Question

Mr Novak Murray is the sole owner of Roger & Rafa, a store that offers tennis racquet stringing service (that involves the use of strings and labour). The unadjusted trial balance of Roger & Raga as at 30 June 2018 is shown below. The annual reporting period for the business ends 30 June.

Roger & Rafa Unadjusted Trial Balance as at 30 June 2018
Account	Debit	Credit
Cash at Bank	$18 000
Accounts Receivable	3 200
String Supplies	5 840
Stringing Machines	23 400
Accounts Payable		$ 1300
Novak Murray, Capital		38 600
Novak Murray, Drawings	2 500
Stringing Service Revenue		21 420
Salaries Expense	3 260
Rent Expense	2 980
String Supplies Expense	2 140
	$61 320	$61 320

Additional information:

1. A cash payment of $540 for rent covering the period 1 May 2018 to 31 July 2018 was made on 30 April 2018 and debited to the Rent Expense account on the day.

2. One customer, Naomi Stosur, purchased a $250 service package by cash on 5 May 2018. Thepackage covers ten times of the use of the store’s stringing service. No service was used at purchase. This transaction was credited to service revenue on the day of purchase. Naomi had used the stringing service four times by the end of the reporting period.

3. The unpaid salaries earned by the store’s two sale assistants, Alex and Ashleigh, totaled $780as at 30 June 2018.
   Ignore depreciation. The use of string supplies in the period has been accounted for.

Required

(a) Prepare the journal entries required to correct recording errors (if any, leave blank if there are no errors).

(b) Prepare adjusting entries (after correction of errors, if any).
(c) Prepare the Adjusted Trial Balance for Roger & Rafa.
(For parts (a) & (b), provide your answers to the related item number, no narration required.)

Answer 1

a. In the books of Roger and Rafa:

Rectification entries:

Date	Account Titles	Debit	Credit
		$	$
1.	Prepaid Rent	540
	Rent Expense		540
2.	Stringing Service Revenue	250
	Unearned Service Revenue		250

b. Adjusting entries:

Date	Account Titles	Debit	Credit
June 30, 2018		$	$
1.	Rent Expense ( $ 540 / 3 * 2 )	360
	Prepaid Rent		360
2.	Unearned Service Revenue ( $ 250 / 10 * 4 )	100
	Stringing Service Revenue		100
3.	Salaries Expense	780
	Salaries Payable		780

c.

Roger and Rafa Adjusted Trial Balance June 30, 2018
Account Titles	Debit	Credit
	$	$
Cash at bank	18,000
Accounts Receivable	3,200
String Supplies	5,840
Prepaid Rent	180
String Machines	23,400
Account Payable		1,300
Salaries Payable		780
Unearned Service Revenue		150
Novak Murray, Capital		38,600
Novak Murray, Drawings	2,500
Sringing Service Revenue		21,270
Salaries Expense	4,040
Rent Expense	2,800
String Supplies Expense	2,140
Totals	$ 62,100	$ 62,100