Question

Journal Entries and Trial Balance

Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2018, follows:

Elite Realty
Unadjusted Trial Balance
March 31, 2018
Account No.		Debit Balances	Credit Balances
11	Cash	10,910
12	Accounts Receivable	25,420
13	Prepaid Insurance	1,240
14	Office Supplies	740
16	Land	—
21	Accounts Payable		7,190
22	Unearned Rent		—
23	Notes Payable		—
31	Common Stock		10,000
32	Retained Earnings		13,600
33	Dividends	870
41	Fees Earned		123,990
51	Salary and Commission Expense	92,040
52	Rent Expense	12,400
53	Advertising Expense	7,320
54	Automobile Expense	2,230
59	Miscellaneous Expense	1,610
		154,780	154,780

The following business transactions were completed by Elite Realty during April 2018:

Apr. 1.	Paid rent on office for month, $4,220.
2.	Purchased office supplies on account, $1,100.
5.	Paid annual insurance premiums, $3,040.
10.	Received cash from clients on account, $21,100.
15.	Purchased land for a future building site for $76,000, paying $8,400 in cash
	and giving a note payable for the remainder.
17.	Paid creditors on account, $3,800.
20.	Returned a portion of the office supplies purchased on November 2, receiving
	full credit for their cost, $170.
23.	Paid advertising expense, $1,690.
27.	Discovered an error in computing a commission; received cash from the salesperson
	for the overpayment, $840.
28.	Paid automobile expense (including rental charges for an automobile), $1,270.
29.	Paid miscellaneous expenses, $380.
30.	Recorded revenue earned and billed to clients during the month, $25,320.
30.	Paid salaries and commissions for the month, $6,520.
30.	Paid dividends, $840.
30.	Rented land purchased on November 15 to local merchants association for
	use as a parking lot in December and January, during a street rebuilding program; received advance payment of $2,530.

Required:

Use the attached spreadsheet to complete parts 1 and 3. Click on the Spreadsheet icon to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem.

1. Enter the April 1, 2018, balance of each account in the appropriate balance column of a four-column account. The word Balance has been entered in the item section and a check mark (√) has been placed in the Posting Reference column.

2. Journalize and insert the Posting References for the transactions for April in a two-column journal beginning on Page 18. For a compound transaction, if an amount box does not require an entry, leave it blank.

General Journal				Page 18
Date	Description	Post. Ref.	Debit	Credit
2018
Apr. 1
Apr. 2
Apr. 5
Apr. 10
Apr. 15
Apr. 17
Apr. 20
Apr. 23

General Journal				Page 19
Date	Description	Post. Ref.	Debit	Credit
2018
Apr. 27
Apr. 28
Apr. 29
Apr. 30-Rev.
Apr. 30-Salary
Apr. 30-Dividends
Apr. 30-Rent

3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.

4. Using the balances from the spreadsheet, prepare an unadjusted trial balance of the ledger as of April 30, 2018. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. If an amount box does not require an entry, leave it blank.

Elite Realty Unadjusted Trial Balance April 30, 2018
	Account No.	Debit Balances	Credit Balances

5a. Assume that the April 30 transaction for salaries and commissions should have been $5,620. As a result, the unadjusted trial balance in (4) would  

5b. Assume that the April 30 transaction for salaries and commissions should have been $5,620. Journalize the correcting entry. If an amount box does not require an entry, leave it blank.

General Journal				PAGE 19
Date	Description	Post. Ref.	Debit	Credit
2018
Apr. 30

5c. Assume that the November 30 transaction for salaries and commissions should have been $5,620. Is this error a transposition or slide?

Answer 1

Solution: