Concept explainers
Journal entries and
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.
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 $19,100.
(a) Why did the unadjusted trial balance in (4) balance?
(b) Journalize the correcting entry.
(c) Is this error a transposition or slide?
(2) and (3)
Journalize the transactions of April in a two column journal beginning on page 18.
Explanation of Solution
Journal:
Journal is the book of original entry. Journal consists of the day today financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.
Rules of debit and credit:
“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.
Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.
Journalize the transactions of April in a two column journal beginning on page 18.
Journal Page 18 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
20Y3 | Rent expense | 52 | 6,500 | ||
April | 1 | Cash | 11 | 6,500 | |
(To record the payment of rent) | |||||
2 | Office supplies | 14 | 2,300 | ||
Accounts payable | 21 | 2,300 | |||
(To record the purchase of supplies of account) | |||||
5 | Prepaid insurance | 13 | 6,000 | ||
Cash | 11 | 6,000 | |||
(To record the payment of insurance premium) | |||||
10 | Cash | 11 | 52,300 | ||
Accounts receivable | 12 | 52,300 | |||
(To record the receipt of cash from clients) | |||||
15 | Land | 16 | 200,000 | ||
Cash | 11 | 30,000 | |||
Notes payable | 23 | 170,000 | |||
(To record the purchase of land party for cash and party on signing a note) | |||||
17 | Accounts payable | 21 | 6,450 | ||
Cash | 11 | 6,450 | |||
(To record the payment made to creditors on account) | |||||
20 | Accounts payable | 21 | 325 | ||
Office supplies | 14 | 325 | |||
(To record the payment made to creditors on account) | |||||
23 | Advertising expense | 53 | 4,300 | ||
Cash | 11 | 4,300 | |||
(To record the payment of advertising expense) |
Table (1)
Journal Page 19 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
20Y3 | Cash | 11 | 2,500 | ||
April | 27 | Salary and commission expense | 51 | 2,500 | |
(To record the receipt of cash) | |||||
28 | Automobile expense | 54 | 1,500 | ||
Cash | 11 | 1,500 | |||
(To record the payment made for automobile expense) | |||||
29 | Miscellaneous expense | 59 | 1,400 | ||
Cash | 11 | 1,400 | |||
(To record the payment made for Miscellaneous expense) | |||||
30 | Accounts receivable | 12 | 57,000 | ||
Fees earned | 41 | 57,000 | |||
(To record the revenue earned and billed) | |||||
30 | Salary and commission expense | 51 | 11,900 | ||
Cash | 11 | 11,900 | |||
(To record the payment made for salary and commission expense) | |||||
30 | Dividends | 33 | 4,000 | ||
Cash | 11 | 4,000 | |||
(To record the payment of dividends) | |||||
30 | Cash | 11 | 10,000 | ||
Unearned rent | 22 | 10,000 | |||
(To record the cash received for the service yet to be provide) |
Table (2)
(1) and (3)
Record the balance of each account in the appropriate balance column of a four-column account and post them to the ledger.
Explanation of Solution
General ledger: General ledger is a record of all accounts of assets, liabilities, and stockholders’ equity, necessary to prepare financial statements.
Record the balance of each account in the appropriate balance column of a four-column account and post them to the ledger.
Account: Cash Account no. 11 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 26,300 | |||
1 | 18 | 6,500 | 19,800 | ||||
5 | 18 | 6,000 | 13,800 | ||||
10 | 18 | 52,300 | 66,100 | ||||
15 | 18 | 30,000 | 36,100 | ||||
17 | 18 | 6,450 | 29,650 | ||||
23 | 18 | 4,300 | 25,350 | ||||
27 | 19 | 2,500 | 27,850 | ||||
28 | 19 | 1,500 | 26,350 | ||||
29 | 19 | 1,400 | 24,950 | ||||
30 | 19 | 11,900 | 13,050 | ||||
30 | 19 | 4,000 | 9,050 | ||||
30 | 19 | 10,000 | 19,050 |
Table (3)
Account: Accounts Receivable Account no. 12 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 61,500 | |||
10 | 18 | 52,300 | 9,200 | ||||
30 | 19 | 57,000 | 66,200 |
Table (4)
Account: Prepaid Insurance Account no. 13 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 3,000 | |||
5 | 18 | 6,000 | 9,000 |
Table (5)
Account: Office Supplies Account no. 14 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 1,800 | |||
2 | 18 | 2,300 | 4,100 | ||||
20 | 18 | 325 | 3,775 |
Table (6)
Account: Land Account no. 16 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 15 | 18 | 200,000 | 200,000 |
Table (7)
Account: Accounts Payable Account no. 21 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 14,000 | |||
2 | 18 | 2,300 | 16,300 | ||||
17 | 18 | 6,450 | 9,850 | ||||
20 | 18 | 325 | 9,525 |
Table (8)
Account: Unearned Rent Account no. 22 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 30 | 19 | 10,000 | 10,000 |
Table (9)
Account: Notes Payable Account no. 23 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 15 | 18 | 170,000 | 170,000 |
Table (10)
Account: Common stock Account no. 31 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 10,000 |
Table (11)
Account: Dividends Account no. 32 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 2,000 | |||
30 | 19 | 4,000 | 6,000 |
Table (12)
Account: Fees earned Account no. 41 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 240,000 | |||
30 | 19 | 57,000 | 297,000 |
Table (13)
Account: Salary and commission expense Account no. 51 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 148,200 | |||
27 | 19 | 2,500 | 145,700 | ||||
30 | 19 | 11,900 | 157,600 |
Table (14)
Account: Rent expense Account no. 52 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 30,000 | |||
1 | 18 | 6,500 | 36,500 |
Table (15)
Account: Advertising expense Account no. 53 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 17,800 | |||
23 | 18 | 4,300 | 22,100 |
Table (16)
Account: Retained earnings Account no. 32 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 36,000 |
Table (17)
Account: Automobile expense Account no. 54 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 5,500 | |||
28 | 19 | 1,500 | 7,000 |
Table (18)
Account: Miscellaneous expense Account no. 59 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y3 | |||||||
April | 1 | Balance | ✓ | 3,900 | |||
29 | 19 | 1,400 | 5,300 |
Table (19)
(4)
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 $ |
Cash | 11 | 19,050 | |
Accounts receivable | 12 | 66,200 | |
Prepaid insurance | 13 | 9,000 | |
Office supplies | 14 | 3,775 | |
Land | 16 | 200,000 | |
Accounts payable | 21 | 9,525 | |
Unearned rent | 22 | 10,000 | |
Notes payable | 23 | 170,000 | |
Common stock | 31 | 10,000 | |
Retained earnings | 32 | 36,000 | |
Dividends | 33 | 6,000 | |
Fees earned | 41 | 297,000 | |
Salaries and commission expense | 51 | 157,600 | |
Rent expense | 52 | 36,500 | |
Advertising expense | 53 | 22,100 | |
Automobile expense | 54 | 7,000 | |
Miscellaneous expense | 59 | 5,3000 | |
Total | 532,525 | 532,525 |
Table (20)
(5) (a)
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)
Journalize the correcting entry.
Explanation of Solution
The correcting entry is as follows:
Journal Page 19 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
20Y3 | Salary and commission expense | 51 | 7,200 | ||
April | 30 | Cash | 11 | 7,200 | |
(To record the correcting entry) |
Table (21)
Working notes:
(5) (c)
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.
Want to see more full solutions like this?
Chapter 2 Solutions
Financial And Managerial Accounting
- INCOME STATEMENT, STATEMENT OF OWNERS EQUITY, AND BALANCE SHEET Backlund Farm Supply completed the work sheet on page 609 for the year ended December 31, 20--. Owners equity as of January 1, 20--, was 50.000. The current portion of Mortgage Payable is 1,000. REQUIRED 1. Prepare a multiple-step income statement. 2. Prepare a statement of owner s equity. 3. Prepare a balance sheet.arrow_forwardPrepare journal entries to record the following transactions that occurred in March: A. on first day of the month, purchased building for cash, $75,000 B. on fourth day of month, purchased inventory, on account, $6,875 C. on eleventh day of month, billed customer for services provided, $8,390 D. on nineteenth day of month, paid current month utility bill, $2,000 E. on last day of month, paid suppliers for previous purchases, $2,850arrow_forwardINCOME STATEMENT. STATEMENT OF OWNER S EQUITY, AND BALANCE SHEET Paulsons Pet Store completed the work sheet on page 602 for the year ended December 31, 20--. Owners equity as of January 1, 20--, was 21,900. The current portion of Mortgage Payable is 500. REQUIRED 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet.arrow_forward
- 3. Many customers have been asking for more allergy-friendly products, so in December the bakery started carrying a line of gluten-free products on a trial basis. The information below relates to the Use the perpetual inventory method with the FIFO valuation method. Please see the "Inventory snhu 2. The following events occurred in November: November 5: Paid employee for period ending October 31. November 10: Paid Octobertelephone bill. 15. (See Wage Calculation Data table at the end of this document.) November 15: Paid rent on bakery space. November 20: Paid $8,500 toward baking supplies vendor payable. November 20: Paid employee for period ending November 15. November 22: Purchased $300 in office supplies. November 30: Received telephone bill for November in amount of $75. Payment is due on December 10. November 30: Accrued wages earned for employee for period of November 16 through November 30. (See Wage Calculation Data table at the end of this document.) November 30: November…arrow_forwardAs journal entriesarrow_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 31,2019, 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. Aug. 17. Paid advertising expenses, $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…arrow_forward
- ACCRUALS & DEFERRALSAnswer and explain thoroughly EXERCISES For the following items, make a journalentry of the original transaction (ifapplicable) a. Paid $10,800 for 6-months’ insurance premiums. b. The balance in the ledger account Office Suppliesamounted to $32,000. A count of the office supplies onNov. 30 totaled $12,800. c. Received $22,800 on Nov. 1 from a customer forservices to be rendered during the months of November,December, January, and February. d. Acquired Office Equipment costing $352,800 on April 1.the equipment is expected to last 5 years. After which, itwill be worthless. e. Assume that on Nov. 30 is a Friday and that thecompany pays its employees a total of $87,500 onSaturday.arrow_forwardJournalizing transactions and posting to T-accounts Roland Poster Optical Dispensary completed the following transactions during the latter part of March: Requirements Journalize the transactions of Roland Foster Optical Dispensary. Include an explanation with each journal entry. Open the following accounts (use T-account format): Cash (Beginning Balance of $21,000), Office Supplies, and Accounts Payable. Post the journal entries from Requirement 1 to the accounts, and compute the balance in each account.arrow_forwardPrepare the journal entries for the following transactions provided by MPM as at January 31, 2011 and post them to their respective general ledger accounts. a. Depreciation $100 b. Prepaid rent expired $400 c. Interest expense accrued $900 d. Employee salaries owed for Monday to Thursday for a five day workweek: weekly payroll $14,000 e. Unearned service revenue $800arrow_forward
- Prepare journal entries to record the following transactions. Create a T-account for Accounts Payable, post any entries that affect the account, and tally ending balance for the account. Assume an Accounts Payable beginning balance of $5,000. A. February 2, purchased an asset, merchandise inventory, on account, $30,000 B. March 10, paid creditor for part of February purchase, $12,000arrow_forwardAccounts Payable Sleek Ride, a company providing limo services, has a December 31 year-end date. For Sleek Ride, the following transactions occurred during the first 10 days of June: a. Purchased, on credit, space for classified advertisements in the New York Times for $1,950. The advertising was run the day the space was purchased. b. Purchased office supplies from Office Max on credit in the amount of $475. c. One of Sleek Rides sales staff signed a $20,000 contract to provide exclusive limo services for a large company for the remainder of the month. The salespersons commission is 10% of service revenue. The commission will be paid July 10. ( Note: Concern yourself only with the commission.) d. Received electric bill for May. The bill is $4,200 and is due June 15. e. Received a bill for $970 from Harrys Auto. Harrys repaired 10 limos for Sleek Ride in late May. Payment is due June 18. Required: Prepare journal entries for the above transactions.arrow_forwardquestion in the attached file regards,arrow_forward
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengageCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning