Reference no: EM13971431

Equity Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 2008, is shown at the top of the following page.

The following business transactions were completed by Equity Realty during August 2008:

Aug. 1. Purchased office supplies on account, $1,500.

2. Paid rent on office for month, $2,500.

3. Received cash from clients on account, $28,720.

5. Paid annual insurance premiums, $3,600.

Aug. 9. Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, $250.

17. Paid advertising expense, $3,450.

23. Paid creditors on account, $2,670.

29. Paid miscellaneous expenses, $500.

30. Paid automobile expense (including rental charges for an automobile), $1,500.

31. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, $1,000.

31. Paid salaries and commissions for the month, $17,400.

31. Recorded revenue earned and billed to clients during the month, $51,900.

31. Purchased land for a future building site for $75,000, paying $10,000 in cash and giving a note payable for the remainder.

31. Withdrew cash for personal use, $5,000.

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 $2,000.

Instructions

1. Record the August 1 balance of each account in the appropriate balance column of a four column account, write Balance in the item section, and place a check mark (??) in the Posting Reference column.

2. Journalize the transactions for August in a two-column journal. Journal entry explanations may be omitted.

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

4. Prepare an unadjusted trial balance of the ledger as of August 31, 2008.