Question

The following is the post-closing trial balance for the Whitlow Manufacturing Corporation as of December 31, 2017.

Account Title	Debits	Credits
Cash	5,000
Accounts receivable	2,000
Inventory	5,000
Equipment	11,000
Accumulated depreciation—equipment		3,500
Accounts payable		3,000
Common stock		10,000
Retained earnings		6,500
Sales revenue		–0–
Cost of goods sold	–0–
Salaries and wages expense	–0–
Rent expense	–0–
Advertising expense	–0–
Totals	23,000	23,000

The following transactions occurred during January 2018:

Jan. 1	Sold merchandise for cash, $3,500. The cost of the merchandise was $2,000. The company uses the perpetual inventory system.
2	Purchased equipment on account for $5,500 from the Strong Company.
4	Received a $150 bill from the local newspaper for an advertisement that appeared in the paper on January 2.
8	Sold merchandise on account for $5,000. The cost of the merchandise was $2,800.
10	Purchased merchandise on account for $9,500.
13	Purchased equipment for cash, $800.
16	Paid the entire amount due to the Strong Company.
18	Received $4,000 from customers on account.
20	Paid $800 to the owner of the building for January’s rent.
30	Paid employees $3,000 for salaries and wages for the month of January.
31	Paid a cash dividend of $1,000 to shareholders.

Required:

Set up T-accounts and enter the beginning balances as of January 1, 2018.

Prepare general journal entries to record each transaction. Omit explanations.

Post the entries to T-accounts.

Prepare an unadjusted trial balance as of January 31, 2018

Answer 1

T-accounts and the beginning balances as of January 1, 2018 is as shown below:

Cash
Particulars	Amount	Particulars	Amount
Opening Balance	5,000
	5,000		0
Closing Balance	5,000
Account Receivable
Particulars	Amount	Particulars	Amount
Opening Balance	2,000
	2,000		0
Closing Balance	2,000
Inventory
Particulars	Amount	Particulars	Amount
Opening Balance	5,000
	5,000		0
Closing Balance	5,000
Equipment
Particulars	Amount	Particulars	Amount
Opening Balance	11,000
	11,000		0
Closing Balance	11,000
Accumulated depreciation
Particulars	Amount	Particulars	Amount
		Opening Balance	3,500
			3,500
		Closing Balance	3,500
Accounts Payable
Particulars	Amount	Particulars	Amount
		Opening Balance	3,000
			3,000
		Closing Balance	3,000
Common Stock
Particulars	Amount	Particulars	Amount
		Opening Balance	10,000
			10,000
		Closing Balance	10,000
Retained Earnings
Particulars	Amount	Particulars	Amount
		Opening Balance	6,500
			6,500
		Closing Balance	6,500
Sales Revenue
Particulars	Amount	Particulars	Amount
		Opening Balance	0
			0
		Closing Balance	0
Cost of goods sold
Particulars	Amount	Particulars	Amount
Opening Balance	0
	0		0
Closing Balance	0
Salaries and Wages Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
	0		0
Closing Balance	0
Rent Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
	0		0
Closing Balance	0
Advertising Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
	0		0
Closing Balance	0

general journal entries to record each transaction is as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
Jan-01	Cash		3,500
	Sales Revenue			3,500
	Cost of goods sold		2,000
	Inventory			2,000
Jan-02	Equipment		5,500
	Account payable			5,500
Jan-04	Advertising Expense		150
	Account payable			150
Jan-08	Account Receivable		5,000
	Sales Revenue			5,000
Jan-08	Cost of goods sold		2,800
	Inventory			2,800
Jan-10	Inventory		9,500
	Account payable			9,500
Jan-13	Equipment		800
	Cash			800
Jan-16	Account Payable		5,500
	cash			5,500
Jan-18	Cash		4,000
	Account Receivable			4,000
Jan-20	Rent Expense		800
	Cash			800
Jan-30	salaries and wages expense		3,000
	cash			3,000
Jan-31	Dividend		1,000
	Cash			1,000

Entries posted to T-accounts are as shown below:

Cash
Particulars	Amount	Particulars	Amount
Opening Balance	5,000	Jan-13	800
Jan-01	3,500	Jan-16	5,500
Jan-18	4,000	Jan-20	800
		Jan-30	3,000
		Jan-31	1,000
	12,500		11,100
Closing Balance	1,400
Account Receivable
Particulars	Amount	Particulars	Amount
Opening Balance	2,000	Jan-18	4,000
Jan-08	5,000
	7,000		4,000
Closing Balance	3,000
Inventory
Particulars	Amount	Particulars	Amount
Opening Balance	5,000	Jan-01	2,000
Jan-10	9,500	Jan-08	2,800
	14,500		4,800
Closing Balance	9,700
Equipment
Particulars	Amount	Particulars	Amount
Opening Balance	11,000
Jan-02	5,500
Jan-13	800
	17,300		0
Closing Balance	17,300
Accumulated depreciation
Particulars	Amount	Particulars	Amount
		Opening Balance	3,500
			3,500
		Closing Balance	3,500
Accounts Payable
Particulars	Amount	Particulars	Amount
Jan-16	5,500	Opening Balance	3,000
		Jan-02	5,500
		Jan-04	150
		Jan-10	9,500
	5,500		18,150
		Closing Balance	12,650
Common Stock
Particulars	Amount	Particulars	Amount
		Opening Balance	10,000
			10,000
		Closing Balance	10,000
Retained Earnings
Particulars	Amount	Particulars	Amount
		Opening Balance	6,500
			6,500
		Closing Balance	6,500
Sales Revenue
Particulars	Amount	Particulars	Amount
		Opening Balance	0
		Jan-01	3,500
		Jan-08	5,000
			8,500
		Closing Balance	8,500
Cost of goods sold
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-01	2,000
Jan-08	2,800
	4,800		0
Closing Balance	4,800
Salaries and Wages Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-30	3,000
	3,000		0
Closing Balance	3,000
Rent Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-20	800
	800		0
Closing Balance	800
Advertising Expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-04	150
	150		0
Closing Balance	150
Dividend
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-31	1,000
	1,000		0
Closing Balance	1,000

Unadjusted Trial Balance is as prepared below:

Unadjusted Trial Balance
January 31, 2018
	Debit Balances	Credit balances
Cash	1,400
Account Receivable	3,000
Inventory	9,700
Equipment	17,300
Accumulated depreciation		3,500
Accounts Payable		12,650
Common Stock		10,000
Retained Earnings		6,500
Sales Revenue		8,500
Cost of goods sold	4,800
Salaries and Wages Expense	3,000
Rent Expense	800
Advertising Expense	150
Dividend	1,000
Total	41,150	41,150