Question

E3-13 Recording and Posting Accrual Basis Journal Entries, and Preparing an Unadjusted Trial Balance and Preliminary Financial Statements [LO 3-2, 3-3, LO 3-4) (The following information applies to the questions displayed below.) Ricky's Piano Rebuilding Company has been operating for one year. On January 1, at the start of its second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: Cash Accounts Receivable Supplies Equipment Land Building $ 5,800 Accounts Payable 33,750 Deferred Revenue (deposits) 1,400 Notes Payable (long-term) 14,800 Common Stock 8,700 Retained Earnings 25,000 $10,050 4,600 57,250 13,500 4,050 Following are the January transactions: a. Received a $955 deposit from a customer who wanted her piano rebuilt in February. b. Rented a part of the building to a bicycle repair shop: $385 rent received for January. c. Delivered five rebuilt pianos to customers who paid $17,275 in cash. d. Delivered two rebuilt pianos to customers for $8,800 charged on account. e. Received $5,950 from customers as payment on their accounts. f. Received an electric and gas utility bill for $720 for January services to be paid in February. g. Ordered $885 in supplies. h. Paid $2,200 on account in January. i. Paid $19,200 in wages to employees in January for work done this month. j. Received and paid cash for the supplies in (g).

Answer 1

1)Journal Entries

Transactions	Debit($)	Credit($)
a) By Cash A/c Dr       To Deffered Revenue	955	955
b) By Cash A/c Dr         To Rent revenue A/c	385	385
c) By Cash A/c Dr           To Supplies	17275	17275
d) By Accounts Receivable A/c            To Supplies	8800	8800
e) By Cash A/c Dr           To Accounts Receivble	5950	5950
f) By Utilities expense A/c Dr           To Accounts Payable	720	720
g) By Supplies A/c Dr            To Cash	885	885
h) By Accounts payable A/c Dr            To Cash	2200	2200
i)     By Wages A/c Dr             To Cash A/c	19200	19200

2) Trial Balance( adjusted as on 1st jan)

Corrected Trail Balance as on 1st jan( Based on Balancehseet Given)
Cash	5800
A/c Receivable	33750
supplies	1400
equipment	14800
land	8700
A/c payable		10050
buildings	25000
utilities expenses
deffered revenue		4600
notes payable		57250
common stock		13500
Retained Earnings		4050
rent revenue
service revenue
salary and wages
	89450	89450

3) Trail Balance As on 1st Feb( After effecting January Transactions)

Corrected Trail Balance as on 1st Feb( Based on Balancehseet Given)
Cash	8080
A/c Receivable	36600
supplies	-23790
equipment	14800
land	8700
A/c payable		8570
buildings	25000
utilities expenses
deffered revenue		5555
notes payable		57250
common stock		13500
Retained Earnings		-15485
rent revenue
service revenue
salary and wages
	69390	69390

Balancesheet as on 1st FEB

Assets	Amount($)	Liability	Amount ($)
Cash	8080	A/c Payable	8570
A/c Recevable	36600	Deffered Revenue	5555
supplies	-23790	Notes Payable	57250
Equipment	14800	Common stock	13500
Land	8700	Retained Earnings	-15485
Building	25000
	69390		69390

Notes

1)Negative Figures could also be shown in the opposite sides respectiveley

2) Break up of income and expenses have not been shown itemwiswe. Hence the Net Figure is summed up in Retained Earnings