Part 1 Boomer Zoomer is the owner of Muskogee Repair, a business engaged in prov
ID: 2329383 • Letter: P
Question
Part 1
Boomer Zoomer is the owner of Muskogee Repair, a business engaged in providing miscellaneous home repair services. Boomer began the business two years ago with cash he stashed while playing professional football. The transactions listed below occurred during the month just ended.
Required: Prepare the journal entries to record the following transactions.
1. Purchased a small building located on a large lot for a total price of $92,000, of
which $50,000 was applicable to the land and $42,000 to the building. A cash down payment of $20,000 was made and a note payable was issued for the balance of the purchase price.
2. Purchased $1,950 supplies from Waurika Supply Co. on open account.
3. Returned for credit $250 of the supplies received from Waurika Supply Co. because they were received in unsatisfactory condition.
4. Paid Waurika Supply Co. the amount owed from transactions 2 and 3 above.
5. Purchased a one-year insurance policy for $600 cash.
6. Performed repairs for a nice elderly couple and collected in full the charge of $5,100. The charge was a bit steep, but the couple had been big Boomer Zoomer fans and didn't know any better. Besides, Boomer included his autograph in the deal.
7. A bill for $120 was received from the Muskogee Herald-Tribune for
advertisements which appeared in the Sunday comics section. The bill is payable by the tenth of next month.
8. Paid the monthly wages earned by employees, $1,800.
9. Paid $350 to Ryan Automotive for repairs to the company's truck.
10. Supplies costing $540 were consumed during the month.
11. One-month's insurance coverage (purchased in item 5 above) expired during the month.
Part 2
Prepare an adjusted trial balance.
Explanation / Answer
JOURNAL ENTRIES Ref Account Title Debit Credit 1 Land $50,000 Building $42,000 Cash $20,000 Note Payable $72,000 2 Supplies $1,950 Accounts Payable $1,950 3 Accounts Payable $250 Supplies $250 4 Accounts Payable $1,700 (1950-250) Cash $1,700 5 Prepaid Insurance $600 Cash $600 6 Cash $5,100 Service Revenue $5,100 7 Advertisement expense $120 Accrued expense $120 8 Wages expense $1,800 Cash $1,800 9 Repair expense $350 Cash $350 10 Supplies expense $540 Supplies $540 11 Insurance expense $50 (600/12) Prepaid insurance $50 T-ACCOUNTS Cash Ref No. Description Debit Credit 1 Purchase of building $20,000 4 Accounts Payable $1,700 5 Prepaid Insurance $600 6 Service Revenue $5,100 8 Wages expense $1,800 9 Repair expense $350 Ending Balance $19,350 Prepaid Insurance Ref No. Description Debit Credit 5 Cash $600 11 Insurance expense $50 Ending Balance $550 Supplies Ref No. Description Debit Credit 2 Accounts Payable $1,950 3 Purchase return $250 10 Supplies expense $540 Ending Balance $1,160 Land Ref No. Description Debit Credit 1 Purchase $50,000 Building Ref No. Description Debit Credit 1 Purchase $42,000 Accounts Payable Ref No. Description Debit Credit 2 Supplies $1,950 3 Purchase return(Credit note) $250 4 Accounts Payable $1,700 Ending Balance $0 Accrued expense Ref No. Description Debit Credit 7 Advertisement expense $120 Note Payable Ref No. Description Debit Credit 1 Purchse of building $72,000 Service Revenue Ref No. Description Debit Credit 6 Cash $5,100 Advertisement Expense Ref No. Description Debit Credit 7 Expense accrued $120 Wage expense Ref No. Description Debit Credit 8 Cash $1,800 Repair expense Ref No. Description Debit Credit 9 Repair expense $350 Supplies expense Ref No. Description Debit Credit 10 Supplies expense $540 Insurance expense Ref No. Description Debit Credit 11 Insurance expense $50 ADJUSTED TRIALBALANCE Cash $19,350 Prepaid Insurance $550 Supplies $1,160 Land $50,000 Building $42,000 Accounts Payable $0 Accrued expense $120 Note Payable $72,000 Service Revenue $5,100 Advertisement Expense $120 Wage expense $1,800 Repair expense $350 Supplies expense $540 Insurance expense $50 Total $ 96,570 $ 96,570