Question

The following transactions occurred for White Rock Ltd during year ended May 31, 2020.

As of the start of the year, June 1, 2019, White Rock had $3,500 of automotive

supplies on hand. During the year, it purchased $9,100 in automotive supplies. At

year end, $1,300 of automotive supplies were on hand.

On October 31, 2019, White Rock purchased $88,000 of automotive repair

equipment on account. The equipment has an 8-year useful life.

White Rock signed an agreement to rent warehouse space, starting on February 1,

2020. White Rock paid $8,250 to its new landlord on that date, for six months of

rent paid in advance.

White Rock sold equipment it doesn’t need to another business for $45,000 (e.g.

credit equipment) on March 1, 2020. The buyer paid $5,000 in cash and signed a

9%, 9-month promissory note for the remaining $40,000. The amount owed plus

accrued interest will be received from the buyer on November 30, 2020.

White Rock is open seven days a week. Employees are paid $4,900 in salaries

every two weeks. Employees were last paid on Friday, May 25 (up to and

including Friday of that week). Employees will next be paid on Friday, June 8.

For journal entries, write all your calculations instead of explanations. Record the

journal entries in proper form using the attached blank general journal sheets. Do

not abbreviate the names of the ledger accounts. Marks may be deducted for any

journal entries that do not show calculations.

REQUIRED

(a) Prepare the journal entries to record transactions on October 31, 2019, and

March 1, 2020.

(b) Prepare year-end adjusting journal entries that should be made on May 31,

2020.

(c) Show the presentation of the automotive repair equipment on the May 31,

2020 classified balance. sheet in proper form (e.g. don’t forget the

classification name).

(d) Prepare the journal entry to record payment of employee salaries on Friday,

June 8th

Answer 1

(a) Prepare the journal entries to record transactions on October 31, 2019, and March 1, 2020 -

(b) Prepare year-end adjusting journal entries that should be made on May 31, 2020 -

(c) Show the presentation of the automotive repair equipment on the May 31, 2020 classified balance. sheet in proper form -

(d) Prepare the journal entry to record payment of employee salaries on Friday, June 8th