Roger’s Repair Services had the following transactions during April and

Roger’s Repair Services had the following transactions during April and May 2016:

April

1

7

8

11

Cash is received from a customer, D. Lloyd, $8200.

Repair services are provided on credit to J. Turner for $12000.

A bill for electricity consumed is received, $720.

Supplies are requisitioned from storage for use in the general office, $280.

May

15

18

23

25

30

2

2

5

12

13

14

19

31

A $50 000 loan is taken out with BCSA Bank. Interest is payable at 10% p.a.

A cheque is issued in payment of the electricity account received on 8 April.

Supplies are purchased on account from Harry’s Hardware, $860.

Supplies are requisitioned for use in the office, $360.

Prepaid insurance costs have been used to the extent of $300.

Owner contributes capital of $20000, by an additional injection of cash.

Rent for the month is paid by cheque, $2200.

Repair equipment is purchased on account from Orange Suppliers, $16 000.

Office fixtures are purchased from OfficeShop for $6000. $500 is paid immediately with cash, the remainder is due in July.

Repair services performed for clients for cash, $7800.

Payment on account is made by cheque to Trade Suppliers, $22000.

A salary of $4200 is paid by electronic bank transfer.

Insurance expired, $300.

Required

a. Assuming that the accounting period is a calendar year, prepare general journal entries for Roger’s Repair Services during April and May 2017. Ignore GST.

b. At the end of May, interest is owing on the loan taken out on 15 April with BCSA Bank. Should this interest be recorded by Roger’s Repair Services in its accounting records? Why or why not?

 

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