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P2-31A, cont.
P2-31A, cont.
P2-31A, cont.
Requirement 4
P2-32A Journalizing transactions, posting journal entries to four-column accounts, and
preparing a trial balance
Learning Objectives 3, 4
3. Cash Balance $12,500
The trial balance of Shawn Merry, CPA, is dated March 31, 2018:
During April, the business completed the following transactions:
Apr. 4 Collected $2,500 cash from a client on account.
8 Performed tax services for a client on account, $5,400.
13 Paid $3,000 on account.
14 Purchased furniture on account, $3,600.
15 Merry contributed his personal automobile to the business in exchange for common stock.
The automobile had a market value of $9,500.
18 Purchased office supplies on account, $900.
19 Received $2,700 for tax services performed on April 8.
20 Paid cash dividends of $6,500.
21 Received $5,700 cash for consulting work completed.
24 Received $2,400 cash for accounting services to be completed next month.
27 Paid office rent, $600.
28 Paid employee salary, $1,700.
Requirements
1. Record the April transactions in the journal. Use the following accounts: Cash; Accounts Receivable;
Office Supplies; Land; Furniture; Automobile; Accounts Payable; Unearned Revenue; Common
Stock; Dividends; Service Revenue; Salaries Expense; and Rent Expense. Include an explanation for
each entry.
2. Open the four-column ledger accounts listed in the trial balance, together with their balances as of
March 31. Use the following account numbers: Cash, 11; Accounts Receivable, 12; Office Supplies,
13; Land, 14; Furniture, 15; Automobile, 16; Accounts Payable, 21; Unearned Revenue, 22; Common
Stock, 31; Dividends, 33; Service Revenue, 41; Salaries Expense, 51; and Rent Expense, 52.
3. Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal
references, and posting references. Assume the journal entries were recorded on page 5 of the journal.
4. Prepare the trial balance of Shawn Merry, CPA, at April 30, 2018.
SOLUTION
Requirement 1
P2-32A, cont.
Requirements 2 and 3
CASH Account No. 11
P2-32A, cont.
P2-32A, cont.
Requirement 4
P2-33A Correcting errors in a trial balance
Learning Objective 4
Total Debits $123,250
The trial balance of Beautiful Tots Child Care does not balance.
The following errors are detected:
a. Cash is understated by $1,500.
b. A $4,100 debit to Accounts Receivable was posted as a credit.
c. A $1,400 purchase of office supplies on account was neither journalized nor posted.
d. Equipment was incorrectly transferred from the ledger as $91,500. It should have been
transferred as $83,000.
e. Salaries Expense is overstated by $700.
f. A $300 cash payment for advertising expense was neither journalized nor posted.
g. A $200 cash dividend was incorrectly journalized as $2,000.
h. Service Revenue was understated by $4,100.
i. A 12-month insurance policy was posted as a $1,900 credit to Prepaid Insurance. Cash was
posted correctly.
Prepare the corrected trial balance as of August 31, 2018. Journal entries are not required.
SOLUTION
