This problem helps to develop journalizing skills by using an actual company's account titles for a selected set of accounts. Refer to the TELUS Corporation's (TELUS) financial statements that appear on MyAccountingLab. Assume TELUS completed the following selected (fictitious) transactions during December 2013:
a. Made sales on account, $950.
b. Paid cash for goods, $1,100.
c. Paid annual financing costs of $447.
d. Collected accounts receivable of $2,100.
e. Paid cash for prepaid rent, $24.
f. Purchased equipment on account for $550.
g. Paid cash for services, $1,800.
Required
1. Set up T-accounts for Cash (debit balance of $1,607); Accounts Receivable (debit balance of $2,611); Prepaid Expenses (debit balance of $144); Property, Plant, and Equipment (debit balance of $7,878); Accounts Payable and Accrued Liabilities (credit balance of $1,185); Service Revenue (credit balance of $9,651); Goods and Services Purchased (debit balance of $2,062); Financing Costs ($0 balance).
2. Journalize TELUS's Transactions a to g. Explanations are not required.
3. Post to T-accounts and compute the balance for each account. Identify each posting by its transaction letter.
4. For each of the accounts, compare your balances to TELUS's actual balances as shown on the December 31, 2013, balance sheet and income statement. All your amounts should agree with the actual figures rounded to the nearest dollar.
Cash
Accounts receivable
Prepaid expenses
Property, plant, and equipment
Accounts payable and accrued liabilities
Service revenue
Goods and services purchased
Financing costs
5. Balance sheet and income statement accounts listed are really categories representing summarized account balances. List three accounts that would be reflected in each of the following categories:
a. Property, plant, and equipment
b. Accounts payable and accrued liabilities
c. General and administration expenses