Elite Realty
Unadjusted Trial Balance
March 31, 2014
Debit
Balances
Credit
Balances
11 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,300
12 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,500
13 Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
14 Office Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800
16 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
21 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000
22 Unearned Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
23 Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
31 Lester Wagner, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,000
32 Lester Wagner, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
41 Fees Earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000
51 Salary and Commission Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,200
52 Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
53 Advertising Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,800
54 Automobile Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500
59 Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900
300,000 300,000
The following business transactions were completed by Elite Realty during April 2014:
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, 2014, 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, 2014.
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?
Answer:
2. and 3.
Date Description
Post.
Ref. Debit Credit
2014
Apr. 1 Rent Expense 52 6,500
Cash 11 6,500
2 Office Supplies 14 2,300
Accounts Payable 21 2,300
5 Prepaid Insurance 13 6,000
Cash 11 6,000
10 Cash 11 52,300
Accounts Receivable 12 52,300
15 Land 16 200,000
Cash 11 30,000
Notes Payable 23 170,000
17 Accounts Payable 21 6,450
Cash 11 6,450
20 Accounts Payable 21 325
Office Supplies 14 325
23 Advertising Expense 53 4,300
Cash 11 4,300
JOURNAL
JOURNAL
Page 18
Page 19
Date Description
Post.
Ref. Debit Credit
2014
Apr. 27 Cash 11 2,500
Salary and Commission Expense 51 2,500
28 Automobile Expense 54 1,500
Cash 11 1,500
29 Miscellaneous Expense 59 1,400
Cash 11 1,400
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
30 Accounts Receivable 12 57,000
Fees Earned 41 57,000
30 Salary and Commission Expense 51 11,900
Cash 11 11,900
30 Lester Wagner, Drawing 32 4,000
Cash 11 4,000
30 Cash 11 10,000
Unearned Rent 22 10,000
1. and 3.
Account: Cash
GENERAL LEDGER
Account No. 11
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 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
Account: Accounts Receivable Account No. 12
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 61,500
10 18 52,300 9,200
30 19 57,000 66,200
Account: Prepaid Insurance
Account: Office Supplies
Account: Land
Account No. 13
Account No. 14
Account No. 16
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 15 18 200,000 200,000
Account: Accounts Payable Account No. 21
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 14,000
2 18 2,300 16,300
17 18 6,450 9,850
20 18 325 9,525
Account: Unearned Rent
Account: Notes Payable
Account No. 22
Account No. 23
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 15 18 170,000 170,000
Account: Lester Wagner, Capital Account No. 31
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 2,000
30 19 4,000 6,000
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 46,000
Account: Lester Wagner, Drawing
Account: Fees Earned
Account No. 32
Account No. 41
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 240,000
30 19 57,000 297,000
Account: Salary and Commission Expense Account No. 51
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 148,200
27 19 2,500 145,700
30 19 11,900 157,600
Account: Rent Expense Account No. 52
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 30,000
1 18 6,500 36,500
Account: Advertising Expense Account No. 53
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 17,800
23 18 4,300 22,100
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 5,500
28 19 1,500 7,000
Prob. 2–4A (Continued)
Account: Automobile Expense
Account: Miscellaneous Expense
Account No. 54
Account No. 59
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 Balance √ 3,900
29 19 1,400 5,300
4.
ELITE REALTY
Unadjusted Trial Balance
April 30, 2014
Debit
Balances
Credit
Balances
Cash 19,050
Accounts Receivable 66,200
Prepaid Insurance 9,000
Office Supplies 3,775
Land 200,000
Accounts Payable 9,525
Unearned Rent 10,000
Notes Payable 170,000
Lester Wagner, Capital 46,000
Lester Wagner, Drawing 6,000
Fees Earned 297,000
Salary and Commission Expense 157,600
Rent Expense 36,500
Advertising Expense 22,100
Automobile Expense 7,000
Miscellaneous Expense 5,300
532,525 532,525
5. (a) The unadjusted trial balance in (4) still balances, since the debits equaled
the credits in the original journal entry.
(b) The correcting entry for $7,200 ($19,100 – $11,900) would be as follows:
JOURNAL Page 19
Date Description
Post.
Ref. Debit Credit
2014
Apr. 30 Salary and Commission Expense 51 7,200
Cash 11 7,200
(c) Transposition