Journal Entries and Trial Balance

As of January 1, 2009, Gammon Corporation had the following balances in its general ledger:

Gammon had the following transactions during 2009. All expenses were paid in cash, unless otherwise stated.

a. Collected $42,000 of receivables.

b. Accounts Payable as of January 1, 2009, were paid off.

c. Purchased inventory for $70,000 cash.

d. Paid utilities of $12,600.

e. Sold $370,000 of merchandise, 90% for cash and 10% for credit. The Cost of Goods Sold was $197,000.

f. Paid $50,000 mortgage payment, of which $30,000 represents interest expense.

g. Paid salaries expense of $120,000.

h. Paid installment of $10,000 on note

Required:

1. Prepare journal entries to record each listed transaction. (Omit explanations.)

2. Set up T-accounts with the proper account balances at January 1, 2009, post the journal entries to the T-accounts, and prepare a trial balance for Gammon Corporation at December 31, 2009.

3. Interpretive Question: If the debit and credit columns of the trial balance are in balance, does this mean that no errors have been made in journalizing the transactions? Explain.