Question

March 31, 2018

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	27,000.00
2	Accounts Receivable	60,000.00
3	Prepaid Insurance	2,500.00
4	Office Supplies	1,600.00
5	Land
6	Accounts Payable		13,800.00
7	Unearned Rent
8	Notes Payable
9	Common Stock		10,000.00
10	Retained Earnings		36,900.00
11	Dividends	1,600.00
12	Fees Earned		232,000.00
13	Salary and Commission Expense	146,800.00
14	Rent Expense	27,000.00
15	Advertising Expense	18,000.00
16	Automobile Expense	4,500.00
17	Miscellaneous Expense	3,700.00
18	Totals	292,700.00	292,700.00

The following business transactions were completed by Elite Realty during April 2018. Enter the transactions through the 23rd on Page 18 of the two-column journal:

Apr.	1	Paid rent on office for month, $5,000.
	2	Purchased office supplies on account, $2,400.
	5	Paid insurance premiums, $5,600.
	10	Received cash from clients on account, $52,800.
	15	Purchased land for a future building site for $222,500, paying $24,000 in cash and giving a note payable for the remainder.
	17	Paid creditors on account, $6,250
	20	Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, $380.
	23	Paid advertising expense, $4,300.

Enter the following transactions on Page 19 of the two-column journal:

Apr.	27	Discovered an error in computing a commission; received cash from the salesperson for the overpayment, $2,600.
	28	Paid automobile expense (including rental charges for an automobile), $1,200.
	29	Paid miscellaneous expenses, $1,500.
	30	Recorded revenue earned and billed to clients during the month, $54,000.
	30	Paid salaries and commissions for the month, $13,500.
	30	Paid dividends, $4,000.
	30	Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of $9,400.
	Required:
1.	Record the April 1, 2018, balance of each account in the appropriate balance column of a four-column account, type Balance in the item section, and select a check mark in the Posting Reference column.
2.	Journalize the transactions for April in a two-column journal beginning on Page 18. Refer to the Chart of Accounts for exact wording of account titles. Insert the appropriate posting references in both the journal and the ledger as each item is posted.
3.	Post to the ledger, extending the account balance to the appropriate balance column after each posting. Post in chronological order. For transactions occurring on the same day, post in the order presented in the instructions. Insert the appropriate posting references in both the journal and the ledger as each item is posted.
4.	Prepare an unadjusted trial balance of the ledger as of April 30, 2018.
5.	Assume that the April 30 transaction for salaries and commissions should have been $15,300. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry on April 30. Use page 20. (Note: You will not be required to post this entry to the ledger at this time.) (c) Is this error a transposition or slide?

CHART OF ACCOUNTSElite RealtyGeneral Ledger

	ASSETS
11	Cash
12	Accounts Receivable
13	Prepaid Insurance
14	Office Supplies
16	Land
	LIABILITIES
21	Accounts Payable
22	Unearned Rent
23	Notes Payable

	EQUITY
31	Common Stock
32	Retained Earnings
33	Dividends
	REVENUE
41	Fees Earned

	EXPENSES
51	Salary and Commission Expense
52	Rent Expense
53	Advertising Expense
54	Automobile Expense
59	Miscellaneous Expense

2. Journalize the transactions for April in a two-column journal beginning on Page 18. Refer to the Chart of Accounts for exact wording of account titles. Insert the appropriate posting references in both the journal and the ledger as each item is posted.

PAGE 18PAGE 19

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Record the April 1, 2018, balance of each account in the appropriate balance column of a four-column account, type Balance in the item section, and select a check mark in the Posting Reference column. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. Post in chronological order. For transactions occurring on the same day, post in the order presented in the instructions. Insert the appropriate posting references in both the jourLEDGER

Account: Cash11Account No.

Account: Accounts Receivable12Account No.

Account: Prepaid Insurance13Account No.

Account: Office Supplies14Account No.

Account: Land16Account No.

Account: Accounts Payable21Account No.

Account: Unearned Rent22Account No.

Account: Notes Payable23Account No.

Account: Common Stock31Account No.

Account: Retained Earnings32Account No.

Account: Dividends33Account No.

Account: Fees Earned41Account No.

Account: Salary and Commission Expense51Account No.

Account: Rent Expense52Account No.

Account: Advertising Expense53Account No.

	DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
						DEBIT	CREDIT
1
2

Account: Automobile Expense54Account No.

Account: Miscellaneous Expense59Account No.

nal and the ledger as each item is posted.

4. Prepare an unadjusted trial balance of the ledger as of April 30, 2018.

Elite Realty

UNADJUSTED TRIAL BALANCE

April 30, 2018

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash
2	Accounts Receivable
3	Prepaid Insurance
4	Office Supplies
5	Land
6	Accounts Payable
7	Unearned Rent
8	Notes Payable
9	Common Stock
10	Retained Earnings
11	Dividends
12	Fees Earned
13	Salary and Commission Expense
14	Rent Expense
15	Advertising Expense
16	Automobile Expense
17	Miscellaneous Expense
18	Totals

5. Assume that the April 30 transaction for salaries and commissions should have been $15,300.

(a) Why did the unadjusted trial balance in (4) balance?

(b) Journalize the correcting entry on April 30. Use page 20. (Note: You will not be required to post this entry to the ledger at this time.)

PAGE 20

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

(c) Is this error a transposition or slide?  

Answer 1

Required details are as computed below:

Date	Particulars	L.F	Amount ($)	Amount ($)
Apr-01	Rent expense		5,000
	cash			5,000
	(For rent paid)
Apr-02	Office supplies		2,400
	Account payable			2,400
	(for office supplies purchased)
Apr-05	Prepaid insurance		5,600
	cash			5,600
	(For premium paid)
Apr-10	Cash		52,800
	Account Receivable			52,800
	(For cash from client received)
Apr-15	Land		222,500
	cash			24,000
	Notes payable			198,500
	(For land purchased)
Apr-17	Account payable		6,250
	cash			6,250
	(For paid to creditors)
Apr-20	Account payable		380
	Office Supplies			380
	(For office supplies returned)
Apr-23	Advertising exp		4,300
	cash			4,300
	(For paid advertising exp)
Apr-27	cash		2,600
	salary and commission			2,600
	(For cash received for overpayment)
Apr-28	Automobile exp		1,200
	cash			1,200
	(For paid for automobile exp)
Apr-29	Miscellaneous exp		1,500
	cash			1,500
	(for paid for miscellaneous exp
Apr-30	Account Receivable		54,000
	Fees earned			54,000
	(for revenue earned)
Apr-30	salary and commissions		13,500
	cash			13,500
	(for paid for salary and commissions)
Apr-30	Dividends		4,000
	cash			4,000
	(for dividend paid)
Apr-30	Cash		9,400
	Unearned rent			9,400
	(For cash received in advance)

Cash
Particulars	Amount	Particulars	Amount
Opening Balance	27,000	Apr-01	5,000
Apr-10	52,800	Apr-05	5,600
Apr-27	2,600	Apr-15	24,000
Apr-30	9,400	Apr-17	6,250
		Apr-23	4,300
		Apr-28	1,200
		Apr-29	1,500
		Apr-30	13,500
		Apr-30	4,000
	91,800		65,350
Closing balance	26,450
Account Receivable
Particulars	Amount	Particulars	Amount
Opening Balance	60,000	Apr-10	52,800
Apr-30	54,000
	114,000		52,800
Closing balance	61,200
Prepaid Insurance
Particulars	Amount	Particulars	Amount
Opening Balance	2,500
Apr-05	5,600
	8,100		0
Closing balance	8,100
Office Supplies
Particulars	Amount	Particulars	Amount
Opening Balance	1,600	Apr-20	380
Apr-02	2,400
	4,000		380
Closing balance	3,620
Land
Particulars	Amount	Particulars	Amount
Opening Balance	0
Apr-15	222,500
	222,500		0
Closing balance	222,500
Account payable
Particulars	Amount	Particulars	Amount
Apr-17	6,250	Opening Balance	13,800
Apr-20	380	Apr-02	2,400
	6,630		16,200
		Closing balance	9,570
Unearned Rent
Particulars	Amount	Particulars	Amount
		Opening Balance	0
		Apr-30	9,400
			9,400
		Closing balance	9,400
Notes payable
Particulars	Amount	Particulars	Amount
		Opening Balance	0
		Apr-15	198,500
			198,500
		Closing balance	198,500
Capital stock
Particulars	Amount	Particulars	Amount
		Opening Balance	10,000
			10,000
		Closing balance	10,000
Retained Earnings
Particulars	Amount	Particulars	Amount
		Opening Balance	36,900
			36,900
		Closing balance	36,900
Dividends
Particulars	Amount	Particulars	Amount
Opening Balance	1,600
Cash	4,000
	5,600		0
Closing balance	5,600
Fees Earned
Particulars	Amount	Particulars	Amount
		Opening Balance	232,000
		Apr-30	54,000
			286,000
		Closing balance	286,000
Salary and Commission expense
Particulars	Amount	Particulars	Amount
Opening Balance	146,800	Apr-27	2,600
Apr-30	13,500
	160,300		2,600
Closing balance	157,700
Rent Expense
Particulars	Amount	Particulars	Amount
Opening Balance	27,000
Apr-01	5,000
	32,000		0
Closing balance	32,000
Advertising expense
Particulars	Amount	Particulars	Amount
Opening Balance	18,000
Apr-23	4,300
	22,300		0
Closing balance	22,300
Automobile expense
Particulars	Amount	Particulars	Amount
Opening Balance	4,500
Apr-28	1,200
	5,700		0
Closing balance	5,700
Miscellaneous expense
Particulars	Amount	Particulars	Amount
Opening Balance	3,700
Apr-29	1,500
	5,200		0
Closing balance	5,200

Elite Realty
Unadjusted Trial Balance
Apr-16
	Debit Balances	Credit balances
Cash	26,450
Account Receivable	61,200
Prepaid insurance	8,100
Office Supplies	3,620
Land	222,500
Account payable		9,570
Unearned Rent		9,400
Notes payable		198,500
Capital stock		10,000
Retained earnings		36,900
Dividends	5,600
Fees Earned		286,000
Salary and Commission expense	157,700
Rent Expense	32,000
Advertising expense	22,300
Automobile expense	5,700
Miscellaneous expense	5,200
Total	550,370	550,370