Question

Part 1

Boomer Zoomer is the owner of Muskogee Repair, a business engaged in providing miscellaneous home repair services. Boomer began the business two years ago with cash he stashed while playing professional football. The transactions listed below occurred during the month just ended.

Required: Prepare the journal entries to record the following transactions.

1. Purchased a small building located on a large lot for a total price of $92,000, of

which $50,000 was applicable to the land and $42,000 to the building. A cash down payment of $20,000 was made and a note payable was issued for the balance of the purchase price.

2. Purchased $1,950 supplies from Waurika Supply Co. on open account.

3. Returned for credit $250 of the supplies received from Waurika Supply Co. because they were received in unsatisfactory condition.

4. Paid Waurika Supply Co. the amount owed from transactions 2 and 3 above.

5. Purchased a one-year insurance policy for $600 cash.

6. Performed repairs for a nice elderly couple and collected in full the charge of $5,100. The charge was a bit steep, but the couple had been big Boomer Zoomer fans and didn't know any better. Besides, Boomer included his autograph in the deal.

7. A bill for $120 was received from the Muskogee Herald-Tribune for

advertisements which appeared in the Sunday comics section. The bill is payable by the tenth of next month.

8. Paid the monthly wages earned by employees, $1,800.

9. Paid $350 to Ryan Automotive for repairs to the company's truck.

10. Supplies costing $540 were consumed during the month.

11. One-month's insurance coverage (purchased in item 5 above) expired during the month.

Part 2

Prepare an adjusted trial balance.

Answer 1

	JOURNAL ENTRIES
	Ref	Account Title	Debit	Credit
	1	Land	$50,000
		Building	$42,000
		Cash		$20,000
		Note Payable		$72,000
	2	Supplies	$1,950
		Accounts Payable		$1,950
	3	Accounts Payable	$250
		Supplies		$250
	4	Accounts Payable	$1,700		(1950-250)
		Cash		$1,700
	5	Prepaid Insurance	$600
		Cash		$600
	6	Cash	$5,100
		Service Revenue		$5,100
	7	Advertisement expense	$120
		Accrued expense		$120
	8	Wages expense	$1,800
		Cash		$1,800
	9	Repair expense	$350
		Cash		$350
	10	Supplies expense	$540
		Supplies		$540
	11	Insurance expense	$50		(600/12)
		Prepaid insurance		$50
		T-ACCOUNTS
		Cash
	Ref No.	Description	Debit	Credit
	1	Purchase of building		$20,000
	4	Accounts Payable		$1,700
	5	Prepaid Insurance		$600
	6	Service Revenue	$5,100
	8	Wages expense		$1,800
	9	Repair expense		$350
		Ending Balance		$19,350
		Prepaid Insurance
	Ref No.	Description	Debit	Credit
	5	Cash	$600
	11	Insurance expense		$50
		Ending Balance	$550
		Supplies
	Ref No.	Description	Debit	Credit
	2	Accounts Payable	$1,950
	3	Purchase return		$250
	10	Supplies expense		$540
		Ending Balance	$1,160
		Land
	Ref No.	Description	Debit	Credit
	1	Purchase	$50,000
		Building
	Ref No.	Description	Debit	Credit
	1	Purchase	$42,000
		Accounts Payable
	Ref No.	Description	Debit	Credit
	2	Supplies		$1,950
	3	Purchase return(Credit note)	$250
	4	Accounts Payable	$1,700
		Ending Balance		$0
		Accrued expense
	Ref No.	Description	Debit	Credit
	7	Advertisement expense		$120
		Note Payable
	Ref No.	Description	Debit	Credit
	1	Purchse of building		$72,000
		Service Revenue
	Ref No.	Description	Debit	Credit
	6	Cash		$5,100
		Advertisement Expense
	Ref No.	Description	Debit	Credit
	7	Expense accrued	$120
		Wage expense
	Ref No.	Description	Debit	Credit
	8	Cash	$1,800
		Repair expense
	Ref No.	Description	Debit	Credit
	9	Repair expense	$350
		Supplies expense
	Ref No.	Description	Debit	Credit
	10	Supplies expense	$540
		Insurance expense
	Ref No.	Description	Debit	Credit
	11	Insurance expense	$50
		ADJUSTED TRIALBALANCE
		Cash		$19,350
		Prepaid Insurance	$550
		Supplies	$1,160
		Land	$50,000
		Building	$42,000
		Accounts Payable		$0
		Accrued expense		$120
		Note Payable		$72,000
		Service Revenue		$5,100
		Advertisement Expense	$120
		Wage expense	$1,800
		Repair expense	$350
		Supplies expense	$540
		Insurance expense	$50
		Total	$        96,570	$ 96,570