JOURNALIZING AND POSTING TRANSACTIONS AND PREPARING FINANCIAL STATEMENTS Sue Reyton owns a suit tailoring shop. She opened her business in September with a cash investment of $5,430. She rents a small work space and has an assistant to receive job orders and process claim tickets. Her trial balance shows her account balances for the first two months of business (September and October). No adjustments were made in September or October.

Reyton's transactions for November are as follows:
Nov. 1 Paid November rent, $300.
2 Purchased tailoring supplies on account from Sew Easy Supplies, $150.
3 Purchased a new button hole machine on account from Seam's Sewing Machines, $3,000.
5 Earned first week's revenue: $400 in cash.
8 Paid for newspaper advertising, $13.
9 Paid telephone bill, $28.
10 Paid electricity bill, $21.
Nov. 12 Earned second week's revenue: $200 in cash, $300 on account.
15 Paid part-time worker, $400.
16 Made payment on account for tailoring supplies, $100.
17 Paid for magazine subscription (miscellaneous expense), $12.
19 Earned third week's revenue: $450 in cash.
21 Paid for prepaid insurance for the year, $500.
23 Received cash from customers (previously owed), $300.
24 Paid for newspaper advertising, $13.
26 Paid for special delivery fee (miscellaneous expense), $12.
29 Earned fourth week's revenue: $600 in cash.
Additional accounts needed are as follows:
313....Income Summary
523...Office Supplies Expense
524....Tailoring Supplies Expense
535....Insurance Expense
542....Depreciation Expense––Tailoring Equipment
November 30 adjustments are as follows:
(a) Tailoring supplies on hand, $450.
(b) Office supplies on hand, $285.
(c) Prepaid insurance expired over past three months, $150.
(d) Depreciation on tailoring equipment for the last three months, $300.
REQUIRED
1. Journalize the transactions for November using the modified cash basis and page 5 of a combination journal. Set up special columns for Tailoring Fees (credit),
Wages Expense (debit), and Advertising Expense (debit).
2. Determine the cash balance as of November 12.
3. Prove the combination journal.
4. Set up general ledger accounts, including the additional accounts listed above, entering the balances as of November 1, 20--. Post the entries from the combination journal.
5. Prepare a work sheet for the three months ended November 30, 20--.
6. Record the adjusting entries on page 6 of the combination journal and post to the general ledger accounts.
7. Prepare an income statement and statement of owner's equity for the three months ended November 30, and a balance sheet as of November 30, 20--.
(Assume that Reyton made an investment of $5,430 on September 1, 20--.)
8. Record closing entries on page 6 of the combination journal and post to the general ledgeraccounts.

Transcribed Image Text:

Sue Reyton Tailors Trial Balance October 31, 20 -- NCCOUNT NO. DEEIT BALANCI NCCOUNTTILE REDIT BALANCE 57 11 00 10 0 0 0 4 8 5 00 100 00 38 0 0 00 Cash 101 Taibring Supplies Office Supplies 141 142 Prepaid Insurance Taibring Equipment Accumulated Depreciation-Tailoring Equipment 145 188 188.1 4 1 2 5 00 5 4 3 0 00 Accounts Payable Sue Reyton, Capital 202 311 50 0 00 Sue Reyton, Drawing 312 360 0 00 Taibring Fees 401 8 0 0 00 3 3 00 Wages Experse 511 Advertising Expense Rent Expense Telephone Experse Electrkity Expense 512 6 00 00 521 6 0 00 4 4 00 2 2 00 13 1 5 5 00 525 533 Miscellaneous Expense 549 13 1 5 5 00