On August 1, 2020, 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. 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 $ 6,040 Accumulated Depreciation- Equipment 2,910 Accounts Payable Cash 600 Accounts 2,300 Receivable Notes Receivable 4,000 Unearned Service Revenue 1,260 1,030 Salaries and Wages Payable Supplies 1,420 Equipment 10,000 Common Stock 12,000 Retained Earnings 6,400 $23,980 $23,980