Financial Accounting with IFRS 4/e (Kieso) ACR4.3

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. Aug. 3 Paid August rent $380. Aug. 5 Received $1,200 cash from customers in payment on account. Aug. 10 Paid $3,120 for salaries due employees, of which $1,700 is for August and $1,420 is for July salaries payable. Aug. 12 Received $2,800 cash for services performed in August. Aug. 15 Purchased store equipment on account $2,000. Aug. 20 Paid creditors $2,000 of accounts payable due. Aug 22 Purchased supplies on account $800. Aug 25 Paid $2,900 cash for employees' salaries. Aug. 27 Billed customers $3,760 for services performed. Aug. 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 statement of financial position at August 31.

h. Journalize and post closing entries and complete the closing process.

i. Prepare a post-closing trial balance at August 31.

Debit Credit Cash Accounts Receivable Notes Receivable Supplies Equipment $ 6,040 2,910 4,000 1,030 10,000 Accumulated Depreciation Equipment Accounts Payable Unearned Service Revenue Salaries and Wages Payable Share CapitalOrdinary Retained Earnings $ 600 2,300 1,260 1,420 16,300 2,100 $23,980 $23,980