As of January 1, 2000, Kendrick Corp. had the following balances in its general ledger:

\begin{tabular}{|c|c|c|}

\hline & Debits & Credits \\

\hline Cash & $\$ 31,500$ & \\

\hline Accounts Receivable . . . . . . . . . . . . & 23,500 & \\

\hline Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & 92,000 & \\

\hline Office Building. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & 208,000 & \\

\hline Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & & $\$ 16,500$ \\

\hline Mortgage Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & & 180,000 \\

\hline Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & & 68,500 \\

\hline Capital Stock . . . . . . . & & 57,500 \\

\hline Retained Earnings . . . . . . . . . . . . . . . . . . . . . & & 32,500 \\

\hline Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & $\$ 355,000$ & $\$ 355,000$ \\

\hline

\end{tabular}

Kendrick had the following transactions during 2000 . All expenses were paid in cash, unless otherwise stated.

a. Accounts payable as of January 1, 2000, were paid off.

b. Purchased inventory for $\$ 35,000$ cash.

c. Collected $\$ 21,000$ of receivables.

d. Sold $\$ 185,000$ of merchandise, 85 percent for cash and 15 percent for credit. The cost of goods sold was $\$ 98,500$.

e. Paid $\$ 25,000$ mortgage payment, of which $\$ 15,000$ represents interest expense.

f. Paid salaries expense of $\$ 60,000$.

g. Paid utilities of $\$ 6,300$.

h. Paid installment of $\$ 5,000$ on note.

1. Prepare journal entries to record each listed transaction. (Omit explanations.)

2. Set up T-accounts with the proper account balances at January 1, 2000, and post the journal entries to the T-accounts and prepare a trial balance for Kendrick Corp. at December 31, 2000 .

3. Interpretive Question: If the debit and credit columns of the trial balance are in balance, does this mean that no errors have been made in journalizing the transactions? Explain.