On August 1, 2019, the following were the account balances of B&B Repair Services.

During August, the following summary transactions were completed.
Aug. 1 Paid $400 cash for advertising in local newspapers. Advertising flyers will be included with newspapers delivered during August and September.
3 Paid August rent $380.
5 Received $1,200 cash from customers in payment on account.
10 Paid $3,120 for salaries due employees, of which $1,700 is for August and $1,420 is for July salaries payable.
12 Received $2,800 cash for services performed in August.
15 Purchased store equipment on account $2,000.
20 Paid creditors $2,000 of accounts payable due.
22 Purchased supplies on account $800.
25 Paid $2,900 cash for employees' salaries.
27 Billed customers $3,760 for services performed.
29 Received $780 from customers for services to be performed in the future.
Adjustment data:
1. A count shows supplies on hand of $960.
2. Accrued but unpaid employees' salaries are $1,540.
3. Depreciation on equipment for the month is $320.
4. Services were performed to satisfy $800 of unearned service revenue.
5. One month's worth of advertising services has been received.
6. One month of interest revenue related to the $4,000 note receivable has accrued. The 4-month note has a 6% annual interest rate. (Hint: Use the formula from Illustration 3-17 to compute interest.)
Instructions
(a) Enter the August 1 balances in the ledger accounts. (Use T-accounts.)
(b) Journalize the August transactions.
(c) Post to the ledger accounts. B&B's chart of accounts includes Prepaid Advertising, Interest
Receivable, Service Revenue, Interest Revenue, Advertising Expense, Depreciation Expense,
Supplies Expense, Salaries and Wages Expense, and Rent Expense.
(d) Prepare a trial balance at August 31.
(e) Journalize and post adjusting entries.
(f) Prepare an adjusted trial balance.
(g) Prepare an income statement and a retained earnings statement for August and a classified balance sheet at August 31.
(h) Journalize and post closing entries and complete the closing process.
(i) Prepare a post-closing trial balance at August 31.

Transcribed Image Text:

Debit Credit Cash Accounts Receivable Notes Receivable Supplies Equipment $6,040 Accumulated Depreciation-Equipment 600 2,300 1,260 1,420 12,000 6,400 $23,980 2,910 Accounts Payable ,000 Unearned Service Revenue 1,030 Salaries and Wages Payable 10,000 Common Stock Retained Earnings $23,980