On August 1, 2022, 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 of 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.

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:

Credit Debit Accumulated Depreciation-Equipment Accounts Payable Unearned Service Revenue Salaries and Wages Payable Common Stock Retained Earnings $ 600 Cash $ 6,040 Accounts Receivable Notes Receivable Supplies 2,910 4,000 1,030 10,000 2,300 1,260 1,420 Equipment 12,000 $23,980 $23,980