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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?

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 2, Problem 4PA
Textbook Problem
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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?

Chapter 2, Problem 4PA, Journal entries and trial balance Elite Realty acts as an agent in buying, selling, renting, and

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?

(2) and (3)

To determine

Journalize the transactions of April in a two column journal beginning on page 18.

Explanation of Solution

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”.

Journalize the transactions of April in a two column journal beginning on page 18.

                                                   Journal                                           Page 18
DateDescriptionPost. RefDebit ($)Credit ($)
20Y3 Rent expense526,500 
April 1    Cash11 6,500
  (To record the payment of rent)   
 
  2Office supplies142,300 
      Accounts payable21 2,300
  (To record the purchase of supplies of account)   
 
  5Prepaid insurance136,000 
      Cash11 6,000
  (To record the payment of insurance premium)   
 
 10Cash1152,300 
  Accounts receivable12 52,300
  (To record the receipt of cash from clients)   
 
 15Land16200,000 
       Cash11 30,000
       Notes payable23 170,000
  (To record the purchase of land party for cash and party on signing a note)   
 
 17Accounts payable216,450 
      Cash11 6,450
  (To record the payment made to creditors on account)   
 
 20Accounts payable 21325 
   Office supplies14 325
 

(1) and (3)

To determine

Record the balance of each account in the appropriate balance column of a four-column account and post them to the ledger.

(4)

To determine

Prepare an unadjusted trial balance of Company E as at April 30, 20Y3.

(5) (a)

To determine

Explain the reason for unadjusted trial balance in (4) is balanced.

(5) (b)

To determine

Journalize the correcting entry.

(5) (c)

To determine

Identify whether the error made is a slide or transposition.

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Chapter 2 Solutions

Financial And Managerial Accounting
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