Journal Entries and Trial Balance

Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 20Y8, is shown below.

Valley Realty
Unadjusted Trial Balance
July 31, 20Y8
		Account No.	Debit Balances	Credit Balances
	Cash	11	12,440
	Accounts Receivable	12	28,970
	Prepaid Insurance	13	1,410
	Office Supplies	14	850
	Land	16
	Accounts Payable	21		8,200
	Unearned Rent	22
	Notes Payable	23
	Common Stock	31		10,000
	Retained Earnings	32		19,700
	Dividends	33	990
	Fees Earned	41		141,310
	Salary and Commission Expense	51	107,700
	Rent Expense	52	14,130
	Advertising Expense	53	8,340
	Automobile Expense	54	2,540
	Miscellaneous Expense	59	1,840
			179,210	179,210

The following business transactions were completed by Valley Realty during August 20Y8:

Aug. 1.	Purchased office supplies on account, $1,250.
2.	Paid rent on office for month, $4,810.
3.	Received cash from clients on account, $24,050.
5.	Paid insurance premiums, $3,460.
9.	Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, $190.
17.	Paid advertising expense, $1,920.
23.	Paid creditors on account, $4,330.

29.	Paid miscellaneous expense, $430.
30.	Paid automobile expense (including rental charges for an automobile), $1,440.
31.	Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, $960.
31.	Paid salaries and commissions for the month, $6,420.
31.	Recorded revenue earned and billed to clients during the month, $28,860.
31.	Purchased land for a future building site for $86,600, paying $9,500 in cash and giving a note payable for the remainder.
31.	Paid dividends, $960.
31.	Rented land purchased on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of $2,890.

Required:

Use the attached spreadsheet to complete parts 1 and 3. Click on the Spreadsheet icon to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem.

1. Record the August 1, 20Y8 balance of each account in the appropriate balance column of the four-column account. The word Balance has been entered in the item section and a check mark () has been placed in the Posting Reference column.

2. Journalize and insert the Posting References for the transactions for August in a two-column journal beginning on Page 18. For a compound transaction, if an amount box does not require an entry, leave it blank.

General Journal				Page 18
Date	Description	Post. Ref.	Debit	Credit
20Y8
Aug. 1	Accounts PayableAccounts ReceivableCashOffice SuppliesSalary and Commission Expense
	Accounts PayableAccounts ReceivableCashOffice SuppliesMiscellaneous Expense
Aug. 2	Accounts PayableCashNotes PayableRent ExpenseUnearned Rent
	Accounts PayableCashFees EarnedRent ExpenseUnearned Rent
Aug. 3	Accounts PayableAccounts ReceivableCashFees EarnedNotes Payable
	Accounts PayableAccounts ReceivableCashFees EarnedNotes Payable
Aug. 5	Accounts PayableAccounts ReceivableCashPrepaid InsuranceTruck
	Accounts PayableAccounts ReceivableCashCommon StockPrepaid Insurance
Aug. 9	Accounts PayableAccount ReceivableCashFees EarnedOffice Supplies
	Accounts PayableAccount ReceivableCashFees EarnedOffice Supplies
Aug. 17	Advertising ExpenseCashFees EarnedCommon StockNotes Payable
	Accounts ReceivableAdvertising ExpenseCashFees EarnedMiscellaneous Expense
Aug. 23	Accounts PayableAccount ReceivableCashFees EarnedOffice Supplies
	Accounts PayableAccount ReceivableCashFees EarnedOffice Supplies

General Journal				Page 19
Date	Description	Post. Ref.	Debit	Credit
20Y8
Aug. 29	Accounts ReceivableCashFees EarnedMiscellaneous ExpenseOffice Supplies
	Accounts PayableCashFees EarnedMiscellaneous ExpenseOffice Supplies
Aug. 30	Automobile ExpenseCashFees EarnedPrepaid InsuranceRent Expense
	Automobile ExpenseCashEquipmentFees EarnedRent Expense
Aug. 31-Error	Accounts PayableCashCommon StockMiscellaneous ExpenseSalary and Commission Expense
	Accounts ReceivableCashCommon StockFees EarnedSalary and Commission Expense
Aug. 31-Salary	Accounts PayableCashFees EarnedMiscellaneous ExpenseSalary and Commission Expense
	Accounts ReceivableCashEquipmentMiscellaneous ExpenseRent Expense
Aug. 31-Revenue	Accounts PayableAccounts ReceivableCashEquipmentFees Earned
	Accounts PayableAccounts ReceivableCashFees EarnedLand
Aug. 31-Land	Accounts PayableCashFees EarnedLandNotes Payable
	Accounts PayableCashLandMiscellaneous ExpenseRent Expense
	Accounts PayableAccount ReceivableFees EarnedLandNotes Payable
Aug. 31-Dividends	Accounts PayableCashCommon StockDividendsFees Earned
	Accounts PayableCashCommon StockDividendsFees Earned
Aug. 31-Rent	Accounts ReceivableCashCommon StockFees EarnedNotes Payable
	Accounts PayableCashEquipmentRent ExpenseUnearned Rent

Required:

3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.

4. Using the balances from the spreadsheet, prepare an unadjusted trial balance of the ledger as of August 31, 20Y8.

List all accounts in the order of Assets, Liabilities, Stockholders equity, Revenues, and Expenses. If an amount box does not require an entry, leave it blank.

Valley Realty Unadjusted Trial Balance August 31, 20Y8
	Account No.	Debit Balances	Credit Balances
Accounts PayableCashCommon StockFees EarnedNotes Payable
Accounts PayableAccounts ReceivableCommon StockFees EarnedUnearned Rent
Advertising ExpenseCommon StockFees EarnedNotes PayablePrepaid Insurance
Accounts PayableCommon StockFees EarnedNotes PayableOffice Supplies
DividendsFees EarnedLandUnearned RentSalary and Commission Expense
Accounts PayableAccounts ReceivableAdvertising ExpenseCashOffice Supplies
Accounts ReceivableDividendsPrepaid InsuranceRent ExpenseUnearned Rent
Accounts ReceivableAutomobile ExpenseDividendsNotes PayableOffice Supplies
Accounts PayableCashCommon StockDividendsMiscellaneous Expense
Accounts PayableCashFees EarnedMiscellaneous ExpenseRetained Earnings
Common StockDividendsFees EarnedNotes PayableUnearned Rent
Accounts ReceivableAdvertising ExpenseFees EarnedOffice SuppliesSalary and Commission Expense
Accounts PayableCommon StockNotes PayableSalary and Commission ExpenseUnearned Rent
DividendsFees EarnedPrepaid InsuranceRent ExpenseUnearned Rent
Accounts PayableAdvertising ExpenseCommon StockFees EarnedNotes Payable
Accounts ReceivableAutomobile ExpenseLandNotes PayableUnearned Rent
Accounts PayableCashCommon StockFees EarnedMiscellaneous Expense

5a. Assume that the August 31 transaction for dividends should have been $4,620. As a result, the unadjusted trial balance in (4) would

still balance.not balance.not be impacted at all.

5b. Assume that the August 31 transaction for dividends should have been $4,620. Journalize the correcting entry. If an amount box does not require an entry, leave it blank.

General Journal				Page 19
Date	Description	Post. Ref.	Debit	Credit
20Y8
Aug. 31	Accounts PayableCashDividendsFees EarnedNotes Payable
	Automobile ExpenseCashDividendsFees EarnedSalary and Commission Expense

5c. Assume that the August 31 transaction for dividends should have been $4,620. Is this error a transposition or slide?