The accounts required for this exercise are shown in the chart of accounts below.

Royal City Engineering - Chart of Accounts

101Bank301Pat Schelling, Capital111A/R-L. Pero302Pat Schelling, Drawings113A/R-K. Puna401Service Revenue115A/R-Spectrum Co.505Automobile Expense117 A/R-W. J. Thompson510Bank Charges Expense120Supplies515General Expense125Equipment520

Rent Expense

130Automobiles525Telephone Expense201Bank Loan530Wages Expense211A/P-Imperial Garage535Loss on Sale of Equipment213A/P-Home Hardware220GST Payable225GST Recoverable

Pat Schelling began a business called Royal City Engineering. His beginning financial position is shown on the following balance sheet:

ROYAL CITY ENGINEERING BALANCE SHEET August 31, 20-

Assets

Liabilities

Bank

$2,000

Bank Loan

$20,000

Office Supplies

1,450

Equipment

14,732

Owner's Equity

Automobile

28,957

P. Schelling, Capital

27,139

Total Assets

$47,139

Total Liabilities and Equity

$47,139

A. Journalize the opening entry and post it in the accounts. B. Journalize and post the transactions for September given below. In working out the accounting entries, assume that 1) for the purposes of this exercise, the business pays GST on all its purchases 2) the business charges GST on all sales.

Transactions

September

1 -- Cheque Copy To Rosewell Investments for the rent of the month, $900.00 plus GST of $63.00, total $963.00. 3 -- Purchase Invoice From Home Hardware for the purchase of supplies on account, $235.00 plus GST of $16.45, total $251.45. 5 -- Sales Invoice - To W. J. Thomson for services rendered on account, $3 500.00 plus GST of $525.00 total $4 025.00. 5 -- Sales Invoice - To L. Pero for services rendered on account, $2 000.00 plus GST of $300.00 , total $2 300.00. 9 -- Cash Sales Slip Sold a piece of equipment for $500.00 cash (assume that this sale is not taxable). This piece of equipment had originally cost $1 200.00 and was included in the Equipment account at that figure. (Note: Although a sale has been made, this transaction does not affect the revenue account, which is used only for the normal revenue of the business.) 10 -- Sales Invoice - To Spectrum Co. for services rendered on account, $800.00 plus GST of $120.00, total $920.00. 11 -- Cheque Copy - To the owner for personal use, $500.00. 12 -- Cheque Copy - To Home Hardware on account, $251.45. 15 -- Purchase Invoice - Received from Imperial Garage for gasoline and oil used in the business automobiles, $342.00 plus GST of $23.94, total $365.94. 16 -- Cheque Copy - Issued to the Marketplace for the cash purchase of supplies, $165.00 plus GST of $11.55, total $176.55. 18 -- Cash Receipt - Received a cheque from W. J. Thomson, in full payment of the account balance. 18 -- Cheque Copy - To the owner, reimbursement for out-of-pocket expenses: postage, $32.00 plus GST of $2.24; parking, $40 plus GST of $2.80; and gasoline and oil for business purposes, $78.00 plus GST of $5.46; total $160.50. 19 -- Bank Debit Memo - Received a memorandum from the bank stating that $250.00 had been deducted from the business bank account to pay for bank interest and charges. 19 -- Cheque Copy - To an employee for wages, $575.00. 19 -- Sales Invoice - To K. Puna for services rendered on account, $600.00 plus GST of $90.00 , total $690.00. 22 -- Memorandum - From the owner stating that the bank had acted on his instructions to reduce the bank loan by $2 000.00.

24 -- Cheque Copy - To Bell Canada in payment of the telephone bill, $58.00 plus GST of $4.06, total $62.06. 25 -- Cash Receipt - Received a cheque from L. Pero on account, $1 000.00. 26 -- Sales Invoice - To W. J. Thomson for services rendered on account, $400.00 plus GST of $60.00 , total $460.00. 26 -- Cheque Copy - To the owner for personal use, $450.00. 29 -- Memorandum - From the owner stating that 1) he had paid $190.00 plus GST of $13.30, total $203.30, out of his own pocket for supplies used for business purposes, and 2) his Drawings account is to be credited for the above. 30 -- Cheque Copy - To an employee for wages, $570.00. 30 -- Cheque Copy - To Imperial Garage, paying $365.94 on account. 30 -- Purchase Invoice - From Imperial Garage, charging for gasoline and oil used in the company automobiles; $312.00 plus GST of $21.84, total $333.84.

C. Balance the ledger by means of a trial balance. D. Prepare an income statement for the month of September. E. Prepare a balance sheet as at September 30. Use the Report Form Balance Sheet(Below) .

Notice how the Assets are above the Liabilities and Owner's Equity. Follow the model below.

Royal City Engineering Balance Sheet September 30, 20--

Assets

Bank

$ 1,800

Accounts Receivable

19,500

Supplies

700

Prepaid Insurance

800

$22,800

Equipment

$22,000

Automobiles

21,000

43,000

Total Assets

$65,800

Liabilities and Owner's Equity

Accounts Payable

$ 4,535

P. Tang, Capital Balance, January 1

$54,040

Net Income

$22,225

Drawings

15,000

Increase in Capital

7,225

Balance, December 31

61,265

Total Liabilities and Equity

$65,800

Note - Assets will ALWAYS equal Liab. & Owners Equity

Use the following three files:

• Journal
• Ledger
• Reports