Question

The business primarily repairs air-conditioners to existing households but is sometimes called upon to provide a consulting service to owner/builders.

As at February 28, 2015.The business accounts showed the following balances:

Cash $5,500 Dr.

Debtors $4,000 Dr .

Creditors $3,500 Cr.

Capital $6,000 Cr.

The following transactions occurred during March 2015:

• On March 1, prepaid three months rent on premises, at a cost of $2,400 (When payment is made it is treated as an asset - prepaid rent)

• On March 5, completed an owner/builder consultation on the design of a split based air-conditioning system. Billed the client $1,400, payable within 30 days.

• On March 6, repaired an electrical problem in the air-conditioning system of an existing dwelling and received a cash payment of $100.

• On March 8, purchased shelving on credit from ‘Officeworks’ at a cost of $2,100 (payable in 30 days) and paid $300 to a local tradesman to install the shelving.

• On March 13, the manager of the business paid several outstanding accounts amounting to $3,500.

• On March 15, a client paid $4,000 on an account owing to the firm.

• On March 31, charged one month’s depreciation of $100 on the shelving.

• On March 31 make the adjusting entry to recognise the rent expense and reduce the prepaid rent.

You are required:

1. For the purposes of this question, prepare journal entries for the transactions as if they were prepared in a general journal. (i.e. there is no need to have special journals such as CRJ CPJ SJ and PJ) GST can be ignored for the purpose of this exercise.

2. Post the journal entries to the ledger accounts. At this stage there is no need to close the revenue and expense ledger accounts so you will have some empty rows in the ledgers.

3. Extract a trial balance at 31 March 2015

Answer 1

Pati CA Caah March 2Moo Marchall &00

Dc Cuoito goo 20IS 2. &00 2400 201S sb0

201e l0o 2o1S Data ati 2 S9DD 2015 ol

Page 2 ーCapital lMoo 24 2200 /60o 800 da li fo 2300 tis Total