Henri Martin and Wes Corbett have decided to go into business together and have chosen the name KBC Decorating Co. Their business will have two main divisions: a retail department to sell paint, wallpaper, and related interior decorating supplies; and a service department to do painting and decorating of office buildings, apartment blocks, and private homes. Martin and Corbett were previously in this same type of work but operated separate businesses. KBC Decorating Co. is located in Paris, Ontario, about an hour from Toronto. Martin and Corbett found a suitable location from which to operate their business, renting half of a warehouse building owned by Frank Bailes. Their space includes an office, retail space, and warehouse space. Your job is to keep the books for KBC Decorating Co. for the first calendar year (January to December). As you progress through these chapters, you will learn and do. Each chapter will introduce new concepts that you will incorporate into the regular bookkeeping activities of KBC Decorating Co.

. 20Jan. 2 The owners started their new business by investing the assets shown here. Notice from the chart of accounts that each owner has his own Capital account. (You will record two compound entries for these investments, one for each owner.)

20Jan. 2 The owners started their new business by investing the assets shown here. Notice from the chart of accounts that each owner has his own Capital account. (You will record two compound entries for these investments, one for each owner.)

Henri Martin: Cash $22,000 Furniture & Equipment 8,000 $30,000

Wes Corbett: Cash $15,000 Vehicle (used van) 15,000 $30,000

2 Issued Cheque #1 for the January rent, $2,500.

2 Issued Cheque #2 for advertising in the newspaper, $610.20. (Debit Advertising Expense.)

4 Bought office supplies, $305.10. Issued Cheque #3. (Debit Office Supplies Expense.)

4 Issued Cheque #4 for the installation of our new phone line, $165. (Telephone Expense).

5 Bought merchandise as follows: paint and supplies, $10,000; wallpaper, $5,000. Issued Cheque #5. (Notice on the chart of accounts that there are separate Purchases accounts for these goods. Record this as a compound entry.)

9 Bought a paint mixer and colour dispenser from Rainbow Supplies Co., $1,620. Issued Cheque #6. (Tools & Equipment).

10 Cash sales: paint and supplies, $3,000; wallpaper, $1,000. (Notice that there are separate Sales accounts for these goods.)

15 Cash sales: paint and supplies, $6,000; wallpaper, $2,000.

These are the previous information you need.

KBC Decorating Co. is located in Paris, Ontario. Most goods and services bought and sold in Ontario are subject to 13% HST. We will assume that a number of errors were recorded in January. For each of the following transactions, record a reversing entry, then record the correct entry based on the new information available.

20Jan. 2 Cheque #1 issued for rent was actually $2,500 plus HST.

2 Cheque #2 for advertising should have been $540 plus HST.

4 Cheque #3 for office supplies should have been $270 plus HST.

4 Cheque #4 for the new phone line should have been $165 plus HST.

5 The purchase of merchandise on the 5th was recorded without HST. Add HST to the values given.

9 Cheque #6 for the paint mixer and colour dispenser should have been $1,620 plus HST.

10 HST was not charged on the sales recorded on the 10th. Add HST to the amounts given.

15 HST was not charged on the sales recorded on the 15th. Add HST to the amounts given.

Post these entries to the ledger accounts and prepare a trial balance on January 15, 20.