FINANCIAL&MANAGERIAL ACCOUNTING(LL)W/AC
FINANCIAL&MANAGERIAL ACCOUNTING(LL)W/AC
15th Edition
ISBN: 9781337955447
Author: WARREN/TAYLOR
Publisher: CENGAGE L
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Chapter 2, Problem 4PA

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)

Expert Solution
Check Mark
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
  (To record the payment made to creditors on account)   
 
 23Advertising expense534,300 
       Cash11 4,300
  (To record the payment of advertising expense)   

Table (1)

                                                   Journal                                           Page 19
DateDescriptionPost. RefDebit ($)Credit ($)
20Y3 Cash112,500 
April27    Salary and commission expense51 2,500
  (To record the receipt of cash)   
 
 28Automobile expense541,500 
      Cash11 1,500
  (To record the payment made for automobile expense)   
 
 29Miscellaneous expense591,400 
      Cash11 1,400
  (To record the payment made for Miscellaneous expense)   
 
 30Accounts receivable1257,000 
       Fees earned41 57,000
  (To record the revenue earned and billed)   
 
 30Salary and commission expense5111,900 
      Cash11 11,900
  (To record the payment made for salary and commission expense)   
 
 30Dividends334,000 
        Cash11 4,000
  (To record the payment of dividends)   
 
 30Cash1110,000 
        Unearned rent22 10,000
  (To record the cash received for the service yet to be provide)   

Table (2)

(1) and (3)

Expert Solution
Check Mark
To determine

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

Explanation of Solution

General ledger: General ledger is a record of all accounts of assets, liabilities, and stockholders’ equity, necessary to prepare financial statements.

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

Account:         Cash                                                              Account no. 11
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    26,300 
 1 18 6,50019,800 
 5 18 6,00013,800 
 10 1852,300 66,100 
 15 18 30,00036,100 
 17 18 6,45029,650 
 23 18 4,30025,350 
 27 192,500 27,850 
 28 19 1,50026,350 
 29 19 1,40024,950 
 30 19 11,90013,050 
 30 19 4,0009,050 
 30 1910,000 19,050 

Table (3)

Account:    Accounts Receivable                                             Account no. 12
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    61,500 
 10 18 52,3009,200 
 30 1957,000 66,200 

Table (4)

Account:    Prepaid Insurance                                             Account no. 13
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    3,000 
 5 186,000 9,000 

Table (5)

Account:    Office Supplies                                             Account no. 14
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    1,800 
 2 182,300 4,100 
 20 18 3253,775 

Table (6)

Account:    Land                                                               Account no. 16
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April15 18200,000 200,000 

Table (7)

Account:     Accounts Payable                                                      Account no. 21
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓     14,000
 2 18 2,300 16,300
 17 186,450  9,850
 20 18325  9,525

Table (8)

Account:          Unearned Rent                                                   Account no. 22
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April30 19 10,000 10,000

Table (9)

Account:   Notes Payable                                                       Account no. 23
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April15 18 170,000 170,000

Table (10)

Account:          Common stock                                                         Account no. 31
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓     10,000

Table (11)

Account:          Dividends                                                              Account no. 32
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    2,000 
 30 194,000 6,000 

Table (12)

Account:          Fees earned                                                         Account no. 41
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓     240,000
 30 19 57,000 297,000

Table (13)

Account:   Salary and commission expense                                Account no. 51
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    148,200 
 27 19 2,500145,700 
 30 1911,900 157,600 

Table (14)

Account:   Rent expense                                                              Account no. 52
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    30,000 
 1 186,500 36,500 

Table (15)

Account:   Advertising expense                                                     Account no. 53
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    17,800 
 23 184,300 22,100 

Table (16)

Account:  Retained earnings                                                     Account no. 32
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    36,000 

Table (17)

Account:   Automobile expense                                                     Account no. 54
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    5,500 
 28 191,500 7,000 

Table (18)

Account:   Miscellaneous expense                                                   Account no. 59
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y3      
April1Balance ✓    3,900 
 29 191,400 5,300 

Table (19)

(4)

Expert Solution
Check Mark
To determine

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

Explanation of Solution

Unadjusted trial balance:

Unadjusted trial balance is that statement which contains complete list of accounts with their unadjusted balances. This statement is prepared at the end of every financial period.

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

Company E

Unadjusted Trial Balance

April 30, 20Y3

Particulars

Account

No.

Debit $Credit $
Cash1119,050 
Accounts receivable1266,200 
Prepaid insurance139,000 
Office supplies143,775 
Land16200,000 
Accounts payable21 9,525
Unearned rent22 10,000
Notes payable23 170,000
Common stock31 10,000
Retained earnings32 36,000
Dividends336,000 
Fees earned41297,000
Salaries and commission expense51157,600 
Rent expense5236,500 
Advertising expense5322,100 
Automobile expense547,000 
Miscellaneous expense595,3000 
Total 532,525532,525

Table (20)

(5) (a)

Expert Solution
Check Mark
To determine

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

Explanation of Solution

The unadjusted trial balance in (4) would still in balance, since the debit balance equalized the credit balance in the original journal entry.

(5) (b)

Expert Solution
Check Mark
To determine

Journalize the correcting entry.

Explanation of Solution

The correcting entry is as follows:

                                                   Journal                                           Page 19
DateDescriptionPost. RefDebit ($)Credit ($)
20Y3 Salary and commission expense517,200 
April30    Cash11 7,200
  (To record the correcting entry)   

Table (21)

Working notes:

Salary and commission expense =$19,100$11,900=$7,200

(5) (c)

Expert Solution
Check Mark
To determine

Identify whether the error made is a slide or transposition.

Explanation of Solution

Transposition error:

At the time of posting a transaction when two digits of numbers are transposed, in such case the transposition error occurs.

The account balance recorded as $11,900 instead of $19,100 is a transposition error. Since the two digits of the numbers are transposed.

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Chapter 2 Solutions

FINANCIAL&MANAGERIAL ACCOUNTING(LL)W/AC

Ch. 2 - Rules of debit and credit and normal balances...Ch. 2 - Journal entry for asset purchase Prepare a journal...Ch. 2 - Journal entry for fees earned Prepare a journal...Ch. 2 - Journal entry for dividends Prepare a journal...Ch. 2 - Missing amount from an account On August 1, the...Ch. 2 - Trial balance errors For each of the following...Ch. 2 - Correcting entries The following errors took place...Ch. 2 - Prob. 8BECh. 2 - Prob. 1ECh. 2 - Chart of accounts Superior Interiors is owned and...Ch. 2 - Chart of accounts LeadCo School is a newly...Ch. 2 - Rules of debit and credit The following table...Ch. 2 - Normal entries for accounts During the month,...Ch. 2 - Normal balances of accounts Identify each of the...Ch. 2 - Transactions Innovative Consulting Co. has the...Ch. 2 - Journalizing and posting On February 11, 20Y9,...Ch. 2 - Transactions and T accounts The following selected...Ch. 2 - Cash account balance During the month, Bavarian...Ch. 2 - Account balances A. During February, 186,500 was...Ch. 2 - Retained earnings account balance As of January 1,...Ch. 2 - Identifying transactions Rocky Mountain Tours Co....Ch. 2 - Journal entries Based upon the T accounts in...Ch. 2 - Trial balance Based upon the data presented in...Ch. 2 - Trial balance The accounts in the ledger of...Ch. 2 - Effect of errors on trial balance Indicate which...Ch. 2 - Errors in trial balance The following preliminary...Ch. 2 - Effect of errors on trial balance The following...Ch. 2 - Errors in trial balance Identify the errors in the...Ch. 2 - Entries to correct errors The following errors...Ch. 2 - Entries to correct errors The following errors...Ch. 2 - Entries into T accounts and trial balance Marjorie...Ch. 2 - Journal entries and trial balance On October 1,...Ch. 2 - Journal entries and trial balance On November 1,...Ch. 2 - Journal entries and trial balance Elite Realty...Ch. 2 - Corrected trial balance The Lexington Group has...Ch. 2 - Entries into T accounts and trial balance Ken...Ch. 2 - Journal entries and trial balance On August 1,...Ch. 2 - Journal entries and trial balance On October 1,...Ch. 2 - Journal entries and trial balance Valley Realty...Ch. 2 - Corrected trial balance Tech Support Services has...Ch. 2 - The transactions completed by PS Music during June...Ch. 2 - Analyze Amazon.com Amazon.com, Inc. (AMZN) is the...Ch. 2 - Prob. 2MADCh. 2 - Prob. 3MADCh. 2 - Analyze Target The following data (in millions)...Ch. 2 - Prob. 5MADCh. 2 - Prob. 6MADCh. 2 - Prob. 1TIFCh. 2 - Prob. 4TIFCh. 2 - Prob. 5TIF
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