As of January 1, 2012, Gammon Corporation had the following balances in its general ledger:

a. Collected $42,000 of receivables.
b. Accounts Payable as of January 1, 2012, were paid off .
c. Purchased inventory for $70,000 cash.
d. Paid utilities of $12,600.
e. Sold $370,000 of merchandise, 90% for cash and 10% for credit. Th e Cost of Goods Sold was $197,000.
f. Paid $50,000 mortgage payment, of which $30,000 represents interest expense.
g. Paid salaries expense of $120,000.
h. Paid installment of $10,000 on note.
Required:
1. Prepare journal entries to record each listed transaction. (Omit explanations.)
2. Set up T-accounts with the proper account balances at January 1, 2012, post the journal entries to the T-accounts, and prepare a trial balance for Gammon Corporation at December 31, 2012.
3. Interpretive Question: If the debit and credit columns of the trial balance are in balance, does this mean that no errors have been made in journalizing the transactions?Explain.

Transcribed Image Text:

Credits Cash Accounts Receivable... .S63,000 47,000 184,000 416,000 Office Building. Accounts Payable Mortgage Payable-.. . Notes Payable Capital Stock S 33,000 360,000 137,000 115,000 65,000 S710,000 . Totals S710,000