Required information E3-13 Recording and Posting Accrual Basis Journal Entries,
ID: 2339534 • Letter: R
Question
Required information E3-13 Recording and Posting Accrual Basis Journal Entries, and Preparing an Unadjusted Trial Balance and Preliminary Financial Statements [LO 3-2, 3-3, LO 3-4] [The following information applies to the questions displayed below.] Ricky's Piano Rebuilding Company has been operating for one year. On January 1, at the start of its second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: 5,800 Accounts Payable 33,750 Deferred Revenue (deposits) Cash Accounts Receivable Supplies Equipment Land Building $10,050 4,600 57,250 13,500 4,050 1,400 Notes Payable (long-term) 14,800 Common Stock 8,700 Retained Earnings 25,000 Following are the January transactions a. Received a $955 deposit from a customer who wanted her piano rebuilt in February b. Rented a part of the building to a bicycle repair shop; $385 rent received for January. c. Delivered five rebuilt pianos to customers who paid $17,275 in cash d. Delivered two rebuilt pianos to customers for $8,800 charged on account. e. Received $5,950 from customers as payment on their accounts f Received an electric and gas utility bill for $720 for January services to be paid in February. g. Ordered $885 in supplies. h. Paid $2,200 on account in January. i. Paid $19,200 in wages to employees in January for work done this month. j. Received and paid cash for the supplies in (g).Explanation / Answer
Solution:
Part 1 – Journal Entries
Transaction
General Journal
Debit
Credit
a.
Cash
$955
Deferred Revenue
$955
b.
Cash
$385
Rent Revenue
$385
c.
Cash
$17,275
Service Revenue
$17,275
d.
Accounts Receivable
$8,800
Service Revenue
$8,800
e.
Cash
$5,950
Accounts Receivable
$5,950
f.
Utilities Expense
$720
Accounts Payable
$720
g.
No Entry is required for ordered supplies
h.
Accounts payable
$2,200
Cash
$2,200
i.
Salaries and Wages Expense
$19,200
Cash
$19,200
j.
Supplies
$885
Cash
$885
Part 2 – Posting to T-Accounts
Cash
Accounts Receivable
Beg. Bal
$5,800
$2,200
h.
Beg. Bal
$33,750
$5,950
e.
a.
$955
$19,200
i.
d.
$8,800
b.
$385
$885
j.
c.
$17,275
End. Bal
$36,600
e.
$5,950
End. Bal
$8,080
Supplies
Equipment
Beg. Bal
$1,400
Beg. Bal
$14,800
j.
$885
End. Bal
$2,285
End. Bal
$14,800
Land
Building
Beg. Bal
$8,700
Beg. Bal
$25,000
End. Bal
$8,700
End. Bal
$25,000
Accounts Payable
Deferred Revenue
Beg. Bal
$10,050
Beg. Bal
$4,600
h.
$2,200
$720
f.
$955
a.
End. Bal
$8,570
End. Bal
$5,555
Notes Payable
Common Stock
Beg. Bal
$57,250
Beg. Bal
$13,500
End. Bal
$57,250
End. Bal
$13,500
Retained Earnings
Service Revenue
Beg. Bal
$4,050
Beg. Bal
$17,275
c.
End. Bal
$4,050
$8,800
d.
End. Bal
$26,075
Rent Revenue
Salaries and Wages Expense
Beg. Bal
$385
b.
Beg. Bal
i.
$19,200
End. Bal
$385
End. Bal
$19,200
Utilities Expense
Beg. Bal
f.
$720
End. Bal
$720
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Transaction
General Journal
Debit
Credit
a.
Cash
$955
Deferred Revenue
$955
b.
Cash
$385
Rent Revenue
$385
c.
Cash
$17,275
Service Revenue
$17,275
d.
Accounts Receivable
$8,800
Service Revenue
$8,800
e.
Cash
$5,950
Accounts Receivable
$5,950
f.
Utilities Expense
$720
Accounts Payable
$720
g.
No Entry is required for ordered supplies
h.
Accounts payable
$2,200
Cash
$2,200
i.
Salaries and Wages Expense
$19,200
Cash
$19,200
j.
Supplies
$885
Cash
$885
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