1. Judi Dench is a licensed dentist.

Duringthefirstmonthoftheoperationofher business, the

following events and transactions occurred.
April1Shareholdersinvested$40,000cashinexchangeforordinaryshares.
1Hiredasecretary-receptionistatasalary of$600perweekpayablemonthly.
2Paid officerentfor themonth$1,400.
3PurchaseddentalsuppliesonaccountfromHaloCompany$5,200.
10Provideddentalservicesandbilledinsurancecompanies$6,600.
11Received$1,000cashadvance fromRichWelkforanimplant.
20Received$2,100cashforservicescompletedanddeliveredtoPhilStueben. 30
Paid secretary-receptionist for the month $2,400.
30Paid$1,900to HaloCompanyforaccountspayable due.
Judi uses the following chart of accounts: No. 101 Cash, No. 112 Accounts
Receivable,No.126Supplies,No.201AccountsPayable,No.209UnearnedServiceRevenue,N
o. 311ShareCapital—Ordinary,No.400ServiceRevenue,No.726SalariesandWages
Expense, and No. 729 Rent Expense.

Instructions
(a) Journalizethetransactions.
(b) Postto theledger accounts.
(c) Prepareatrial balanceonApril30,2014.

Answer:
a.
J1

Date AccountTitlesand Explanation Ref. Debit Credit

2014
Apr.1 Cash...................................................... 101 40,000
ShareCapitalOrdinary.......... (Issued 311 40,000
shares for cash)
1 Noentry—nota transaction.
2 RentExpense....................................... 729 1,400
Cash............................................. 101 1,400
(Paidmonthlyofficerent)
3 Supplies................................................ 126 5,200
AccountsPayable........................ 201 5,200
(PurchasedsuppliesonaccountfromHaloCompany)
10 AccountsReceivable........................... 112 6,600
Service Revenue.......................... 400 6,600
(Billedclientsforservicesprovided)
11 Cash...................................................... 101 1,000
Unearned Service Revenue......... 209 1,000
(Receivedcashforfutureservice)
20 Cash...................................................... 101 2,100
Service Revenue.......................... 400 2,100
(Receivedcashforservicesprovided)
30 SalariesandWagesExpense.............. 726 2,400
Cash............................................. 101 2,400
(Paidmonthlysalary)
 30 AccountsPayable............................. 201 1,900
Cash........................................... 101 1,900
(Paid Halo Companyonaccount)
b.
 Thetrial balanceofRonSalem Co.shownbelow doesnot balance.

Eachofthelistedaccountshasanormalbalanceperthegeneralledger.Anexamination of the
ledger and journal reveals the following errors.
1. Cashreceivedfromacustomerinpaymentofitsaccountwas debitedfor$570,and
Accounts Receivable was credited for the same amount. The actual collection was for
$750.
2. Thepurchaseofacomputeronaccountfor$620wasrecordedasadebitto Supplies for
$620 and a credit to Accounts Payable for $620.
3. Serviceswereperformedonaccountforaclientfor$890.AccountsReceivablewas
debited for $890, and Service Revenue was credited for $89.
4. Adebitposting to Salariesand WagesExpenseof$700wasomitted.
5. Apaymentofabalance duefor$309wascreditedto Cashfor$309andcreditedto
Accounts Payable for $390.
6. Thepaymentofa$600cashdividendwasdebitedtoSalariesandWagesExpense for
$600andcreditedto Cashfor $600.
 Instructions
Preparea correct trialbalance. (Hint:Ithelpstoprepare the correct journalentry for the
transaction described and compare it to the mistake made.)

Answer:
RONSALEMCO.
Trial
Balance
June30,
2014
Debit Credit
Cash($3,840+ $180) ................................................. $ 4,020
AccountsReceivable($2,898–$180) ...................... 2,718
Supplies($800–$620).............................................. 180
Equipment($3,000+$620)........................................ 3,620
AccountsPayable($2,666–$309 – $390)................ $ 1,967
UnearnedServiceRevenue...................................... 2,200
ShareCapital—Ordinary............................................ 9,000
Dividends($800+$600)............................................ 1,400
ServiceRevenue($2,380 + $801).............................. 3,181
Salariesand WagesExpense($3,400 + $700–$600) 3,500
UtilitiesExpense........................................................ 910
Skip to main content
$16,348 $16,348

The unadjusted trial balance of La Mesa Laundry at August 31, 2016, the end of the
fiscal year, follows:
The data needed to determine year-end adjustments are as follows:

a. Wages accrued but not paid at August 31 are $2,200.

b. Depreciation of equipment during the year is $8,150.

c. Laundry supplies on hand at August 31 are $2,000.

d. Insurance premiums expired during the year are $5,300.

Instructions

1. For each account listed in the unadjusted trial balance, enter the balance in a T
account. Identify the balance as “Aug. 31 Bal.” In addition, add T accounts for Wages
Payable, Depreciation Expense, Laundry Supplies Expense, Insurance Expense, and
Income Summary.

2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and

complete the spreadsheet. Add the accounts listed in part (1) as needed.

3. Journalize and post the adjusting entries. Identify the adjustments by “Adj.” and the
new balances as “Adj. Bal.”

4. Prepare an adjusted trial balance.

5. Prepare an income statement, a statement of owner's equity (no additional

investments were made during the year), and a balance sheet.

6. Journalize and post the closing entries. Identify the closing entries by “Clos.”

7. Prepare a post-closing trial balance.

To prepare: The T-accounts.

Record the transactions directly in their respective T-accounts, and determine their
balances.

Cash

August 31 Balance 3,800

Laundry Supplies
August 31 Balance 9,000 August 31 Adjusted 7,000

August 31 Adjusted balance 2,000

Prepaid Insurance
August 31 Balance 6,000 August 31 Adjusted 5,300
 Adjusted balance 700

Laundry Equipment

August 31 Balance 180,800

Accumulated Depreciation

August 31 Balance 49,200

August 31 Adjusted 8,150

August 31 Adjusted balance 57,350

Accounts Payable

August 31 Balance 7,800

Wages Payable

August 31 Adjusted 2,200

BD, Capital
August 31 Closing 2,400 August 31 Balance 95,000

August 31 Closing 27,350

August 31 Balance 119,950

BD, Drawing
August 31 Balance 2,400 August 31 Closing 2,400
Laundry Revenue
August 31 Closing 248,000 August 31 Balance 248,000
Wages Expense
August 31 Balance 135,800 August 31 Closing 138,000

August 31 Adjusted 2,200

August 31 Adjusted balance 138,000

Rent Expense

August 31 Balance 43,200 August 31 Closing 43,200

Utilities Expense

August 31 Balance 16,000 August 31 Closing 16,000

Depreciation Expense
August 31 Adjusted 8,150 August 31 Closing 8,150

Laundry Supplies Expense

August 31 Adjusted 7,000 August 31 Closing 7,000

Insurance Expense

August 31 Adjusted 5,300 August 31 Closing 5,300

Miscellaneous Expense

August 31 Balance 3,000 August 31 Closing 3,000

3.
To determine
To Journalize and post: The adjusting entries.
Explanation of Solution
Date Description Debit ($) Credit ($)

2016 Wages expense 2,200

August 31 Wages payable 2,200

(To record the wages accrued)

Table (3)

 Wages expense is an expense account, and it is increased. Hence, debit the wages
expense account by $2,200.
  Wages payable is a liability account, and it is increased. Hence, credit the wages
payable account by $2,200.

Date Description Debit ($) Credit ($)

2016 Depreciation expense 8,150

August 31 Accumulated depreciation 8,150

(To record the equipment depreciation)

Table (4)

 Depreciation expense is an expense account, and it is increased. Hence, debit the

wages expense account by $8,150.

 Accumulated depreciation is a contra asset account, and it is increased. Hence, credit

the accumulated depreciation account by $8,150.

Date Description Debit ($) Credit ($)

2016 Laundry supplies expense 7,000

Laundry supplies ($9,000−$2,000)($9,000−

August 31 7,000
$2,000)

(To record the equipment depreciation)

Table (5)

 Laundry supplies expense is an expense account, and it is increased. Hence, debit the
laundry supplies expense account by $7,000.

 Laundry supplies are the asset account, and it is increased. Hence, credit the laundry
supplies account by $7,000.

Date Description Debit ($) Credit ($)

2016 Insurance expense 5,300

Prepaid insurance ($9,000−$2,000)($9,000−

August 31 5,300
$2,000)

(To record the equipment depreciation)

Table (6)

 Insurance expense is an expense account, and it is increased. Hence, debit the

insurance expense account by $5,300.

 Prepaid insurance is an asset account, and it is decreased. Hence, credit the prepaid
insurance account by $5,300.