Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2019, follows:

Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2019, follows:

Elite Realty Unadjusted Trial Balance March 31, 2019 Account No. Debit  Balances Credit Balances Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 26,300 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 61,500 Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3,000 Office Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1,800 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 — Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 14,000 Unearned Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 — Notes Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 — Lester Wagner, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 46,000 Lester Wagner, Drawing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2,000 Fees Earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 240,000 Salary and Commission Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 148,200 Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 30,000 Advertising Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 17,800 Automobile Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 5,500 Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 3,900 300,000 300,000

The following business transactions were completed by Elite Realty during April 2019:

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, 2019, 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, 2019.

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.

Page 18

Post.

Ref. Debit Credit

 2019

 Apr. 1 Rent Expense52 6,500

Cash11 6,500

2 Office Supplies14 2,300

Accounts Payable 21 2,300

5 Prepaid Insurance 13 6,000

Cash11 6,000

10 Cash11 52,300

Accounts Receivable 12 52,300

15 Land16 200,000

Cash11 30,000

Notes Payable23 170,000

17 Accounts Payable21 6,450

Cash11 6,450

20 Accounts Payable21 325

Office Supplies 14 325

23 Advertising Expense 53 4,300

Cash11 4,300

Page 19

Post.

Ref. Debit Credit

 2019

 Apr. 27 Cash11 2,500

Salary and Commission Expense 51 2,500

28 Automobile Expense 54 1,500

Cash11 1,500

29 Miscellaneous Expense 59 1,400

Cash11 1,400

30 Accounts Receivable 12 57,000

Fees Earned41 57,000

30 Salary and Commission Expense 51 11,900

Cash11 11,900

30 Lester Wagner, Drawing 32 4,000

Cash11 4,000

30 Cash11 10,000

Unearned Rent22 10,000

1. and 3.

Account No. 11

Post.

Item Ref. Debit Debit Credit

 2019

 Apr. 1 Balance  26,300

1 1819,800

5 1813,800

10 18 52,300 66,100

15 1836,100

17 1829,650

23 1825,350

27 19 2,500 27,850

28 1926,350

29 1924,950

30 1913,050

30 199,050

30 19 10,000 19,050

Account No. 12

Post.

Item Ref. Debit Debit Credit

 2019

 Apr. 1 Balance  61,500

10 189,200

30 19 57,000 66,200

Account No. 13

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance  3,000

5 18 6,000 9,000

Account No. 14

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance  1,800

2 18 2,300 4,100

20 18 325 3,775

Account No. 16

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 15 18 200,000 200,000

Account No. 21

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance 14,000

2 18 2,300 16,300

17 18 6,4509,850

20 18 3259,525

Account No. 22

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 30 19 10,000 10,000

Account No. 23

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 15 18 170,000 170,000

Account No. 31

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance 46,000

Account No. 32

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance  2,000

30 19 4,000 6,000

Account No. 41

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance 240,000

30 19 57,000 297,000

Account No. 51

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance  148,200

27 19 2,500 145,700

30 19 11,900 157,600

Account No. 52

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance  30,000

1 18 6,500 36,500

Account No. 53

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance  17,800

23 18 4,300 22,100

Account No. 54

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance  5,500

28 19 1,500 7,000

Account No. 59

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Apr. 1 Balance  3,900

29 19 1,400 5,300

4.

Account Debit Credit

No. Balances Balances

Cash11 19,050

Accounts Receivable12 66,200

Prepaid Insurance13 9,000

Office Supplies14 3,775

Land16 200,000

Accounts Payable21 9,525

Unearned Rent22 10,000

Notes Payable23 170,000

Lester Wagner, Capital31 46,000

Lester Wagner, Drawing 32 6,000

Fees Earned41 297,000

Salary and Commission Expense 51 157,600

Rent Expense52 36,500

Advertising Expense53 22,100

Automobile Expense54 7,000

Miscellaneous Expense59 5,300

532,525 532,525

5. (a) The unadjusted trial balance in (4) still balances because 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:

 2019

 Apr. 30 Salary and Commission Expense 51 7,200

Cash11 7,200

(c) Transposition

The unadjusted trial balance of Lakota Freight Co. at March 31, 2019, the end of the year, follows:

The unadjusted trial balance of Lakota Freight Co. at March 31, 2019, the end of the year, follows:

Lakota Freight Co. Unadjusted Trial Balance March 31, 2019 Debit   Balances Credit   Balances

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11 12,000 Supplies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13 30,000

Prepaid Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14 3,600

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16 110,000

Accumulated Depreciation Equipment. . . . . . . . . . . . . . . . . . . . . . . . .  17 25,000

Trucks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18 60,000

Accumulated Depreciation—Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19 15,000 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21 4,000 Kaya Tarango, Capital  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31 96,000 Kaya Tarango, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32 15,000 Service Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41 160,000 Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51 45,000 Rent Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53 10,600 Truck Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54 9,000 Miscellaneous Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  59 4,800 300,000 300,000

The data needed to determine year-end adjustments are as follows:

a. Supplies on hand at March 31 are $7,500.

b. Insurance premiums expired during the year are $1,800.

c. Depreciation of equipment during the year is $8,350.

d. Depreciation of trucks during the year is $6,200.

e. Wages accrued but not paid at March 31 are $600.

Instructions

1. For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark (✓) in the Posting Reference column.

2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed.

3. Journalize and post the adjusting entries, inserting balances in the accounts affected. 

Record the adjusting entries on Page 26 of the journal. The following additional accounts from Lakota Freight Co.’s chart of accounts should be used: Wages Payable, 22; Supplies Expense, 52; Depreciation Expense—Equipment, 55; Depreciation Expense—Trucks, 56; Insurance Expense, 57.

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. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry.

7. Prepare a post-closing trial balance.

Answer:

1., 3., and 6.

Account No. 11

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  12,000

Account No. 13

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  30,000

31 Adjusting 26 22,500 7,500

Account No. 14

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  3,600

31 Adjusting 26 1,800 1,800

Account No. 16

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  110,000

Account No. 17

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance 25,000

31 Adjusting 26 8,350 33,350

Account No. 18

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  60,000

Account No. 19

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance 15,000

31 Adjusting 26 6,200 21,200

Account No. 21

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance 4,000

Account No. 22

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Adjusting 26 600 600

Account No. 31

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance 96,000

31 Closing 27 51,150 147,150

31 Closing 27 15,000 132,150

Account No. 32

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  15,000

31 Closing 27 15,000 — —

Prob. 4-4A (Continued)

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance 160,000

31 Closing 27 160,000 — —

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  45,000

31 Adjusting 26 600 45,600

31 Closing 27 45,600 — —

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Adjusting 26 22,500 22,500

31 Closing 27 22,500 — —

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  10,600

31 Closing 27 10,600 — —

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  9,000

31 Closing 27 9,000

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Adjusting 26 8,350 8,350

31 Closing 27 8,350 — —

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Adjusting 26 6,200 6,200

31 Closing 27 6,200 — —

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Adjusting 26 1,800 1,800

31 Closing 27 1,800 — —

Post.

Item Ref. Debit Credit Debit Credit

 2019

 Mar. 31 Balance  4,800

31 Closing 27 4,800

2.     Optional (Appendix)

Account Title Debit Credit Debit Credit Debit Credit Debit Credit

Cash 12,00012,00012,000

Supplies 30,000(a) 22,500 7,5007,500

Prepaid Insurance 3,600(b) 1,800 1,8001,800

Equipment 110,000110,000110,000

Accum. Depr.—Equip. 25,000 (c) 8,350 33,35033,350

Trucks 60,00060,00060,000

Accum. Depr.—Trucks 15,000 (d) 6,200 21,20021,200

Accounts Payable4,0004,0004,000

Wages Payable(e) 600 600600

Kaya Tarango, Capital 96,00096,00096,000

Kaya Tarango, Drawing 15,00015,00015,000

Service Revenue160,000160,000 160,000

Wages Expense 45,000 (e) 600 45,600 45,600

Supplies Expense (a) 22,500 22,500 22,500

Rent Expense 10,60010,600 10,600

Truck Expense 9,0009,000 9,000

Depr. Exp.—Equipment (c) 8,350 8,350 8,350

Depr. Exp.—Trucks(d) 6,200 6,200 6,200

Insurance Expense(b) 1,800 1,800 1,800

Miscellaneous Expense 4,8004,800 4,800

300,000 300,000 39,450 39,450 315,150 315,150 108,850 160,000 206,300 155,150

Net income51,15051,150

160,000 160,000 206,300 206,300

3.Page 26

Post.

Ref. Debit Credit

 2019

 Mar. 31 Supplies Expense 52 22,500

Supplies13 22,500

Supplies used ($30,000 – $7,500).

31 Insurance Expense 57 1,800

Prepaid Insurance 14 1,800

Insurance expired.

31 Depreciation Expense—Equipment 55 8,350

Accumulated Depr.—Equipment 17 8,350

Equipment depreciation.

31 Depreciation Expense—Trucks 56 6,200

Accumulated Depr.—Trucks 19 6,200

Truck depreciation.

31 Wages Expense 51 600

Wages Payable 22 600

Accrued wages.

4.

Account Debit Credit

No. Balances Balances

Cash11 12,000

Supplies13 7,500

Prepaid Insurance14 1,800

Equipment16 110,000

Accumulated Depreciation—Equipment 17 33,350

Trucks18 60,000

Accumulated Depreciation—Trucks 19 21,200

Accounts Payable21 4,000

Wages Payable22 600

Kaya Tarango, Capital 31 96,000

Kaya Tarango, Drawing 32 15,000

Service Revenue41 160,000

Wages Expense51 45,600

Supplies Expense52 22,500

Rent Expense53 10,600

Truck Expense54 9,000

Depreciation Expense—Equipment 55 8,350

Depreciation Expense—Trucks 56 6,200

Insurance Expense57 1,800

Miscellaneous Expense 59 4,800

315,150 315,150

5.

Service revenue$160,000

Expenses:

Wages expense$45,600

Supplies expense22,500

Rent expense10,600

Truck expense9,000

Depreciation expense—equipment 8,350

Depreciation expense—trucks6,200

Insurance expense1,800

Miscellaneous expense4,800

Total expenses108,850

Net income$ 51,150

Kaya Tarango, capital, April 1, 2018$ 96,000

Net income for the year$ 51,150

Withdrawals(15,000)

Increase in owner’s equity36,150

Kaya Tarango, capital, March 31, 2019$132,150

Current assets:

Cash$12,000

Supplies7,500

Prepaid insurance1,800

Total current assets$ 21,300

Property, plant, and equipment:

Equipment$110,000

Less accumulated depreciation 33,350 $76,650

Trucks$ 60,000

Less accumulated depreciation 21,200 38,800

Total property, plant, and equipment115,450

Total assets$136,750

Current liabilities:

Accounts payable$ 4,000

Wages payable600

Total liabilities$ 4,600

Kaya Tarango, capital132,150

Total liabilities and owner’s equity$136,750

6.Page 27

Post.

Ref. Debit Credit

 2019

 Mar. 31 Service Revenue 41 160,000

Wages Expense 51 45,600

Supplies Expense 52 22,500

Rent Expense 53 10,600

Truck Expense 54 9,000

Depreciation Expense—Equipment 55 8,350

Depreciation Expense—Trucks 56 6,200

Insurance Expense 57 1,800

Miscellaneous Expense 59 4,800

Kaya Tarango, Capital 31 51,150

31 Kaya Tarango, Capital 31 15,000

Kaya Tarango, Drawing 32 15,000

7.

Account Debit Credit

No. Balances Balances

Cash11 12,000

Supplies13 7,500

Prepaid Insurance14 1,800

Equipment16 110,000

Accumulated Depreciation—Equipment 17 33,350

Trucks18 60,000

Accumulated Depreciation—Trucks 19 21,200

Accounts Payable21 4,000

Wages Payable22 600

Kaya Tarango, Capital31 132,150

191,300 191,300