Question

Below is the post-closing trial balance of Gracie Consultancy Services as at 30 June 2019:

	Debit $	Credit $
Cash at bank	38250
Accounts receivable	8250
Equipment	40500
Accumulated depreciation - Equipment		675
Accounts payable		14250
Wages payable		4500
Revenue received in advance		2625
Gracie, Capital		64950
	87000	87000

The following transactions occurred during the month July 2019.

July	1	Paid employee salaries, $4500 for June. Gracie pays her employees’ accrued salaries on the first day of each calendar month.
	8	Invoiced customers for consultancy services performed, $13100.
	14	Performed $1125 of services for customers who paid in advance in June for consultancy services to be performed in July.
	15	Paid $8100 for 4 months office building rent.
	25	Gracie redrew capital of $1800.
	31	Purchased office supplies on account for $1350.

Required

a)     Journalise the transactions, including narrations.

b)    Prepare an unadjusted trial balance as at 31 July 2019. (Total 20 Marks)

a)

General Journal
Date	Account name and narration	Debit $	Credit $

b)

Gracie Consultancy Services
Trial balance
as at 31 July 2019
Account name	Debit $	Credit $

Answer 1

Solution

Gracie Consultancy Services

a. Journal entries –

General Journal
Date	Account Name and Narration	Debit $	Credit $
1-Jul	Wages Payable	4,500
	Cash			4,500
	(To record payment of accrued June salaries)
8-Jul-19	Accounts Receivable	13,100
	Service Revenue		13,100
	(To record services performed)
14-Jul-19	Revenue Received in Advance	$1,125
	Service Revenue		1,125
	(To record earned portion of revenue received in advance)
15-Jul-19	Prepaid Rent	8,100
	Cash			8,100
	(To record payment of 4 months office building rent in advance)
25-Jul-19	Gracie, Drawings	1,800
	Cash			1,800
	(To record owner's drawings)
31-Jul-19	Office Supplies	1,350
	Accounts Payable		1,350
	(To record purchase of office supplies on account)

b. Unadjusted trial balance as at July 31, 2019:

Gracie Consultancy Services
Trial Balance as at July 31, 2019
Account Name	Debit $	Credit $
Cash at bank	23,850
Accounts Receivable	21,350
Prepaid Rent	8,100
Office Supplies	1,350
Equipment	40,500
Accumulated Depreciation - Equipment	675
Gracie, Drawings	1,800
Accounts Payable	15,600
Revenue received in advance	1,500
Gracie, Capital	64,950
Service Revenue	14,225
Totals	96,950	96,950

Computations –

Cash account –

Beg. Balance $38,250

Less: wages payable (4,500)

Prepaid rent     (8,100)

Gracie, Drawings (1,800)

Ending balance 23,850

Accounts Receivable –

Beg. Balance 8,250

Add: service revenue 13,100

Ending balance 21,350

Accounts Payable –

Beg. Balance 14,250

Add: supplies purchased on account 1,350

Ending balance 15,600

Service Revenue –

Accounts receivable    13,100

Revenue received in advance 1,125

Total 14,225

Revenue received in advance –

Beg. Balance 2,625

Less: earned portion in current year 1,125

Ending balance = 1,500