Recording and Posting Accrual Basis Journal Entries

Recording and Posting Accrual Basis Journal Entries

 

Ricky’s Piano Rebuilding Company has been operating for one year (2012). At the start of 2013, its income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash $ 6,000 Accounts Payable $ 8,000

Accounts Receivable 25,000 Unearned Revenue (deposits) 3,200

Supplies 1,200 Notes Payable 40,000

Equipment 8,000 Contributed Capital 8,000

Land 6,000 Retained Earnings 9,000

Building 22,000

 

Required:

1. Create T-accounts for the balance sheet accounts and for these additional accounts: Piano

Rebuilding Revenue, Rent Revenue, Wages Expense, and Utilities Expense. Enter the beginning balances.

 

2. Prepare journal entries for the following January 2010 transactions, using the letter of each transaction as a reference:

a. Received a $500 deposit from a customer who wanted her piano rebuilt in February.

b. Rented a part of the building to a bicycle repair shop; $300 rent received for January.

c. Delivered five rebuilt pianos to customers who paid $14,500 in cash.

d. Delivered two rebuilt pianos to customers for $7,000 charged on account.

e. Received $6,000 from customers as payment on their accounts.

f. Received an electric and gas utility bill for $350 for January services to be paid in February.

g. Ordered $800 in supplies.

h. Paid $1,700 on account in January.

i. Paid $10,000 in wages to employees in January for work done this month.

j. Received and paid cash for the supplies in (g).

 

3. Post the journal entries to the T-accounts. Show the unadjusted ending balances in the T-accounts