Question

Journalize transactions and follow through accounting cycle to preparation of financial statements.

On November 1, 2014, the following were the account balances of Rijo Equipment Repair.

Debit Credit
Cash $2,790 Accumulated DepreciationEquipment $500
Accounts Receivable 2,910 Accounts Payable 2,300
Supplies 1,120 Unearned Service Revenue 400
Equipment 10,000 Salaries and Wages Payable 620
Common Stock 10,000
Retained Earnings 3,000
$16,820 $16,820

During November, the following summary transactions were completed.

Nov. 8 Paid $1,220 for salaries due employees, of which $500 is for November and $720 is for October salaries payable.
10 Received $1,810 cash from customers in payment of account.
12 Received $3,710 cash for services performed in November.
15 Purchased store equipment on account $3,510.
17 Purchased supplies on account $1,310.
20 Paid creditors $2,510 of accounts payable due.
22 Paid November rent $450. 25 Paid salaries $1,010.
27 Performed services on account worth $900 and billed customers.
29 Received $750 from customers for services to be performed in the future.

Answer 1

To journalize transactions and follow through the accounting cycle to preparation of financial statements, transactions need to be recorded in the general journal, posted to the general ledger, and financial statements need to be prepared.

Step-by-step explanation:

To journalize the transactions and follow through the accounting cycle to the preparation of financial statements, we need to record each transaction in the general journal, post the entries to the general ledger, prepare a trial balance, adjust the entries, prepare an adjusted trial balance, and finally, create the financial statements.

For example, on November 8, the transaction is to pay $1,220 for salaries due to employees. We would record this as a debit to Salaries and Wages Expense and a credit to Cash in the general journal.

Once all the transactions have been recorded and properly posted, we can prepare the financial statements such as the income statement, statement of retained earnings, and balance sheet.

Answer 2

Nov. 8 Paid $1,220 for salaries due employees, of which $500 is for November and $720 is for October salaries payable.

Dr Wages expense 500

Dr Wages payable 720

Cr Cash 1,220

10 Received $1,810 cash from customers in payment of account.

Dr Cash 1,810

Cr Accounts receivable 1,810

12 Received $3,710 cash for services performed in November.

Dr Cash 3,710

Cr Service revenue 3,710

15 Purchased store equipment on account $3,510.

Dr Equipment 3,510

Cr Accounts payable 3,510

17 Purchased supplies on account $1,310.

Dr Supplies 1,310

Cr Accounts payable 1,310

20 Paid creditors $2,510 of accounts payable due.

Dr Accounts payable 2,510

Cr Cash 2,510

22 Paid November rent $450.

Dr Rent expense 450

Cr Cash 450

25 Paid salaries $1,010.

Dr Wages expense 1,010

Cr Cash 1,010

27 Performed services on account worth $900 and billed customers.

Dr Accounts receivable 900

Cr Service revenue 900

29 Received $750 from customers for services to be performed in the future.

Dr Cash 750

Cr Unearned revenue 750

Rijo Equipment Repair

Trial Balance

For the month ended November 30, 2014

Debit Credit

Cash $3,870

Accounts Receivable $2,000

Supplies $2,430

Equipment $13,510

Accumulated Dep. Equipment $500

Accounts Payable $4,610

Salaries and Wages Payable -$100 (see Nov. 8)

Unearned Service Revenue $1,150

Common Stock $10,000

Retained Earnings $3,000

Service revenue $4,610

Wages expense $500

Wages expense $1,010

Rent expense $450

Totals $23,770 $23,770

In order to prepare an income statement, you must adjust several accounts, e.g. depreciation expense, wages expense for last week, utilities expense, etc.