
Assignment A-3.1
Prepare journal entries and post to T-accounts the following transactions of Albert Smith - a realtor.
- Acquired office supplies of $700 on open account. Use a Supplies Inventory account.
- Sold a house and collected a $9,000 commission on the sale. Use a Commissions Revenue account.
- Paid cash of $700 to a local newspaper for current advertisements.
- Paid $600 for a previous credit purchase of office supplies.
- Recorded office supplies used of $300.
Assignment A-3.2
Callaway Gardens a retailer of garden supplies and equipment had the accompanying balance sheet accounts, December 31, 20X7.
Assets
Cash $22,000
Accounts Receivable 37,000
Inventory 131,000
Prepaid rent 4,000
Store equipment $60,000
Less: Accumulated depreciation 24,000 36,000
Total $230,000
Liabilities and Stockholders' Equity
Accounts payable $111,000
Paid-in capital 40,000
Retained income 79,000
Total $230,000
Following is a summary of transactions that occurred during 20X8:
- Purchase of merchandise inventory on open account, $550,000.
- Sales, all on credit, $800,000.
- Cost of merchandise sold to customers, $440,000.
- On June 1, 20X4, borrowed $80,000 from a supplier. The note is payable at the end of 20X8. Interest is payable yearly on December 31 at the rate of 15% per annum.
- Disbursed $25,000 the rent of the store. Add to Prepaid Rent.
- Disbursed $165,000 for wages through November.
- Disbursed $76,000 for miscellaneous expenses such as utilities, advertising and legal help.
- On July 1, 20X8, lent $20,000 to the office manager. He signed a note that will mature on July 1, 20X9, together with interest at 10% per annum. Interest for 20X8 is due on December 31, 20X8.
- Collections on accounts receivable, $691,000.
- Payments on accounts payable $471,000.
- Previous rent payments applicable to 20X9 amounted to $3,000.
- Depreciation for 20X8 was $6,000.
- Wages earned by employees during December were paid on December 31, $6,000.
- Interest on the loan from the supplier was disbursed.
- Interest on the loan made to the office manager was received.
- Prepare journal entries in thousands of dollars.
- Post the entries to the ledger, keying your posting by transaction letter.
- Prepare a trial balance, December 31, 20X8.
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