial balance Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 20Y3, follows: The following business transactions were completed by Elite Realty during April 20Y3: Apr. 1. Paid rent on office for month, 6,500. 2. Purchased office supplies on account, 2,300. 5. Paid insurance premiums, 6,000. 10. Received cash from clients on account, 52,300. 15. Purchased land for a future building site for 200,000, paying 30,000 in cash and giving a note payable for the remainder. 17. Paid creditors on account, 6,450. 20. Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, 325. 23. Paid advertising expense, 4,300. Enter the following transactions on Page 19 of the two-column journal: 27. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, 2,500. 28. Paid automobile expense (including rental charges for an automobile), 1,500. 29. Paid miscellaneous expenses, 1,400. 30. Recorded revenue earned and billed to clients during the month, 57,000. 30. Paid salaries and commissions for the month, 11,900. 30. Paid dividends, 4,000. 30. Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of 10,000. Instructions 1. Record the April 1, 20Y3, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of April 30, 20Y3. 5. Assume that the April 30 transaction for salaries and commissions should have been 19,100. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide? The following business transactions were completed by Elite Realty during April 20Y3: Apr. 1. Paid rent on office for month, 6,500. 2. Purchased office supplies on account, 2,300. 5. Paid insurance premiums, 6,000. 10. Received cash from clients on account, 52,300. 15. Purchased land for a future building site for 200,000, paying 30,000 in cash and giving a note payable for the remainder. 17. Paid creditors on account, 6,450. 20. Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, 325. 23. Paid advertising expense, 4,300. Enter the following transactions on Page 19 of the two-column journal: 27. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, 2,500. 28. Paid automobile expense (including rental charges for an automobile), 1,500. 29. Paid miscellaneous expenses, 1,400. 30. Recorded revenue earned and billed to clients during the month, 57,000. 30. Paid salaries and commissions for the month, 11,900. 30. Paid dividends, 4,000. 30. Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of 10,000. Instructions 1. Record the April 1, 20Y3, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of April 30, 20Y3. 5. Assume that the April 30 transaction for salaries and commissions should have been 19,100. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?arrow_forwardJournal entries and trial balance Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 20Y8, follows: The following business transactions were completed by Valley Realty during August 20Y8: Aug. 1. Purchased office supplies on account, 3,150. 2. Paid rent on office for month, 7,200. 3. Received cash from clients on account, 83,900. 5. Paid insurance premiums, 12,000. 9. Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, 400. 17. Paid advertising expense, 8,000. 23. Paid creditors on account, 13,750. Enter the following transactions on Page 19 of the two-column journal: 29. Paid miscellaneous expenses, 1,700. 30. Paid automobile expense (including rental charges for an automobile), 2,500. 31. Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, 2,000. 31. Paid salaries and commissions for the month, 53,000. 31. Recorded revenue earned and billed to clients during the month, 183,500. 31. Purchased land for a future building site for 75,000, paying 7,500 in cash and giving a note payable for the remainder. 31. Paid dividends, 1,000. 31. Rented land purchased on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of 5,000. Instructions 1. Record the August 1 balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for August in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of August 31, 20Y8. 5. Assume that the August 31 transaction for dividends should have been 10,000. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?arrow_forwardJournal entries and trial balance On August 1, 20Y7, 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 in exchange for common stock, 17,500. b. Purchased supplies on account, 2,300. c. Earned sales commissions, receiving cash, 13,300. d. Paid rent on office and equipment for the month, 3,000. e. Paid creditor on account, 1,150. f. Paid dividends, 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, Common Stock, Dividends, Sales Commissions, 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, 20Y7. 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 retained earnings for August.arrow_forward
- Journal entries and trial balance On October 1, 20Y6, Jay Crowley established Affordable Realty, which completed the following transactions during the month: a. Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 40,000. b. Paid rent on office and equipment for the month, 4,800. c. Purchased supplies on account, 2,150. d. Paid creditor on account, 1,100. e. Earned sales commissions, receiving cash, 18,750. f. Paid automobile expenses (including rental charge) for month, 1,580, and miscellaneous expenses, 800. g. Paid office salaries, 3,500. h. Determined that the cost of supplies used was 1,300. i. Paid dividends, 1,500. Instructions 1. Journalize entries for transactions (a) through (i), using the following account titles: Cash, Supplies, Accounts Payable, Common Stock, Dividends, 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, 20Y6. 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 retained earnings for October.arrow_forwardValley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 2019, follows: The following business transactions were completed by Valley Realty during August 2019: Aug. 1. Purchased office supplies on account, 3,150. 2.Paid rent on office for month, 7,200. 3.Received cash from clients on account, 83,900. 5.Paid insurance premiums, 12,000. 9.Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, 400. Analyzing Transactions Aug. 17. Paid advertising expense, 8,000. 23.Paid creditors on account, 13,750. Enter the following transactions on Page 19 of the two-column journal: 29.Paid miscellaneous expenses, 1,700. 30.Paid automobile expense (including rental charges for an automobile), 2,500. 31.Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, 2,000. 31.Paid salaries and commissions for the month, 53,000. 31.Recorded revenue earned and billed to clients during the month, 183,500. 31.Purchased land for a future building site for 75,000, paying 7,500 in cash and giving a note payable for the remainder. 31.Withdrew cash for personal use, 1,000. 31.Rented land purchased on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of 5,000. Instructions 1. Record the August 1 balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for August in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of August 31, 2019. 5. Assume that the August 31 transaction for Cindy Getmans cash withdrawal should have been 10,000. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?arrow_forwardElite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2019, follows: The following business transactions were completed by Elite Realty during April 2019: Apr. 1. Paid rent on office for month, 6,500. 2.Purchased office supplies on account, 2,300. 5.Paid insurance premiums, 6,000. 10.Received cash from clients on account, 52,300. 15.Purchased land for a future building site for 200,000, paying 30,000 in cash and giving a note payable for the remainder. 17.Paid creditors on account, 6,450. 20.Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, 325. 23.Paid advertising expense, 4,300. Enter the following transactions on Page 19 of the two-column journal: 27.Discovered an error in computing a commission; received cash from the salesperson for the overpayment, 2,500. 28.Paid automobile expense (including rental charges for an automobile), 1,500. 29.Paid miscellaneous expenses, 1,400. 30.Recorded revenue earned and billed to clients during the month, 57,000. 30.Paid salaries and commissions for the month, 11,900. 30.Withdrew cash for personal use, 4,000. 30.Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of 10,000. Instructions 1. Record the April 1, 2019, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of April 30, 2019. 5. Assume that the April 30 transaction for salaries and commissions should have been 19,100. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?arrow_forward
- The transactions completed by PS Music during June 2018 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the businesss operations: July 1. Peyton Smith made an additional investment in PS Musk in exchange for common stock by depositing 5,000 in PS Music s checking account. 1. Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, 1,750. 1. Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2. Received 1,000 on account. 3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3. Paid 250 on account. 4. Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, 7,500. 8. Paid for a newspaper advertisement, 200. 11. Received 1,000 for serving as a disc jockey for a party. 13. Paid 700 to a local audio electronics store for rental of digital recording equipment. 14. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on lage 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22. Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2018. 27. Paid electric bill, 915. 28. Paid wages of 1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, 540. 30. Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2018. 31. Received 3,000 for serving as a disc jockey for a party. July 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31. Paid dividends, 1,250. PS Musics chart of accounts and the balance of accounts as of July 1, 2018 (all normal balances), are as follows: 11 Cash 3,920 41 Fees Earned 6,200 12 Accounts Receivable 1,000 50 Wages Expense 400 14 Supplies 170 51 Office Rent Expense 800 15 Prepaid Insurance 52 Equipment Rent Expense 675 17 Office Equipment 53 Utilities Expense 300 21 Accounts Payable 250 54 Music Expense 1,590 23 Unearned Revenue 55 Advertising Expense 500 31 Common Stock 4,000 56 Supplies Expense 180 33 Dividends 500 59 Miscellaneous Expense 415 Instructions 1. Enter the July 1, 2018, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column, and place a check mark () in the Posting Reference column. {Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance as of July 31, 2018.arrow_forwardIncome Statement and Balance Sheet Fort Worth Corporation began business in January 2016 as a commercial carpet-cleaning and drying service. Shares of stock were issued to the owners in exchange for cash. Equipment was purchased by making a down payment in cash and signing a note payable for the balance. Services are performed for local restaurants and office buildings on open account, and customers are given 15 days to pay their accounts. Rent for office and storage facilities is paid at the beginning of each month. Salaries and wages are paid at the end of the month. The following amounts are from the records of Fort Worth Corporation at the end of its first month of operations: Required Prepare an income statement for the month ended January 31, 2016. Prepare a balance sheet at January 31, 2016. What information would you need about Notes Payable to fully assess Fort Worths longterm viability? Explain your answer.arrow_forwardKelly Pitney began her consulting business, Kelly Consulting, on April 1, 2016. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2016, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2016, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6) a. Insurance expired during May is 275. b. Supplies on hand on May 31 are 715. c. Depreciation of office equipment for May is 330. d. Accrued receptionist salary on May 31 is 325. e. Rent expired during May is 1,600. f. Unearned fees on May 31 are 3,210. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owners equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forward
- Following is the chart of accounts of Sanchez Realty Company: Sanchez completed the following transactions during April (the first month of business): Required 1. Journalize the transactions for April in the general journal. 2. Post the entries to the general ledger accounts. (Skip this step if you are using CLGL.) 3. Prepare a trial balance as of April 30, 20. 4. Prepare an income statement for the month ended April 30, 20. 5. Prepare a statement of owners equity for the month ended April 30, 20. 6. Prepare a balance sheet as of April 30, 20. If you we using CLGL, use the year 2020 when preparing all reports.arrow_forwardJournal entries and trial balance On October 1, 20Y4, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business: Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 18,000. 4. Paid rent for period of October 4 to end of month, 3,000. 10. Purchased a used truck for 23,750, paying 3,750 cash and giving a note payable for the remainder. 13. Purchased equipment on account, 10,500. 14. Purchased supplies for cash, 2,100. Oct. 15. Paid annual premiums on property and casualty insurance, 3,600. 15. Received cash for job completed, 8,950. Enter the following transactions on Page 2 of the two-column journal: 21. Paid creditor a portion of the amount owed for equipment purchased on October 13, 2,000. 24. Recorded jobs completed on account and sent invoices to customers, 14,150. 26. Received an invoice for truck expenses, to be paid in November, 700. 27. Paid utilities expense, 2,240. 27. Paid miscellaneous expenses, 1,100. 29. Received cash from customers on account, 7,600. 30. Paid wages of employees, 4,800. 31. Paid dividends, 3,500. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck 21 Notes Payable 22 Accounts Payable 31 Common Stock 33 Dividends 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 20Y4. 4. Determine the excess of revenues over expenses for October. 5. Can you think of any reason why the amount determined in (4) might not be the net income for October?arrow_forwardKelly Pitney began her consulting business, Kelly Consulting, on April 1, 2018. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 4,500. 5. Received cash from clients on account, 2,450. 9. Paid cash for a newspaper advertisement, 225. 13. Paid Office Station Co. for part of the debt incurred on April 5, 640. 15. Recorded services provided on account for the period May 115, 9,180. 16. Paid part-time receptionist for two weeks salary including the amount owed on April 30, 750. 17. Recorded cash from cash clients for fees earned during the period May 1-16, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Recorded services provided on account for the period May 16-20,4,820. 25. Recorded cash from cash clients for fees earned for the period May 17- 23, 7,900. 27. Received cash from clients on account, 9,520. 28. Paid part-time receptionist for two weeks salary, 750. 30. Paid telephone bill for May, 260. 31. Paid electricity bill for May, 810. 31. Recorded cash from cash clients for fees earned for the period May 26-31, 3,300. 31. Recorded services provided on account for the remainder of May, 2,650. 31. Paid dividends, 10,500. Instructions 1. The cl1art of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2018, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2018, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (A) Insurance expired during May is 275. (B) Supplies on hand on May 31 are 715. (C) Depreciation of office equipment for May is 330. (D) Accrued receptionist salary on May 31 is 325. (E) Rent expired during May is 1,600. (F) Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of d1e journal. (Income Summary is account #34 in d1e chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forward
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