Question

This corporation sells office products and performs accounting services.

S & B uses the Perpetual Inventory system and had the following balances:

S & B Office Supplies and Services

Trial Balance

November 1, 2018

Title	Debit	Credit
Cash	9,000
Accounts Receivable	2,240
Supplies	860
Equipment	25,000
Accumulated Depreciation		1,000
Accounts Payable		3,400
Unearned Service Revenue		4,000
Salaries and Wages Payable		1,700
Common Stock		20,000
Retained Earnings		7,000
Totals	$37,100	$37,100

During the month of November, the following summary transactions were completed.

Nov. 1   Paid November Rent $375

8    Paid $3,550 for salaries due employees, of which 1,850 is for November and $1,700 is for October.

        10     Received $1,900 cash from customers in payment of account.

        11     Purchased merchandise on account from dd’s Discount Supply $8,000, terms 2/10, n/30.

        12     Sold merchandise on account for $5,500, terms 2/10, n/30. The cost of the
merchandise sold was $4,000.

        15     Received credit from dd’s Discount Supply for merchandise returned $300.

        19     Received collections in full, less discounts, from customers billed
on sales of $5,500 on November 12.

        20     Paid dd’s Discount Supply in full, less discount.

        22     Received $2,300 Cash for services performed in November.

        25     Purchased equipment on account $5,000.

        27     Purchased supplies on account $1,700.

        28     Paid creditors $3,000 of accounts payable due.

        29     Paid Salaries $1,300.

        29     Performed services on account and billed customers $700.

        29     Received $675 from customers for services to be performed in the future.

Adjustment Data:

1. Supplies on hand are valued at $1,400.
2. Accrued salaries are $500.
3. Depreciation for the month is $250.
4. $750 of services related to the unearned service revenue has not been earned by month end.

Instructions:

1. Enter the November 1, balances in ledger accounts.
2. Journalize the November transactions.
3. Post to the ledger accounts. HINT: You will need to add some accounts to the beginning ones available.
4. Journalize and Post the Adjusting Entries.
5. Prepare an adjusted trial balance at November 30, 2018.
6. Journalize the Closing Entries.

Answer 1

A	B	C	D	E	F	G	H
2
3		In the journal entry, increase in assets and expenses are debited whereas
4		increase in liabilities, equity and revenue are credited.
5
6		Journal entry for the Nov transactions will be as follows:
7		Date	Account	Debit	Credit
8		1-Nov	Rent Expense	$375
9			Cash		$375
10
11		8-Nov	Salaries Expense	1850
12			Salaries Payable	1700
13			Cash		3550
14
15		10-Nov	Cash	$1,900
16			Accounts Receivable		$1,900
17
18		11-Nov	Merchandise Inventory	$8,000
19			Accounts Payable		$8,000
20
21		12-Nov	Accounts Receivable	$5,500
22			Revenue		$5,500
23
24			Cost of goods sold	$4,000
25			Merchandise Inventory		$4,000
26
27		15-Nov	Accounts Payable	$300
28			Purchase Return and Allowances		$300
29
30		19-Nov	Cash	$5,390
31			Sales Discount	$110		=F32*2%
32			Accounts Receivable		$5,500
33
34		20-Nov	Accounts Payable	$7,700		=F19-E27
35			Purchase discount		$154	=E34*2%
36			Cash		$7,546
37
38		22-Nov	Cash	$2,300
39			Revenue		$2,300
40
41		25-Nov	Equipment	$5,000
42			Accounts Payable		$5,000
43
44		27-Nov	Supplies	$1,700
45			Accounts Payable		$1,700
46
47		28-Nov	Accounts Payable	$3,000
48			Cash		$3,000
49
50		29-Nov	Salaries Expense	$1,300
51			Cash		$1,300
52
53		29-Nov	Accounts Receivable	$700
54			Service Revenue		$700
55
56		29-Nov	Cash	$675
57			Unearned Service Revenue		$675
58