Question

March 31, 2019 ACCOUNT TITLE DEBIT CREDIT 1 25,800.00 Cash Accounts Receivable 60,800.00 Prepaid Insurance 3,200.00 Office Supplies 2,200.00 Land Accounts Payable 13,000.00 Unearned Rent 44,000.00 8 Notes Payable 9 Lester Wagner, Capital 10 Lester Wagner, Drawing 11 Fees Earned 2,400.00 243,100.00

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 TITLE   DEBIT   CREDIT
1
Cash
25,800.00

2
Accounts Receivable
60,800.00

3
Prepaid Insurance
3,200.00

4
Office Supplies
2,200.00

5
Land


6
Accounts Payable

13,000.00
7
Unearned Rent


8
Notes Payable


9
Lester Wagner, Capital

44,000.00
10
Lester Wagner, Drawing
2,400.00

11
Fees Earned

243,100.00
12
Salary and Commission Expense
148,100.00

13
Rent Expense
32,000.00

14
Advertising Expense
17,500.00

15
Automobile Expense
4,000.00

16
Miscellaneous Expense
4,100.00

17
Totals
300,100.00
300,100.00
The following business transactions were completed by Elite Realty during April 2019. Enter the transactions through the 23rd on Page 18 of the two-column journal:
Apr.   1   Paid rent on office for month, $3,500.
2   Purchased office supplies on account, $2,500.
5   Paid insurance premiums, $5,000.
10   Received cash from clients on account, $52,700.
15   Purchased land for a future building site for $245,000, paying $29,000 in cash and giving a note payable for the remainder.
17   Paid creditors on account, $6,050.
20   Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, $380.
23   Paid advertising expense, $4,000.
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, $2,100.
28   Paid automobile expense (including rental charges for an automobile), $1,300.
29   Paid miscellaneous expenses, $1,400.
30   Recorded revenue earned and billed to clients during the month, $58,000.
30   Paid salaries and commissions for the month, $11,900.
30   Withdrew cash for personal use, $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 $10,200.
Required:
1.   Record the April 1, 2019, 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.
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, 2019.
5.   Assume that the April 30 transaction for salaries and commissions should have been $19,100. (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?

Answer 1

Post Ref. Debit Credit Elite Realty Journal entries Date Account Page 18 1-Apr Rent Expense Cash $ 3,500 GL18 GL18 $ 3,500 $ 2,500 2-Apr Office Supplies Accounts Payable GL18 GL18 $ 2,500 $ 5,000 5-Apr Prepaid Insurance Cash GL18 GL18 $ 5,000 $ 52,700 10-Apr Cash Accounts Receivable GL18 GL18 $ 52,700 $ 245,000 15-Apr Land Cash Notes Payable GL18 GL18 GL18 $ 29,000 $ 216,000 17-Apr Accounts Payable Cash $ 6,050 GL18 GL18 $ 6,050 $ 380 20-Apr Accounts Payable Office Supplies GL18 GL18 $ 380 $ 4,000 $ 4,000 23-Apr Advertising Expense GL18 Cash GL18 Page 19 27-Apr Cash GL19 Salary and Commission Expense GL19 $ 2,100 $ 2,100 $ 1,300 28-Apr Automobile Expense Cash GL19 GL19 $ 1,300 $ 1,400 29-Apr Miscellaneous Expense Cash GL19 GL19 $ 1,400 $ 59,000 30-Apr Accounts Receivable Fees Earned GL19 GL19 $ 59,000 $ 11,900 30-Apr Salary and Commission Expense GL19 Cash GL19 $ 11,900 $ 4,000 30-Apr Lester Wagner, Drawing Cash GL19 GL19 $ 4,000 $ 10,200 30-Apr Cash Unearned Rent GL19 GL19 $ 10,200

Balance Credit Balance Debit Credit Credit Debit Date Item Credit Post Ref Debit Accounts Receivable 1-Apr Balance 10-Apr Cash collected from client 30-Apr Services provided on account $ 3,500 $ 5,000 $ 52,700 GL18 GL19 $ 60,800 $ 8,100 $ 67,100 $ 67,100 $59,000 Elite Realty T Accounts Date Item Post Ref Debit Cash 1-Apr Balance 4-Apr Paid office rent GL18 5-Apr Prepaid insurance GL18 10-Apr Cash collected from client GL18 $ 52,700 15-Apr Purchase of land GL18 17-Apr Paid creditors GL18 23-Apr Paid advertising expense GL18 27-Apr Cash recd from salesperson for overpmt GL19 $ 2,100 28-Apr Paid automobiles expense GL19 29-Apr Paid miscellaneous expense GL19 30-Apr Paid salary and Commission expense GL19 30-Apr Withdrew cash for personal use GL19 30-Apr Advance rent received GL19 $ 10,200 Prepaid Insurance 1-Apr Balance 5-Apr Prepaid insurance GL18 $ 5,000 $ 29,000 $ 6,050 $ 4,000 $ 25,800 $ 22,300 $ 17,300 $ 70,000 $ 41,000 $ 34,950 $ 30,950 $ 33,050 $ 31,750 $ 30,350 $ 18,450 $ 14,450 $ 24,650 $ 1,300 $ 1,400 $ 11,900 $ 4,000 $ $ $ 3,200 8,200 8,200 $ $ $ 2,200 4,700 4,320 $ 380 Land 1-Apr Balance 15-Apr Purchase of land Office Supplies 1-Apr Balance 2-Apr Purchased Office supplies on account GL18 $ 2,500 20-Apr Returned Office supplies on account GL18 $ - Accounts Payable 1-Apr Balance 2-Apr Purchased Office supplies on account GL18 17-Apr Paid creditors GL18 $ 6,050 20-Apr Returned Office supplies on account GL18 $ 380 Notes Payable 1-Apr Balance 15-Apr Purchase of land GL18 GL18 $ 245,000 $ 245,000 $ 2,500 $ 13,000 $ 15,500 $ 9,450 $ 9,070 Unearned Rent V 1-Apr Balance 30-Apr Advance rent received $ - $ 216,000 GL19 $ 10,200 $216,000 $ - $ 10,200 $ 10,200 $ 10,200 Lester Wagner, Capital 1-Apr Balance $ 44,000 $ 44,000 $ 2,400 $ 6,400 Lester Wagner, Drawing 1-Apr Balance 30-Apr Withdrew cash for personal use GL19 $ 4,000 Fees Earned 1-Apr Balance 30-Apr Services provided on account GL19 $ 59,000 $ 243,100 $ 302,100 $ 302,100 $ $ 148,100 2,100 $146,000 $157,900 Rent Expense Salary and Commission Expense 1-Apr Balance 27-Apr Cash recd from salesperson for overpmt GL19 30-Apr Paid salary and Commission expense GL19 $11,900 Advertising Expense 1-Apr Balance 23-Apr Paid advertising expense GL18 $ 4,000 Miscellaneous Expense 1-Apr Balance 29-Apr Paid miscellaneous expense GL19 $ 1,400 1-Apr Balance 4-Apr Paid office rent $ 32,000 $ 35,500 $ 17,500 $ 21,500 3,500 GL18 $ Automobile Expense 1-Apr Balance 28-Apr Paid automobiles expense $ $ 4,000 5,300 GL19 $ 1,300 $ 4,100 $ 5,500

Elite Realty Account Names 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 Totals April 30 TB Debit Credit 24,650 67,100 8,200 4,320 245,000 9,070 10,200 216,000 44,000 6,400 302,100 157,900 35,500 21,500 5,300 5,500 581,370 581,370

Reg 5 A Unadjusted trial balance matches because both debit and credit accounts has been recorded at an error amount of $11,900 So, both Cash & Salary and Commission Expense are recorded at wrong amount of $11,900 This is called as a compensating error which is more difficult to trace and correct B Credit Date Account 30-Apr Salary and Commission Expense Cash Debit $ 7,200 Calculation =19,100-11,900 $ 7,200 C Transposition error Transposition error is error due to interchange of digits in the amount to be recorded For example, $1,200 recorded as $2,100 Slide error is error due to mistake in decimals in the amount to be recorded For example, $1,200 recorded as $120