Prepare a trial balance as of May 31, 2003. 1 answer below »

Downtown Company, a retailer, had the following account balances as of April 30, 2003:

Cash

10,100

Accounts Receivable

4,900

Inventory

16,000

Land

26,000

Building

24,000

Furniture

4,000

Notes Payable.

$25,000

Accounts Payable

12,000

Capital Stock.

30,000

Retained Earnings.

18,000

Totals

$85,000

$85,000

During May, the company completed the following transactions.

May 3 Paid one-half of 4/30/03 accounts payable.

May 6 Collected all of 4/30/03 accounts receivable.

May 7 Sold inventory costing $7,700 for $6,000 cash and $4,000 on account.

May 8 Sold one-half of the land for $13,000, receiving $8,000 cash plus a note for $5,000.

May 10 Purchased inventory on account, $10,000.

May 15 Paid installment of $5,000 on notes payable (entire amount reduces the liability account).

May 21 Issued additional capital stock for $2,000 cash.

May 23 Sold inventory costing $4,000 for $7,500 cash.

May 25 Paid salaries of $2,000.

May 26 Paid rent of $500.

May 29 Purchased desk for $500 cash.

Required

1. Prepare the journal entry for each transaction.

2. Set up T-accounts with the proper account balances at April 30, 2003, and post the entries to the T-accounts.

3. Prepare a trial balance as of May 31, 2003.

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