Question

Journal Entries and Trial Balance

Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2019, follows:

Elite Realty
Unadjusted Trial Balance
March 31, 2019
Account No.		Debit Balances	Credit Balances
11	Cash	12,970
12	Accounts Receivable	30,230
13	Prepaid Insurance	1,470
14	Office Supplies	880
16	Land	—
21	Accounts Payable		8,550
22	Unearned Rent		—
23	Notes Payable		—
31	Lester Wagner, Capital		29,500
32	Lester Wagner, Drawing	1,030
41	Fees Earned		147,440
51	Salary and Commission Expense	110,900
52	Rent Expense	14,740
53	Advertising Expense	8,700
54	Automobile Expense	2,650
59	Miscellaneous Expense	1,920
		185,490	185,490

The following business transactions were completed by Elite Realty during April 2019:

Apr. 1.	Paid rent on office for month, $4,900.
2.	Purchased office supplies on account, $1,270.
5.	Paid insurance premiums, $3,530.
10.	Received cash from clients on account, $24,490.
15.	Purchased land for a future building site for $88,200, paying $9,700 in cash
	and giving a note payable for the remainder.
17.	Paid creditors on account, $4,410.
20.	Returned a portion of the office supplies purchased on April 2, receiving
	full credit for their cost, $200.
23.	Paid advertising expense, $1,960.
27.	Discovered an error in computing a commission; received cash from the salesperson
	for the overpayment, $980.
28.	Paid automobile expense (including rental charges for an automobile), $1,470.
29.	Paid miscellaneous expenses, $440.
30.	Recorded revenue earned and billed to clients during the month, $29,390.
30.	Paid salaries and commissions for the month, $6,470.
30.	Withdrew cash for personal use, $980.
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 $2,940.

Required:

Use the attached spreadsheet to complete parts 1 and 3. Click on the Spreadsheet icon to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem.

1. Record the April 1, 2019, balance of each account in the appropriate balance column of a four-column account. The word Balance has been entered in the item section and a check mark (√) has been placed in the Posting Reference column.

2. Journalize and insert the posting reference for the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. If an amount box does not require an entry, leave it blank.

General Journal				Page 18
Date	Description	Post. Ref.	Debit	Credit
2019
Apr. 1	Rent Expense
	Cash
Apr. 2	Office Supplies
	Accounts Payable
Apr. 5	Prepaid Insurance
	Cash
Apr. 10	Cash
	Accounts Receivable
Apr. 15	Land
	Cash
	Notes Payable
Apr. 17	Accounts Payable
	Cash
Apr. 20	Accounts Payable
	Office Supplies
Apr. 23	Advertising Expense
	Cash

General Journal				Page 19
Date	Description	Post. Ref.	Debit	Credit
2019
Apr. 27	Cash
	Salary and Commission Expense
Apr. 28	Automobile Expense
	Cash
Apr. 29	Miscellaneous Expense
	Cash
Apr. 30-Rev.	Accounts Receivable
	Fees Earned
Salary	Salary and Commission Expense
	Cash
Withdraw	Lester Wagner, Drawing
	Cash
Rent	Cash
	Unearned Rent

Feedback

1. The ending balance for accounts on March 31 will be the beginning balance on April 1.

2. Identify which accounts are affected in each transaction. Keep in mind that every transaction involves at least two accounts. Determine whether the account increases or decreases and record each increase or decrease following the rules of debit and credit. Use the Posting Reference column to enter the corresponding account number from the general ledger account. Remember total debits should equal total credits in your entries.

3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.

4. Using the balances from the spreadsheet, prepare an unadjusted trial balance of the ledger as of April 30, 2019. If an amount box does not require an entry, leave it blank.

Elite Realty Unadjusted Trial Balance April 30, 2019
	Debit Balances	Credit Balances
Cash
Accounts Receivable
Prepaid Insurance
Office Supplies
Land
Accounts Payable
Unearned Rent
Notes Payable
Lester Wagner, Capital
Lester Wagner, Drawing
Fees Earned
Salary and Commission Expense
Rent Expense
Advertising Expense
Automobile Expense
Miscellaneous Expense

5a. Assume that the April 30 transaction for salaries and commissions should have been $4,670. As a result, the unadjusted trial balance in (4) would still balance.

5b. Assume that the April 30 transaction for salaries and commissions should have been $4,670. Journalize the correcting entry. If an amount box does not require an entry, leave it blank.

General Journal				PAGE 19
Date	Description	Post. Ref.	Debit	Credit
2019
Apr. 30	Cash
	Salary and Commission Expense

5c. Assume that the April 30 transaction for salaries and commissions should have been $4,670. Is this error a transposition or slide?
Transposition

Answer 1

Journal Entries Account titles & explanation Date Debit Credit 2019 1-Apr Rent Expense 4,900 Cash 4,900 9. 2-Apr Office Supplies 10 1,270 Accounts Payable 11 1,270 12 13 5-Apr Prepaid Insurance 3,530 Cash 14 3,530 15 10-Apr Cash 24,490 16 Accounts Receivable 24,490 17 18 15-Apr Land 19 88,200 Cash 20 9,700 Notes Payable 21 78,500 22 17-Apr Accounts Payable 23 4,410 Cash 24 4,410

20-Apr Accounts Payable Office Supplies 26 200 200 27 28 23-Apr Advertising Expense 1,960 29 Cash 30 1,960 31 27-Apr Cash 32 980 Salary & Commission Expense 980 33 34 28-Apr Automobile Expense 35 1,470 Cash 36 1,470 37 29-Apr Miscellaneous Expense 38 440 Cash 39 440 40 30-Apr Accounts receivable 41 29,390 42 Fees earned 29,390 43 30-Apr Salary & Commission expense 44 6,470 Cash 45 6,470 46 47 30-Apr Lester Wagner Drawings 980 Cash 48 980

2,940 50 30-Apr Cash Unearned Rent 2,940 51 52 53 54

General Ledger 4 Cash Balance Post Ref. Debit Credit Debit Credit Date Item 1-Apr Balance 12970 1-Apr 10 4900 8070 3530 4540 11 5-Apr 10-Apr 12 24490 29030 15-Apr 13 9700 19330 14 17-Apr 4410 14920 23-Apr 15 1960 12960 27-Apr 16 980 13940 17 28-Apr 1470 12470 29-Apr 18 440 12030 19 30-Apr 6470 5560 30-Apr 20 980 4580 21 30-Apr 2940 7520 22 23 Accounts Receivable Balance 24 Debit Post Ref. Debit Credit Credit 25 Date Item 30230 26 1-Apr Balance 10-Apr 27 24490 5740 30-Apr 29390 28 35130

Prepaid Insurance 31 Balance 32 Post Ref. Debit Credit Debit Credit 33 Date Item 1-Apr|Balance 34 1,470 35 5-Apr 3530 5,000 36 Office Supplies 37 Balance 38 Post Ref. Debit Credit Debit Credit 39 Date Item 1-Apr|Balance 40 880 41 2-Apr 1270 2,150 20-Apr 42 200 1,950 43 Land 44 Balance 45 Debit Post Ref. Credit Debit Credit 46 Date Item 1-Apr Balance 47 15-Apr 48 88200 88200 49

Accounts Payable 50 Balance 51 Debit Credit Post Ref. Debit 52 Date Item Credit 1-Apr|Balance 53 8,550 9,820 2-Apr 54 1270 55 17-Apr 4410 5,410 5,210 20-Apr 56 200 57 Unearned Rent 58 Balance 59 Debit Credit Debit Credit 60 Date Item Post Ref. 1-Apr Balance 61 30-Apr 2940 2,940 62 63 Notes Payable 64 Balance 65 Debit Date Post Ref. Debit Credit Credit 66 Item 1-Apr Balance 67 78500 68 15-Apr 78,500 69 Lester Wagner Capital 70 Balance 71 Credit Post Ref. Debit Credit Debit 72 Date Item 1-Apr Balance 29,500 73 74

Lester Wagner Drawings 75 Balance 76 Date Post Ref. Debit Credit Debit Credit 77 Item 1-Apr Balance 78 1,030 980 2,010 79 30-Apr 80 Fees earned 81 Balance 82 Credit Date Post Ref. Debit Credit Debit 83 Item 1-Apr Balance 84 147,440 30-Apr 176,830 85 29390 86 Salaries & Commission Expense 87 Balance 88 Debit Credit Debit Credit 89 Date Item Post Ref. 1-Apr Balance 90 110,900 27-Apr 980 109,920 91 30-Apr 92 6470 116,390 93 Rent Expense 94 Balance 95 Post Ref. Debit Credit Debit Credit 96 Date Item 1-Apr|Balance 14,740 97 1-Apr 98 4900 19,640 99

Advertising Expense 100 Balance 101 Debit Post Ref. Debit Credit Credit 102 Date Item 1-Apr Balance 8,700 103 23-Apr 104 1960 10,660 105 Automobile Expense 106 Balance 107 Post Ref. Debit Credit Debit Credit 108 Date Item 1-Apr|Balance 2,650 109 28-Apr 110 1470 4,120 111 112 Miscellaneous Expense 113 Balance 114 Date Post Ref. Debit Credit Debit Credit 115 Item 1-Apr Balance 116 1,920 440 117 29-Apr 2,360 118 119

ELITE REALTY Unadjusted Trial Balance 4/30/2019 Particulars Debit Credit Cash 7,520 Accounts Receivable 35,130 10 Prepaid Insurance 11 5,000 Office Supplies 12 1,950 Land 88,200 13 Accounts payable 14 5,210 Unearned Rent 2,940 15 Notes Payable Lester Wagner Capital 16 78,500 29,500 17 Lester Wagner Drawings 18 2,010 Fees earned 19 176,830 Salary & Commission Expense 20 116,390 Rent Expense 21 19,640 Advertising Expense Automobile Expense Miscellaneous Expense 22 10,660 23 4,120 2,360 24 Total 25 292,980 292,980 26 27

28 29 a) The unadjusted trial balance in (4) still balances, since the debits must be equaled to the credits in the original entry. 30 31 The correcting Journal entry 32 b) 33 Account titles & explanation Debit Credit 34 Date 2019 35 36 30-Apr Cash 1,800 Salary & Commission expense 37 1,800 38 39 5c. Assume that the April 30 transaction for salaries and commissions should have been $4,670. Is this error a transposition or slide? 40 Transposition 41 42 43