Accounting-9th-edition-horngren-solution-manual.doc

Chapter 2 Recording Business Transactions Short Exercises (10 min.)

S 2-1

Req.1 1.

G

2.

C

3.

E

4.

D

5.

A

6.

I

7.

F

8.

B

9.

H

10. J

Chapter 2

Recording Business Transactions

67

(5 min.)

S 2-2

Req. 1 Debits are increases for the following types of accounts:  Assets  Owner’s drawing  Expenses Debits are decreases for these types of accounts:  Liabilities  Owner’s capital  Revenues

Req. 2

68

Credits   

are increases for these types of accounts: Liabilities Owner’s capital Revenues

Credits   

are decreases for these types of accounts: Assets Owner’s drawing Expenses

Accounting 9/e

Solutions Manual

(5 min.)

S 2-3

Req. 1 Normal Balance Debit or Credit Assets Liabilities Owner’s equity overall Capital Drawing Revenues Expenses

Debit Credit Credit Credit Debit Credit Debit

(5 min.)

S 2-4

Req. 1 Step 1: Identify each account affected and its type. Step 2: Determine whether each account is increased or decreased. Step 3: Record the transaction in the journal.

Account 5 Accounts receivable Service revenue 28 Cash Accounts receivable Chapter 2

Type Asset Owner’s equity Asset Asset

Recording Business Transactions

Increase/ Decrease Increase Increase Increase Decreas e 69

(continued)

S 2-4

Req. 1 - continued

Journal DATE

Jan

5

2 8

ACCOUNTS AND EXPLANATIONS

POST. REF. DEBIT

Accounts receivable Service revenue Performed service on account.

CREDIT

1,000 1,000

Cash Accounts receivable Received cash on account.

600 600

(10 min.)

S 2-5

Req. 1

Journal DATE

Jan

ACCOUNTS AND EXPLANATIONS

POST. REF. DEBIT

29,00 0

1 Cash

29,00 0

Brown, capital Owner investment 14,00 0

2 Medical supplies

14,00 0

Accounts payable 70

CREDIT

Accounting 9/e

Solutions Manual

Purchased supplies on account. 2 Rent expense Cash Paid office rent.

2,600

3 Accounts receivable Service revenue Performed service on account.

8,000

Chapter 2

Recording Business Transactions

2,600

8,000

71

(10min.)

S 2-6

Req. 1

Journal DATE

Jan 2 2

ACCOUNTS AND EXPLANATIONS

POST. REF.

Accounts receivable

DEBIT

8,000

Service revenue Performed service on account. 3 0

Cash

8,000

7,000

Accounts receivable Received cash on account. 3 1

Utilities expense

7,000

180

Accounts payable Received utility bill. 3 1

180

Salary expense

2,000

Cash Paid salary expense. 3 1

Advertising expense Cash Paid advertising expense.

72

CREDIT

Accounting 9/e

Solutions Manual

2,000

700 700

(10-15 min.)

S 2-7

Req. 1

Journal DATE

1.

ACCOUNTS AND EXPLANATIONS

Supplies

POST. REF.

DEBIT

CREDI T

3,40 0

Accounts payable

3,40 0

Purchased supplies on account. 2.

Accounts payable

1,70 0

Cash ($3,400  ½)

1,70 0

Paid on account.

Req. 2 Accounts payable 2. 1. 1,700 3,400 Bal 1,700

Chapter 2

Recording Business Transactions

73

(10-15 min.)

S 2-8

POST. REF.

CREDIT

Req. 1

Journal DATE

ACCOUNTS AND EXPLANATIONS

Accounts receivable

DEBIT

16,00 0

Service revenue

16,00 0

Performed service on account. Cash Accounts receivable Received cash on account.

9,600 9,600

Req. 2 Cash

Bal

74

9,60 0 9,60 0

Accounts receivable 16,00 9,600 0 Bal 6,40 0

Accounting 9/e

Solutions Manual

Service revenue 16,00 0 Bal 16,00 0

Req. 3 a.

Washington earned:

$16,00 0

b.

Cash Accounts receivable Total assets

$9,600 6,400

Chapter 2

as Service revenue

$16,00 0

Recording Business Transactions

75

(10-15 min.)

S 2-9

Req. 1

Bal

Cash 29,00 0 26,40 0

2,60 0

Bal

Medical supplies 14,00 0 Bal 14,00 0

Brown, capital 29,00 0 29,00 0

Bal

Bal 76

Accounts receivable 8,000 8,000

Accounts payable 14,00 0 Bal 14,00 0

Service revenue 8,000 Bal

Rent expense 2,600 2,600 Accounting 9/e

Solutions Manual

8,000

Chapter 2

Recording Business Transactions

77

(continued)

S 2-9

Req. 2 Ned Brown, M.D. Trial Balance January 3, 2012 ACCOUNT DEBIT Cash $26,400 Accounts receivable 8,000 Medical supplies 14,000 Accounts payable Brown, capital Service revenue Rent expense 2,600 Total $51,000

CREDIT

$14,000 29,000 8,000 $51,000

(10 min.)

S 2-10

Req. 1 Oakland Floor Coverings Trial Balance December 31, 2012 ACCOUNT DEBIT Cash $12,000 Equipment 45,000 Accounts payable Other liabilities 78

Accounting 9/e

Solutions Manual

CREDIT

$ 2,000 18,000

Oakland, capital Revenues Expenses Total

Chapter 2

Recording Business Transactions

22,000 34,000 19,000 $76,000

$76,000

79

(10 min.)

S 2-11

Req. 1 Brenda Longval Travel Design Incorrect Trial Balance April 30, 2012 Balance ACCOUNT DEBIT CREDIT Cash $18,000 Accounts receivable 1,000 Office supplies 500 Land 14,000 Accounts payable $ 400 Longval, capital 30,600* Longval, drawing 3,000 Service revenue 8,800 Rent expense, computer 700 Rent expense, office 900 Salary expense 1,100 Utilities expense 600 Total $70,400 $9,200 __________ *Incorrect; should be listed as a credit.

To correct this error, 1. Take the difference between total debits and total credits: $70,400 – $9,200 = $61,200 80

Accounting 9/e

Solutions Manual

2. Divide the error by 2: $61,200 / 2 = $30,600 3. Locate $30,600 on the trial balance. The Longval, capital account should have a credit balance. (10 min.)

S 2-12

Req. 1 Francis Nangle Travel Design Incorrect Trial Balance January 31, 2012 Balance ACCOUNT DEBIT CREDIT Cash $20,000 Accounts receivable 1,000 Office supplies 500 Land 12,000 Accounts payable $ 100 Nangle, capital 31,000 Nangle, drawing 300* Service revenue 8,700 Rent expense, computer 700 Rent expense, office 1,200 Salary expense 1,200 Utilities expense 200 Total $37,100 $39,800 *Incorrect; should be listed as $3,000. To correct this error, Chapter 2

Recording Business Transactions

81

1. Take the difference between total debits and total credits: $37,100 − $39,800 = $2,700 2. Divide the error by 9: $2,700 ÷ 9 = $300 3. Locate $300 on the trial balance. The Nangle, drawing account holds the error. Trace the Nangle, drawing balance back to the ledger account, which shows the correct amount, $3,000.

82

Accounting 9/e

Solutions Manual

Exercises (10 min.)

E 2-13

4

1

C R 2 D E B D I 3 T R

I

I

A C C O U N T

A

5

D

Chapter 2

8

6

L B E D G E B R

7

A L S S E T

Recording Business Transactions

A

J O U R N C A L

9

C R E D I T

83

(10-15 min.)

E 2-14

4 2

R

E

C

A

L

A

1

D E 3 B I T

5

P

6

C

R

N E T I N C O M E

I

V

A

B

L

C

E

S

H

E

S

T

D

I

7

E X P E N S E

T

T

(10-15 min.)

E 2-15

Req. 1 ASSETS Debit

=

LIABILITIES Credit

+

OWNER’S EQUITY Credit

$390,000

=

$260,000

+

$130,000

REVENUES

–

EXPENSES

=

$480,000 Credit

–

$350,000 Debit

=

Req. 2 NET INCOME (net loss) $130,000 Credit

NET INCOME represents a net credit because revenues (credits) exceed expenses (debits). 84

Accounting 9/e

Solutions Manual

NET LOSS would be a net debit because expenses (debits) would exceed revenues (credits).

Chapter 2

Recording Business Transactions

85

(10-15 min.)

E 2-16

Req. 1

Journal DATE

Jul

ACCOUNTS AND EXPLANATIONS

2 Utilities expense Cash

CREDIT

400 400

5 Equipment Accounts payable

2,100

10 Accounts receivable Service revenue

2,000

12 Cash Note payable

7,000

2,100

2,000

7,000

19 Cash Land

29,000 29,000

21 Supplies Cash

800 800

27 Accounts payable Cash

86

DEBIT

Accounting 9/e

2,100 2,100

Solutions Manual

(20-30 min.)

E 2-17

Req. 1 May

1 2 4 6 9 17 23 31

Owner’s investment Purchased supplies on account (on credit) Paid cash for building Performed services for cash Payment on account Performed services on account Received payment on account Payment of expenses

Reqs. 2 and 3 Cash 110 May 1 6 23 May 31

75,00 May 0 4 2,600 9 1,900 31 24,10 0

53,00 0 400

Accounts receivable 120 May 2,500 May 1,90 17 23 0 May 600 31

2,000

Supplies 130

Building 140

Chapter 2

Recording Business Transactions

87

May 2

500

May 31

500

May 9

88

May 4 May 31

Accounts payable 210 400 May 500 2 May 100 31

Accounting 9/e

53,00 0 53,00 0

Ward, capital 310 May 75,00 1 0 May 75,00 31 0

Solutions Manual

(continued)

E 2-17

Req. 1 Service revenue 410 May 2,60 6 0 2,50 17 0 May 5,10 31 0

May 31 May 31

Rent expense 510 900 900

Salary expense 520 May 31 1,10 0 May 31 1,10 0

(continued)

E 2-17

Req. 4 Ward Technology Solutions Trial Balance May 31, 2012 ACCOUNT DEBIT Cash $24,100 Accounts receivable 600 Chapter 2

Recording Business Transactions

CREDIT

89

Supplies Building Accounts payable Ward, capital Service revenue Salary expense Rent expense Total

90

Accounting 9/e

500 53,000 $ 100 75,000 5,100 1,100 900 $80,200

Solutions Manual

$80,200

(20.30 min.) Req. 1

Req. 2 Amount

Direction of Error

$7,000

Too low

Utility expense

810

Too high

Furniture

800

Too high

Accounts payable

800

Too high

1,080

Too high

Effect on Trial Balance

Account

a.

Total debits > Total credits

Note payable

b.

Total debits > Total credits

c.

Total debits = Total credits

d.

Total debits > Total credits

Cash

e.

Total debits = Total credits

Supplies

90

Too low

Accounts payable

90

Too low

Chapter 2

E 2-18

Recording Business Transactions

91

(15-25 min.)

E 2-19

Reqs. 1 and 2

Jul 1 12

Cash 4,000 Jul 2

400

Accounts receivable Jul 10 2,000

7,000

800

Jul 31

21

29,00 19 0 27 Jul 31 36,70 0

Jul 21 Jul 31

2,100

Supplies 800 800

Equipment Jul 5 2,100 Jul 31 2,100

Land Jul 1 29,00 Jul 19 0 Jul 31 0

Accounts payable 29,00 Jul 27 2,10 Jul 5 2,10 0 0 0 Jul 31 0

Notes payable

92

2,00 0

Accounting 9/e

London, capital

Solutions Manual

Jul 12

7,000

Jul 1

Jul 31

7,000

Jul 31

Service revenue Jul 10 2,00 0 Jul 31 2,00 0

Chapter 2

33,00 0 33,00 0

Utilities expense Jul 2 400 Jul 31

Recording Business Transactions

400

93

(continued)

E2-19

Req. 3 London Engineering Trial Balance July 31, 2012 ACCOUNT DEBIT Cash $36,700 Accounts receivable 2,000 Supplies 800 Equipment 2,100 Notes payable London, capital Service revenue Utilities expense 400 Total $42,000

94

Accounting 9/e

Solutions Manual

CREDIT

$

7,000 33,000 2,000

$42,000

(10 min.)

E 2-20

Req. 1

Journal DATE

ACCOUNTS AND EXPLANATIONS

1. Cash

POST. REF.

DEBIT

53,00 0

Adams, capital Owner’s investment. 2. Supplies Accounts payable Purchased supplies on account. 3. Building

53,000

700 700

40,00 0

Cash Paid cash for building. 4. Cash

40,000

50,00 0

Note payable Borrowed money; signed note payable. 5. Equipment Cash Paid cash for equipment. Chapter 2

CREDIT

Recording Business Transactions

50,000

4,700 4,700

95

96

Accounting 9/e

Solutions Manual

(continued)

E 2-20

Req. 2 Adams’ Lawn Care Company Trial Balance December 31, 2012 ACCOUNT DEBIT Cash $ 58,300 Supplies 700 Equipment 4,700 Building 40,000 Accounts payable Note payable Adams, capital Total

Chapter 2

$103,700

Recording Business Transactions

CREDIT

$ 700 50,000 53,000 $103,700

97

(10 min.)

Req. 1

E 2-21

Thomas Sell’s transaction:

Journal DATE

ACCOUNTS AND EXPLANATIONS

POST. REF.

Repair expense

DEBIT

573.4 1

Cash Paid repair bill.

Req. 2

CREDIT

573.41

Best Automotive’s transaction:

Journal DATE

ACCOUNTS AND EXPLANATIONS

POST. REF.

Cash

CREDIT

573.4 1

Service revenue Performed service and received cash.

98

DEBIT

Accounting 9/e

Solutions Manual

573.41

(20-25 min.)

E 2-22

Req. 2

Journal DATE

a.

ACCOUNTS AND EXPLANATIONS

Cash Office furniture Parker, capital

b.

c.

d.

e.

f.

Rent expense Cash

Office supplies Accounts payable

Salary expense Cash

Accounts payable Cash

Accounts receivable Service revenue

Chapter 2

Recording Business Transactions

POST. REF.

DEBIT

CREDIT

14,10 0 5,200 19,300 1,500 1,500

900 900

1,700 1,700

700 700

5,900 5,900

99

g.

100

Parker, drawing Cash

Accounting 9/e

6,700 6,700

Solutions Manual

(continued)

E 2-22

Reqs. 1 and 2

DATE

ACCOUNT NO.

Cash

ACCOUNT

ITEM

JRNL . REF.

a. b. d. e. g.

BALANCE DEBIT

CREDIT

DEBIT

1,500 1,700 700 6,700

14,100 12,600 10,900 10,200 3,500

14,100

Accounts receivable

ACCOUNT

DATE

ITEM

JRNL . REF.

f.

DEBIT

CREDIT

DATE

ITEM

c.

CREDIT

ACCOUNT NO. BALANCE

DEBIT

CREDIT

900

Chapter 2

DEBIT

5,900

Office supplies JRNL . REF.

ACCOUNT NO. BALANCE

5,900

ACCOUNT

CREDIT

Recording Business Transactions

DEBIT

CREDIT

900

101

ACCOUNT

DATE

a.

102

ACCOUNT NO.

Office furniture ITEM

JRNL . REF.

BALANCE DEBIT

CREDIT

5,200

Accounting 9/e

DEBIT

5,200

Solutions Manual

CREDIT

(continued)

E 2-22

Reqs. 1 and 2

DATE

ACCOUNT NO.

Accounts payable

ACCOUNT

ITEM

JRNL . REF.

c. e.

BALANCE DEBIT

CREDIT

DEBIT

CREDIT

900

900 200

700

DATE

ACCOUNT NO.

Parker, capital

ACCOUNT

ITEM

JRNL . REF.

BALANCE DEBIT

a.

CREDIT

DEBIT

19,300

DATE

ITEM

JRNL . REF.

g.

BALANCE DEBIT

CREDIT

6,700

DATE

ITEM

Chapter 2

JRNL . REF.

DEBIT

CREDIT

6,700

ACCOUNT NO.

Service revenue

ACCOUNT

19,300

ACCOUNT NO.

Parker, drawing

ACCOUNT

CREDIT

BALANCE DEBIT

CREDIT

Recording Business Transactions

DEBIT

CREDIT 103

f.

104

5,900

Accounting 9/e

Solutions Manual

5,900

(continued)

E 2-22

Reqs. 1 and 2

DATE

ACCOUNT NO.

Salary expense

ACCOUNT

ITEM

JRNL . REF.

d.

BALANCE DEBIT

CREDIT

1,700

DATE

ITEM

b.

JRNL . REF.

CREDIT

1,700

ACCOUNT NO.

Rent expense

ACCOUNT

DEBIT

BALANCE DEBIT

CREDIT

1,500

DEBIT

CREDIT

1,500

Req. 3 Teresa Parker, CPA Trial Balance December 31, 2012 ACCOUNT DEBIT Cash $ 3,500 Accounts receivable 5,900 Office supplies 900 Office furniture 5,200 Accounts payable Parker, capital Parker, drawing 6,700 Service revenue Chapter 2

Recording Business Transactions

CREDIT

$

200 19,300 5,900 105

Salary expense Rent expense Total

106

1,700 1,500 $25,400

Accounting 9/e

Solutions Manual

$25,400

Req. 1 min.) E 2-23

(10-20

Journal DATE

Aug

ACCOUNTS AND EXPLANATIONS

Cash 1

POST. REF. DEBIT

CREDIT

48,00 0

Principe, capital

48,00 0

Owner’s investment Supplies

500

2 Accounts payable Purchased supplies on account. Building 4

500

47,00 0

Cash Paid cash for a building. Cash

47,000

4,400

6 Service revenue Performed service for cash. Accounts payable

4,400

200

9 Cash Paid cash on account. Chapter 2

Recording Business Transactions

200

107

1 Accounts receivable 7 Service revenue Performed service on account.

2,200

2 Cash 3 Accounts receivable Received cash on account.

1,600

3 Salary expense 1 Rent expense Cash Paid expenses.

1,900

2,200

1,600

700 2,600 (15-20 min.)

E 2-24

Req. 1

Aug 1 6 23 Aug 31 108

Cash 48,00 Aug 0 4 4,400 9 1,600 31 4,200

47,00 0 200

Accounts receivable Aug 2,200 Aug 1,60 17 23 0 Aug 600 31

2,600

Accounting 9/e

Solutions Manual

Aug

2

Aug 31

Supplies 500

Aug

500

Aug 31

Accounts payable Aug 200 Aug 2 500 9 Aug 31 300

Service revenue Aug 4,40 6 0 2,20 17 0 Aug 6,60 31 0

4

Building 47,00 0 47,00 0

Principe, capital Aug 1 48,00 0 Aug 31 48,00 0

Salary expense Aug 31 1,900 Aug 31 1,900

Rent expense Aug 31 700 Aug 31 700 Chapter 2

Recording Business Transactions

109

110

Accounting 9/e

Solutions Manual

(continued)

E 2-24

Req. 2 Principe Technology Solutions Trial Balance August 31, 2012 ACCOUNT DEBIT Cash $4,200 Accounts receivable 600 Supplies 500 Building 47,000 Accounts payable Principe, capital Service revenue Salary expense 1,900 Rent expense 700 Total $54,900

Chapter 2

Recording Business Transactions

CREDIT

$ 300 48,000 6,600

$54,900

111

(10 min.)

E 2-25

Req. 1 Atkins Moving Company Trial Balance August 31, 2012 ACCOUNT DEBIT CREDIT Cash $ 4,000 Accounts receivable 8,800 Supplies 300 Trucks 132,000 Building 48,000 Accounts payable $ 4,000 Note payable 54,000 Atkins, capital 72,000 Atkins, drawing 5,400 Service revenue 80,000 Salary expense 7,000 Fuel expense 3,000 Insurance expense 600 Utilities expense 500 Supplies expense 40 0 Total $210,000 $210,000

112

Accounting 9/e

Solutions Manual

(15-20 min.)

E 2-26

Req. 1 Joy McDowell Tutoring Service Trial Balance May 31, 2012 ACCOUNT DEBIT CREDIT Cash $ 3,500* Accounts receivable 1,500* Supplies 600 Computer equipment 25,800 Accounts payable $12,700* McDowell, capital 12,200* Service revenue 9,800 Salary expense 1,700 Rent expense 700 Utilities expense 900* Total $34,700 $34,700 __________ *Calculations: Cash: $3,000 + $500 = $3,500 Accounts receivable: $2,000 – $500 = $1,500 Accounts payable: $11,400 + $900 + $400 = $12,700 McDowell, capital: $11,600 + $600 = $12,200 Utilities expense: $500 + $400 = $900

Chapter 2

Recording Business Transactions

113

Problems Group A (10-15 min.)

Req. 1

Req. 2

Account

Account Type

Cash Supplies Building Accounts payable Notes payable Cougliato, capital Cougliato, drawing Service revenue Salary expense Rent expense Property tax expense

114

P 2-27A

Asset Asset Asset Liability Liability Equity Equity Revenue Expense Expense Expense

Accounting 9/e

Solutions Manual

Normal Balance Debit Debit Debit Credit Credit Credit Debit Credit Debit Debit Debit

(40-50 min.)

P 2-28A

Req. 1

Journal DATE

Sep

POST. ACCOUNTS AND EXPLANATIONS REF.

Cash 1

DEBIT

370,00 0

Cougliato, capital

Building 2

370,00 0 360,00 0

Cash

Cash 5

360,00 0 260,00 0

Note payable

260,00 0

1 Supplies 0 Accounts payable

1,400

1 Accounts payable 5 Cash

1,200

1 Property tax expense 5

1,500

Chapter 2

Recording Business Transactions

CREDIT

1,400

1,200

115

Cash

116

1,500

1 Salary expense 6 Rent expense Cash

2,500

2 Cougliato, drawing 8 Cash

7,000

3 Cash 0 Service revenue

21,000

Accounting 9/e

1,400 3,900

7,000

21,000

Solutions Manual

(continued)

P 2-28A

Req. 2

Sep 1 5 30

Cash 370,00 Sep 2 0 260,00 0 15 21,000 15

360,0 00 1,200

Accounts payable Sep 1,20 Sep 10 1,40 15 0 0 Bal 200

1,500 3,900

16 7,000

Notes Payable

28 Bal

277,40 0

Supplies Sep 10 1,40 0 Bal 1,40 0

Sep 2 Bal

Building 360,00 0 360,00 0

Chapter 2

Recording Business Transactions

Sep 5 260,00 0 Bal 260,00 0 Cougliato, capital Sep 370,00 1 0 Bal 370,00 0 Service revenue Sep 21,00 30 0 Bal 21,00 0

117

Cougliato, drawing Sep 28 7,00 0 Bal 7,00 0

Sep 6 Bal

Property tax expense Sep 15 1,50 0 Bal 1,50 0

Rent expense Sep 16 1,40 0 Bal 1,40 0

118

Accounting 9/e

Salary expense 2,500 2,500

Solutions Manual

(45-60 min.)

P 2-29A

Req. 1

Journal DATE

Jul

POST. ACCOUNTS AND EXPLANATIONS REF.

1 Cash Yung, capital 5 Rent expense equipment Cash 9 Land

DEBIT

68,000 68,000 560 560 16,000

Cash 10 Supplies Accounts payable 19 Cash Note payable

16,000 1,600 1,600 23,000 23,000

22 Accounts payable Cash

1,300

31 Cash Accounts receivable Service revenue

6,500 5,800

31 Salary expense Rent expense - office Utilities expense

2,500 1,100 400

Chapter 2

CREDIT

Recording Business Transactions

1,300

12,300

119

Cash

4,000

31 Yung, drawing Cash

7,000 7,000 (continued)

P 2-29A

Req. 2

Jul 1 19 31

Cash 68,00 Jul 0 5 23,00 0 9 6,500 22

Accounts receivable 560 Jul 31 5,800 16,00 Bal 0 1,300

5,800

4,000 31 7,000

Supplies

31 Bal

Jul 9 Bal

68,64 0

Jul 10 1,600 Bal 1,600

Land 16,00 0 16,00 0

Accounts payable Jul 22 1,30 July 1,60 0 10 0 Bal 300

Notes payable 120

Accounting 9/e

Yung, capital

Solutions Manual

Jul 19 23,00 0 Bal 23,00 0

Jul 1 Bal

Yung, drawing Jul 31 7,00 0 Bal 7,00 0

Rent expense - equipment Jul 5 560 Bal

Jul 31 Bal

560

Salary expense 2,50 0 2,50 0

Chapter 2

68,00 0 68,00 0

Service revenue Jul 31 12,30 0 Bal 12,30 0

Rent expense - office Jul 31 1,10 0 Bal 1,10 0

Utility expense Jul 31 400 Bal

Recording Business Transactions

400

121

(continued)

P2-29A

Req. 3 Vernon Yung, M.D. Trial Balance July 31, 2012 ACCOUNT DEBIT CREDIT Cash $ 68,640 Accounts receivable 5,800 Supplies 1,600 Land 16,000 Accounts payable $ 300 Note payable 23,000 Yung, capital 68,000 Yung, drawing 7,000 Service revenue 12,300 Salary expense 2,500 Rent expense - office 1,100 Rent expense - equipment 560 Utilities expense 400 Total $103,600 $103,600

122

Accounting 9/e

Solutions Manual

(45-60 min.)

P 2-30A

Req. 2

Journal DATE

Sep

POST. ACCOUNTS AND EXPLANATIONS REF.

1 Cash Stewart, capital

DEBIT

42,000 42,000

4 Supplies Furniture Accounts payable

700 1,900

6 Cash Service revenue

1,400

7 Land Cash

2,600

1,400 24,000 24,000

10 Accounts receivable Service revenue

1,000

14 Accounts payable Cash

1,900

1,000

1,900

15 Salary expense Cash

490

17 Cash Accounts receivable

400

Chapter 2

Recording Business Transactions

CREDIT

490

400

123

20 Accounts receivable Service revenue

700 700

28 Cash Service revenue

2,100 2,100 (continued)

30 Salary expense Cash

490

30 Rent expense Cash

650

P 2-30A 490

650

30 Stewart, drawing Cash

3,000 3,000

Reqs. 1 and 3

Sep 1 6 17 28

Cash 42,00 Sep. 0 7 1,400 14 400 15 2,100 30 30 30

Bal 124

24,00 0 1,900 490

Accounts receivable Sep 1,000 Sep. 400 10 17 Sep 700 20 Bal 1,300

490 650

Supplies

3,000 Sep 4

15,37 0

Bal Accounting 9/e

700 700

Solutions Manual

Sep 4

Furniture 1,900

Sep 7

Bal

1,900

Bal

Accounts payable Sep 14 1,90 Sep. 4 2,600 0 Bal 700

Chapter 2

Recording Business Transactions

Land 24,00 0 24,00 0

Stewart, capital Sep 1 42,00 0 Bal 42,00 0

125

(continued)

P2-30A

Reqs. 1 and 3 Stewart, drawing Sep 30 3,00 0 Bal 3,00 0

Service revenue Sep 1,400 6 1,000 10 700 20 2,100 28 Bal

Salary expense Sep 490 15 490 30 Bal 980

Sep 30 Bal

5,200

Rent expense 650 650

Req. 4 Doris Stewart, Designer Trial Balance September 30, 2012 ACCOUNT DEBIT Cash $ 15,370 Accounts receivable 1,300 Supplies 700 Furniture 1,900 126

Accounting 9/e

Solutions Manual

CREDIT

Land Accounts payable Stewart, capital Stewart, drawing Service revenue Salary expense Rent expense Total

Chapter 2

Recording Business Transactions

24,000 $ 700 42,000 3,000 5,200 980 650 $47,900

$47,900

127

(45-60 min.)

P 2-31A

Req. 2

Journal DATE

Sep

POST. ACCOUNTS AND EXPLANATIONS REF.

2 Cash Moore, capital

CREDIT

39,000 39,000

3 Supplies Furniture Accounts payable

600 2,000

4 Cash Service revenue

1,300

2,600

7 Land Cash

1,300 26,000 26,000

11 Accounts receivable Service revenue

700

15 Salary expense Cash

590

16 Accounts payable Cash

600

Accounting 9/e

700

590

600

18 Cash Service revenue

128

DEBIT

2,400 2,400

Solutions Manual

19 Accounts receivable Service revenue

800

29 Cash Accounts receivable

700

30 Salary expense Cash

590

30 Rent expense Cash

670

30 Moore, drawing Cash

800

700

590

670 2,400 2,400

(continued)

P2-31A

Reqs. 1 and 3 Cash Accounts receivable Sep 2 39,00 Sep 26,00 Sep 700 Sep 700 0 7 0 11 29 1,300 590 800 4 15 19 2,400 600 Bal 800 18 16 700 590 29 30 670 Supplies 30 2,400 Sep 3 600 30

Chapter 2

Recording Business Transactions

129

Bal

12,55 0

Bal

Sep 3

Furniture 2,000

Bal

2,000

Land Sep 7 26,00 0 Bal 26,00 0

Accounts payable Sep 16 600 Sep 3 2,600 Bal

130

2,000

Accounting 9/e

600

Moore, capital Sep 2 39,00 0 Bal 39,00 0

Solutions Manual

(continued) Moore, drawing Sep 2,40 30 0 Bal 2,40 0

P2-31A

Service revenue Sep 4 1,300 700

11

2,400

18

800 19 Bal Salary expense Sep 590 15 590 30 Bal 1,18 0

Sep 30 Bal

5,200

Rent expense 670 670

Req. 4 Trevor Moore, Attorney Trial Balance September 30, 2012 ACCOUNT DEBIT Cash $ 12,550 Accounts receivable 800 Supplies 600 Furniture 2,000 Chapter 2

Recording Business Transactions

CREDIT

131

Land Accounts payable Moore, capital Moore, drawing Service revenue Salary expense Rent expense Total

132

Accounting 9/e

26,000 $ 2,000 39,000 2,400 5,200 1,180 670 $46,200

Solutions Manual

$46,200

(45-60 min.)

P 2-32A

Req. 1

Journal DATE

POST . REF.

DEBIT

Cash

11

4,000

Accounts receivable Received cash on account.

12

Accounts receivable

12

Service revenue Performed services on account.

41

ACCOUNTS AND EXPLANATIONS

Feb

CREDIT

4 4,000

4,600

8 4,600

13 Accounts payable Cash Paid on account.

21 11

2,400

18 Supplies Accounts payable Purchased supplies on account.

13 21

900

2 0

Mitchell, drawing

32

2,200

Cash Owner drawing

11

2 1

2,400

900

2,200

Paid for deck for residence; not a transaction of the

Chapter 2

Recording Business Transactions

133

business. 2 2

2 7

2 9

Cash

11

Service revenue Performed service for cash.

41

Rent expense

52

Cash Paid rent.

11

Salary expense

51

Cash Paid employee salary.

11

2,300 2,300

500 500

1,600 1,600

(continued)

P 2-32A

Req. 2 ACCOUNT

DATE

Jan Feb

134

Cash

ITEM

3 Bal 1 4 1 3 2 0 2 2

JRN L. REF.

ACCOUNT NO. 11 BALANCE DEBIT

CREDIT

DEBIT

7,000 4,000 2,400

11,000 8,600

2,200

6,400

2,300

Accounting 9/e

Solutions Manual

8,700

CREDIT

2 7 2 9

ACCOUNT

DATE

Jan Feb

3 Bal 1 4 8

ACCOUNT

DATE

Jan Feb

Accounts receivable JRN L. ITEM REF. DEBIT

Chapter 2

8,200

1,600

6,600

ACCOUNT NO. 12 BALANCE CREDIT

DEBIT

CREDIT

10,500 4,000 4,600

Supplies JRN L. ITEM REF.

3 Bal 1 1 8

500

6,500 11,100

ACCOUNT NO. 13 BALANCE DEBIT

CREDIT

DEBIT

CREDIT

600 900

Recording Business Transactions

1,500

135

(continued)

P 2-32A

Req. 2 ACCOUNT

DATE

Jan

ITEM

DATE

Feb

Jan

136

DEBIT

CREDIT

DEBIT

CREDIT

17,000

Accounts payable JRN L. ITEM REF. DEBIT

3 Bal 1 1 3 1 8

ACCOUNT

DATE

JRN L. REF.

ACCOUNT NO. 14 BALANCE

3 Bal 1

ACCOUNT

Jan

Land

ACCOUNT NO. 21 BALANCE CREDIT

DEBIT

CREDIT

4,700 2,400

2,300 900

Mitchell, capital JRN L. ITEM REF. DEBIT

3,200

ACCOUNT NO. 31 BALANCE CREDIT

3 Bal 1

DEBIT

CREDIT

30,400

Accounting 9/e

Solutions Manual

ACCOUNT

DATE

Feb

Mitchell, drawing JRNL . ITEM REF. DEBIT

2 0

Chapter 2

ACCOUNT NO. 32 BALANCE CREDIT

2,200

Recording Business Transactions

DEBIT

CREDIT

2,200

137

(continued)

P 2-32A

Req. 2 ACCOUNT

DATE

Feb

8 2 2

ACCOUNT

DATE

Feb

2 9

ACCOUNT

DATE

Feb

138

Service revenue JRN L. ITEM REF. DEBIT

2 7

ACCOUNT NO. 41 BALANCE CREDIT

DEBIT

4,600 2,300

Salary expense JRN L. ITEM REF. DEBIT

CREDIT

DEBIT

CREDIT

1,600

ACCOUNT NO. 52 BALANCE CREDIT

500

Accounting 9/e

4,600 6,900

ACCOUNT NO. 51 BALANCE

1,600

Rent expense JRN L. ITEM REF. DEBIT

CREDIT

DEBIT

500

Solutions Manual

CREDIT

(continued)

P 2-32A

Req. 3 Sam Mitchell, CPA Trial Balance February 29, 2012 ACCT. NO.

11 12 13 14 21 31 32 41 51 52

ACCOUNT

Cash Accounts receivable Supplies Land Accounts payable

DEBIT

$ 6,600 11,100 1,500 17,000 $ 3,200 30,400

Mitchell, capital Mitchell, drawing

Service revenue Salary expense Rent expense Total

Chapter 2

Recording Business Transactions

CREDIT

2,200 6,900 1,600 500 $ 40,500

$ 40,500

139

(45-60 min.)

P 2-33A

Req. 1

Journal DATE

ACCOUNTS AND EXPLANATIONS

Jul

POST . REF.

Cash

DEBIT

CREDIT

6,000

4 Accounts receivable Received cash on account. Accounts receivable

6,000

6,600

7 Service revenue Performed services on account.

6,600

16 Supplies Accounts payable Purchased supplies on account.

1,000

19 Silver, drawing Cash Owner drawing

2,300

2 0

2,500

1,000

2,300

Accounts payable Cash Paid on account.

2 4 140

2,500

Cash

2,200 Accounting 9/e

Solutions Manual

Service revenue Performed service for cash. 2 5

Rent expense

2,200

500

Cash Paid rent. 3 1

Salary expense Cash Paid employee salary.

Chapter 2

Recording Business Transactions

500

1,700 1,700

141

(continued)

P 2-33A

Req. 2 ACCOUNT

DATE

Jun

ITEM

3 Bal 0 4 1 9 2 0 2 4 2 5 3 1

Jul

ACCOUNT

DATE

Jun Jul 142

Cash JRN L. REF.

ACCOUNT NO. 11 BALANCE DEBIT

DEBIT

CREDIT

7,000 6,000 2,300

13,000 10,700

2,500

8,200

2,200

Accounts receivable JRN L. ITEM REF. DEBIT

3 Bal 0 4 7

CREDIT

10,400 500

9,900

1,700

8,200

ACCOUNT NO. 12 BALANCE CREDIT

DEBIT

8,500 6,000 6,600 Accounting 9/e

Solutions Manual

2,500 9,100

CREDIT

ACCOUNT

DATE

Jun Jul

Supplies JRN L. ITEM REF.

3 Bal 0 1 6

Chapter 2

ACCOUNT NO. 13 BALANCE DEBIT

CREDIT

DEBIT

CREDIT

800 1,000

Recording Business Transactions

1,800

143

(continued)

P 2-33A

Req. 2 ACCOUNT

DATE

Jun

DATE

Jul

Jun

144

DEBIT

CREDIT

DEBIT

CREDIT

13,000

Accounts payable JRN L. ITEM REF. DEBIT

3 Bal 0 1 6 2 0

ACCOUNT

DATE

ACCOUNT NO. 14 BALANCE

3 Bal 0

ACCOUNT

Jun

Equipment JRN L. ITEM REF.

ACCOUNT NO. 21 BALANCE CREDIT

DEBIT

CREDIT

4,800 1,000

5,800

2,500

Silver, capital JRN L. ITEM REF. DEBIT

3,300

ACCOUNT NO. 31 BALANCE CREDIT

3 Bal 0

DEBIT

CREDIT

24,500

Accounting 9/e

Solutions Manual

ACCOUNT

DATE

Jul

Silver, drawing JRNL . ITEM REF. DEBIT

19

Chapter 2

ACCOUNT NO. 32 BALANCE CREDIT

2,300

Recording Business Transactions

DEBIT

CREDIT

2,300

145

(continued)

P 2-33A

Req. 2 ACCOUNT

DATE

Jul

7 2 4

ACCOUNT

DATE

Jul

3 1

ACCOUNT

DATE

Jul

146

Service revenue JRN L. ITEM REF. DEBIT

2 5

ACCOUNT NO. 41 BALANCE CREDIT

DEBIT

6,600 2,200

Salary expense JRN L. ITEM REF. DEBIT

CREDIT

DEBIT

CREDIT

1,700

ACCOUNT NO. 52 BALANCE CREDIT

500

Accounting 9/e

6,600 8,800

ACCOUNT NO. 51 BALANCE

1,700

Rent expense JRN L. ITEM REF. DEBIT

CREDIT

DEBIT

500

Solutions Manual

CREDIT

(continued)

P 2-33A

Req. 3 Sharon Silver, Registered Dietician Trial Balance July 31, 2012 ACCT. NO.

11 12 13 14 21 31 32 41 51 52

ACCOUNT

Cash Accounts receivable Supplies Equipment Accounts payable Silver, capital Silver, drawing Service revenue Salary expense Rent expense Total

Chapter 2

Recording Business Transactions

DEBIT

CREDIT

$ 8,200 9,100 1,800 13,000 $ 3,300 24,500 2,300 8,800 1,700 500 $36,600

$36,600

147

(45-60 min.)

P 2-34A

Req. 2

Journal DATE

a.

ACCOUNTS AND EXPLANATIONS

POST. REF.

Cash

DEBIT

48,00 0 30,00 0

Building Wills, capital Owner investment. b.

c.

78,000

Office supplies Accounts payable Purchased supplies on account.

2,000

Office furniture

14,00 0

2,000

Cash Purchased furniture. d.

e.

148

CREDIT

14,000

Salary expense Cash Paid salary.

2,200

Accounts receivable Service revenue Performed service on

3,700

Accounting 9/e

2,200

3,700

Solutions Manual

account. f.

g.

Accounts payable Cash Paid on account.

900

Advertising expense Accounts payable Received advertising bill.

600

Chapter 2

Recording Business Transactions

900

600

149

(continued)

P 2-34A

Req. 2

Journal DATE

h.

i.

j.

k.

150

ACCOUNTS AND EXPLANATIONS

POST. REF.

DEBIT

Cash Service revenue Performed service and received cash.

1,100

Cash Accounts receivable Collected cash on account.

1,100

Rent expense Utilities expense Cash Paid expenses.

1,000 900

Wills, drawing Cash Owner’s withdrawal

2,300

Accounting 9/e

CREDIT

1,100

1,100

1,900

2,300

Solutions Manual

(continued)

P 2-34A

Reqs . 1 and 3

DATE

ACCOUNT NO.

Cash

ACCOUNT

ITEM

JRNL . REF.

a. c. d. f. h. i. j. k.

BALANCE DEBIT

CREDIT

48,000 14,000 2,200 900 1,100 1,100 1,900 2,300

Accounts receivable

ACCOUNT

DATE

ITEM

JRNL . REF.

e. i.

DEBIT

DATE

ITEM

b.

ACCOUNT NO.

DEBIT

1,100

3,700 2,600

CREDIT

ACCOUNT NO. BALANCE

DEBIT

CREDIT

2,000

Chapter 2

48,000 34,000 31,800 30,900 32,000 33,100 31,200 28,900

CREDIT

Office supplies JRNL . REF.

CREDIT

BALANCE

3,700

ACCOUNT

DEBIT

Recording Business Transactions

DEBIT

CREDIT

2,000

151

ACCOUNT

DATE

c.

152

ACCOUNT NO.

Office furniture ITEM

JRNL . REF.

BALANCE DEBIT

14,000

Accounting 9/e

CREDIT

DEBIT

14,000

Solutions Manual

CREDIT

(continued)

P 2-34A

Reqs. 1 and 3

DATE

ACCOUNT NO.

Building

ACCOUNT

ITEM

JRNL . REF.

a.

BALANCE DEBIT

CREDIT

30,000

DATE

ITEM

JRNL . REF.

b. f. g.

ACCOUNT NO. BALANCE

DEBIT

CREDIT

DEBIT

2,000 600

DATE

ACCOUNT NO.

Wills, capital ITEM

JRNL . REF.

BALANCE DEBIT

a.

CREDIT

DEBIT

78,000

DATE

ITEM

k.

JRNL . REF.

78,000

BALANCE DEBIT

CREDIT

2,300

Chapter 2

CREDIT

ACCOUNT NO.

Wills, drawing

ACCOUNT

CREDIT

2,000 1,100 1,700

900

ACCOUNT

CREDIT

30,000

Accounts payable

ACCOUNT

DEBIT

Recording Business Transactions

DEBIT

CREDIT

2,300

153

ACCOUNT

DATE

ITEM

JRNL . REF.

BALANCE DEBIT

e. h.

154

ACCOUNT NO.

Service revenue CREDIT

3,700 1,100

Accounting 9/e

Solutions Manual

DEBIT

CREDIT

3,700 4,800

(continued)

P 2-34A

Reqs. 1 and 3

DATE

ACCOUNT NO.

Salary expense

ACCOUNT

ITEM

JRNL . REF.

d.

BALANCE DEBIT

CREDIT

2,200

DATE

ITEM

JRNL . REF.

j.

ACCOUNT NO. BALANCE

DEBIT

CREDIT

1,000

DATE

ITEM

JRNL . REF.

g.

DEBIT

CREDIT

DATE

ITEM

j.

DEBIT

CREDIT

ACCOUNT NO. BALANCE

DEBIT

CREDIT

900

Chapter 2

ACCOUNT NO.

600

Utilities expense JRNL . REF.

CREDIT

BALANCE

600

ACCOUNT

DEBIT

1,000

Advertising expense

ACCOUNT

CREDIT

2,200

Rent expense

ACCOUNT

DEBIT

Recording Business Transactions

DEBIT

CREDIT

900

155

(continued)

P 2-34A

Req. 4 Wills Environmental Consulting Company Trial Balance February 29, 2012 ACCOUNT DEBIT CREDIT Cash $ 28,900 Accounts receivable 2,600 Supplies 2,000 Furniture 14,000 Building 30,000 Accounts payable $ 1,700 Wills, capital 78,000 Wills, drawing 2,300 Service revenue 4,800 Salary expense 2,200 Rent expense 1,000 Advertising expense 600 Utilities expense 900 Total $84,500 $84,500

156

Accounting 9/e

Solutions Manual

(15-25 min.)

P 2-35A

Req. 1 Smart Tots Child Care Trial Balance August 31, 2012 ACCOUNT DEBIT CREDIT Cash $ 7,700* Accounts receivable 15,000* Supplies 1,700* Equipment 78,500* Accounts payable $ 54,000* Tilley, capital 50,500 Tilley, drawing 2,400 Service revenue 4,700 Salary expense 3,400* Rent expense 500 Total $109,200 $109,200 *Calculations: a. Cash:

$6,700 + $1,000 = $7,700

b. Accounts receivable: $7,000 + $4,000 + $4,000 = $15,000 c. Supplies:

$700 + $1,000 = $1,700

Accounts payable: d. Equipment: Chapter 2

$53,000 + $1,000 = $54,000 $87,000 - $8,500 = $78,500

Recording Business Transactions

157

e. Salary expense:

158

$3,600 – $200 = $3,400

Accounting 9/e

Solutions Manual

(15-25 min.)

P 2-36A

Req. 1 Treasure Hunt Exploration Company Trial Balance February 29, 2012 ACCOUNT DEBIT CREDIT Cash $ 1,300* Accounts receivable 6,360* Supplies 1,300* Exploration equipment 16,490* Computers 49,000 Accounts payable $ 3,700* Note payable 18,500 Jones, capital 50,000 Jones, drawing 4,000 Service revenue 10,900* Salary expense 1,400 Rent expense 1,480* Advertising expense 900 Utilities expense 870* Total $83,100 $83,100 *Calculations: a. Cash:

$6,300 - $5,000 = $1,300

b. Rent expense:

$800 + $340 + $340 = $1,480

c. Service revenue:

$4,100 + $6,800 = $10,900

d. Accounts receivable:

$6,000 + (400-40=$360) =

$6,360 Chapter 2

Recording Business Transactions

159

e. Utilities expense:

$800 + $70 = $870

f. Supplies:

$400 + $900 = $1,300

Accounts payable:

$2,800 + $900 = $3,700

g. Exploration equipment: $22,300 - $5,810 = $16,490

160

Accounting 9/e

Solutions Manual

(20-30 min.)

P 2-37A

Req. 1 Showtime Amusements Company Income Statement Month Ended September 30, 2012 Revenue: Service revenue $21,00 0 Expenses: Salary expense $2,500 Property tax expense 1,500 Rent expense 1,400 Total expenses 5,400 Net income $15,60 0

Req. 2 Showtime Amusements Company Statement of Owner’s Equity Month Ended September 30, 2012 Cougliato, capital, September 1, 2012 $ 0 Owner investment 370,000 Net income 15,600 385,600 Drawing Chapter 2

(7,000) Recording Business Transactions

161

Cougliato, capital, September 30, 2012

162

Accounting 9/e

Solutions Manual

$378,60 0

(continued)

P 2-37A

Req. 3 Showtime Amusements Company Balance Sheet September 30, 2012 ASSETS LIABILITIES Cash $277,400 Accounts payable $ 200 Supplies 1,400 Note payable 260,000 Building 360,000 Total liabilities 260,200 OWNER’S EQUITY Cougliato, capital 378,600 _______ Total liabilities and Total assets $638,80 owner’s equity $638,800 0

Chapter 2

Recording Business Transactions

163

(20-30 min.)

P 2-38A

Req. 1 Vernon Yung, M.D. Income Statement Month Ended July 31, 2012 Revenue: Service revenue

$12,30 0

Expenses: Salary expense Rent expense - office Rent expense - equipment Utilities expense Total expenses Net income

$2,500 1,100 560 400 4,560 $7,740

Req. 2 Vernon Yung, M.D. Statement of Owner’s Equity Month Ended July 31, 2012 Yung, capital, July 1, 2012 Owner investment Net income

Drawing 164

Accounting 9/e

Solutions Manual

$ 0 68,000 7,740 75,7 40 (7,00

Yung, capital, July 31, 2012

Chapter 2

Recording Business Transactions

0) $68,74 0

165

(continued)

P 2-38A

Req. 3 Vernon Yung, M.D. Balance Sheet July 31, 2012 ASSETS LIABILITIES Cash $ Accounts payable $ 68,640 300 Accounts 5,80 Note payable 23,000 receivable 0 Supplies 1,60 Total liabilities 23,300 0 Land 16,00 OWNER’S EQUITY 0 Yung, capital 68,740 _______ Total liabilities and Total assets $ owner’s equity $ 92,040 92,040

166

Accounting 9/e

Solutions Manual

(20-30 min.)

P 2-39A

Req. 1 Doris Stewart, Designer Income Statement Month Ended September 30, 2012 Revenue: Service revenue $ 5,200 Expenses: Salary expense $ 980 Rent expense 650 Total expenses 1,630 Net income $3,570

Req. 2 Doris Stewart, Designer Statement of Owner’s Equity Month Ended September 30, 2012 Stewart, capital, September 1, 2012 $ 0 Owner investment 42,000 Net income 3,570 45,570 Drawing (3,000) Stewart, capital, September 30, 2012 $42,570

Chapter 2

Recording Business Transactions

167

(continued)

P 2-39A

Req. 3 Doris Stewart, Designer Balance Sheet September 30, 2012 ASSETS LIABILITIES Cash $ Accounts payable $ 700 15,370 Accounts 1,30 receivable 0 Supplies 70 OWNER’S EQUITY 0 Furniture 1,90 0 Land 24,00 Stewart, capital 42,570 0 _______ Total liabilities and Total assets $ $43,270 owner’s equity 43,270

168

Accounting 9/e

Solutions Manual

(20-30 min.)

P 2-40A

Req. 1 Trevor Moore, Attorney Income Statement Month Ended September 30, 2012 Revenue: Service revenue $ 5,200 Expenses: Salary expense $1,180 Rent expense 670 Total expenses 1,850 Net income $ 3,350

Req. 2 Trevor Moore, Attorney Statement of Owner’s Equity Month Ended September 30, 2012 Moore, capital, September 1, 2012 $ 0 Owner investment 39,000 Net income 3,350 Drawing Moore, capital, September 30, 2012

Chapter 2

Recording Business Transactions

42,350 (2,400) $39,950

169

(continued)

P 2-40A

Req. 3 Trevor Moore, Attorney Balance Sheet September 30, 2012 ASSETS LIABILITIES Cash $ Accounts payable $ 12,550 2,000 Accounts 80 receivable 0 Supplies 60 OWNER’S EQUITY 0 Furniture 2,00 0 Land 26,00 Moore, capital 39,950 0 _______ Total liabilities and owner’s equity $ Total assets $ 41,950 41,950

170

Accounting 9/e

Solutions Manual

(20-30 min.)

P 2-41A

Req. 1 Sam Mitchell, CPA Income Statement Month Ended February 29, 2012 Revenue: Service revenue Expenses: Salary expense Rent expense Total expenses

$ 6,900

$1,600 500

Net income

2,100 $ 4,800

Req. 2 Sam Mitchell, CPA Statement of Owner’s Equity Month Ended February 29, 2012 Mitchell, capital, February 1, 2012 $ Owner investment Net income Drawing Mitchell, capital, February 29, 2012 Chapter 2

Recording Business Transactions

0 30,400 4,800 35,200 (2,200) $ 171

33,000

172

Accounting 9/e

Solutions Manual

(continued)

P 2-41A

Req. 3 Sam Mitchell, CPA Balance Sheet February 29, 2012 ASSETS LIABILITIES Cash $ 6,600 Accounts payable $ 3,200 Accounts 11,100 receivable Supplies 1,500 OWNER’S EQUITY Land 17,000 Mitchell, capital 33,000 _______ Total liabilities and Total assets $ $ 36,200 owner’s equity 36,200

Chapter 2

Recording Business Transactions

173

(20-30 min.)

P 2-42A

Req. 1 Sharon Silver, Registered Dietician Income Statement Month Ended July 31, 2012 Revenue: Service revenue Expenses: Salary expense Rent expense Total expenses

$ 8,800

$1,700 500 2,200 $ 6,600

Net income

Req. 2 Sharon Silver, Registered Dietician Statement of Owner’s Equity Month Ended July 31, 2012 Silver, capital, July 1, 2012 $ 0 Owner investment 24,500 Net income 6,600 31,100 Drawing (2,300) 174

Accounting 9/e

Solutions Manual

Silver, capital, July 31, 2012

Chapter 2

Recording Business Transactions

$28,800

175

(continued)

P 2-42A

Req. 3

Cash

Sharon Silver, Registered Dietician Balance Sheet July 31, 2012 ASSETS LIABILITIES $ 8,200 Accounts payable

Accounts receivable Supplies Equipment Total assets

176

$ 3,300

9,100 1,800 OWNER’S EQUITY 13,000 Silver, capital, 28,800 Total liabilities and owner’s equity $ $ 32,100 32,100

Accounting 9/e

Solutions Manual

(20-30 min.)

P 2-43A

Req. 1 Wills Environmental Consulting Company Income Statement Month Ended February 29, 2012 Revenue: Service revenue $ 4,800 Expenses: Salary expense $ 2,200 Rent expense 1,000 Utilities expense 900 Advertising expense _60 0 Total expenses 4,700 Net income $ 100

Req. 2 Wills Environmental Consulting Company Statement of Owner’s Equity Month Ended February 29, 2012 Wills, capital, February 1, 2012 $ 0 Chapter 2

Recording Business Transactions

177

Owner investment Net income

78,000 100 78,100

Drawing Wills, capital, February 29, 2012

178

Accounting 9/e

Solutions Manual

(2,300) $ 75,800

(continued)

P 2-43A

Req. 3

Wills Environmental Consulting Company Balance Sheet February 29, 2012 ASSETS LIABILITIES Cash $28,900 Accounts payable $ 1,700 Accounts 2,600 receivable Office supplies 2,000 OWNER’S EQUITY Office furniture 14,000 Building 30,000 Wills, capital 75,800 Total liabilities and Total assets $77,500 owner’s equity $ 77,500

Chapter 2

Recording Business Transactions

179

Problems Group B (10-15 min.)

P 2-44B

Reqs. 1 and 2 Account Cash Supplies Building Accounts payable Note payable Smith, capital Smith, drawing Service revenue Salary expense Rent expense Property tax expense

180

Account Type Asset Asset Asset Liability Liability Equity Equity Revenue Expense Expense Expense

Accounting 9/e

Normal balance

Solutions Manual

Debit Debit Debit Credit Credit Credit Debit Credit Debit Debit Debit

(40-50 min.)

P 2-45B

Req. 1

Journal POST. ACCOUNTS AND EXPLANATIONS REF.

DATE

Aug

1 Cash

DEBIT

400,00 0

Smith, capital

2 Building

400,00 0 350,00 0

Cash

5 Cash

350,00 0 200,00 0

Notes payable

Supplies

CREDIT

200,00 0 1,300

10 Accounts payable

1,300

15 Accounts payable Cash

1,000

15 Property tax expense Cash

1,200

Chapter 2

Recording Business Transactions

1,000

1,200 181

16 Salary expense Rent expense Cash

2,700 1,700

28 Smith, drawing Cash

8,000

4,400

8,000

31 Cash Service revenue

182

Accounting 9/e

25,000 25,000

Solutions Manual

(continued)

P 2-

45B Req. 2 Cash 400,00 Aug 0 2 200,00 0 15 25,000 15

Aug 1 5 31

Accounts payable 350,0 Aug15 1,000 Aug 1,30 00 10 0 1,000 1,200

Bal

300

4,400 16 8,000

Notes payable

28 Bal

260,40 0

Aug10 Bal

Aug 2 Bal

Aug 5 200,00 0 Bal 200,00 0

Supplies 1,30 0 1,30 0

Smith, capital Aug 1 400,00 0 Bal 400,00 0

Building 350,00 0 350,00 0

Service revenue Aug 31 25,00 0 Bal 25,00 0

Chapter 2

Recording Business Transactions

183

Smith, drawing Aug 28 8,000 Bal

8,000

Property tax expense Aug 15 1,20 0 Bal 1,20 0

184

Accounting 9/e

Salary expense Aug 2,70 16 0 Bal 2,70 0

Rent expense Aug 16 1,70 0 Bal 1,70 0

Solutions Manual

(45-60 min.)

P 2-46B

Req. 1

Journal DATE

Mar

POST. ACCOUNTS AND EXPLANATIONS REF.

1 Cash Rockford, capital 5 Rent expense Cash 9 Land

DEBIT

74,000 74,000 560 560 24,000

Cash 10 Supplies Accounts payable 19 Cash Note payable 22 Accounts payable Cash

24,000 1,300 1,300 19,000 19,000 900 900

31 Cash Accounts receivable Service revenue

7,100 4,700

31 Salary expense Rent expense Utilities expense Cash

2,000 1,600 320

Chapter 2

CREDIT

Recording Business Transactions

11,800

3,920 185

31 Rockford, drawing Cash

186

Accounting 9/e

8,000 8,000

Solutions Manual

(continued)

P 2-46B

Req. 2

Mar 1 19 31

Bal

Cash 74,00 Mar 560 0 5 19,00 24,00 0 9 0 7,100 2 900 2 3 3,920 1 3 8,000 1 62,72 0

Land Mar 9 24,00 0 Bal 24,00 0

Accounts receivable Mar 4,700 31 Bal 4,700

Supplies Mar 10 Bal

1,300

Accounts payable Mar 900 Mar 1,30 22 10 0 Bal 400

Notes payable Mar 19,00 19 0 Bal 19,00 0

Chapter 2

1,300

Recording Business Transactions

Rockford, capital Mar 1 74,00 0 Bal 74,00 0

187

Rockford, drawing Mar 8,00 31 0 Bal 8,00 0

Salary expense Mar 31 2,00 0 Bal 2,00 0

Service revenue Mar 11,80 31 0 Bal 11,80 0

Rent expense Mar 5 560 31 1,60 0 Bal

2,16 0

Utility expense Mar 320 31 Bal 320 (continued)

P2-46B

Req. 3

Cash 188

Vince Rockford, M.D. Trial Balance March 31, 2012 ACCOUNT DEBIT $ 62,720 Accounting 9/e

Solutions Manual

CREDIT

Accounts receivable Supplies Land Accounts payable Note payable Rockford, capital Rockford, drawing Service revenue Salary expense Rent expense Utilities expense Total

Chapter 2

Recording Business Transactions

4,700 1,300 24,000 $ 400 19,000 74,000 8,000 11,800 2,000 2,160 320 $105,200 $105,200

189

(45-60 min.)

P 2-47B

Req. 1

Journal DATE

Nov

POST. ACCOUNTS AND EXPLANATIONS REF.

1 Cash Yung, capital

CREDIT

34,000 34,000

4 Supplies Furniture Accounts payable

500 1,900

6 Cash Service revenue

1,200

2,400

7 Land Cash

190

DEBIT

1,200 25,000 25,000

10 Accounts receivable Service revenue

1,200

14 Accounts payable Cash

1,900

1,200

1,900

15 Salary expense Cash

540

17 Cash Accounts receivable

500

Accounting 9/e

540

Solutions Manual

500

20 Accounts receivable Service revenue 28 Cash Service revenue

800 800 2,200 2,200 (continued) P 2-47B

30 Salary expense Cash

540

30 Rent expense Cash

830

30 Yung, drawing Cash

2,700

540

830

2,700

Req. 2

Nov 1 6

Cash Accounts receivable 34,00 Nov 7 25,00 Nov 1,200 Nov 17 500 0 0 10 1,200 14 1,900 800 20 500 15 540 Bal 1,500

17 2,200 28

540 30 830

Supplies

30 Chapter 2

Recording Business Transactions

191

2,700 Nov 4

500

30 Bal

6,390

Bal

Nov 4

Furniture 1,900

Nov 7

Bal

1,900

Bal

Accounts payable Nov 14 1,90 Nov 4 2,400 0 Bal 500

192

Accounting 9/e

500 Land 25,00 0 25,00 0 Yung, capital Nov 1 34,00 0 Bal 34,00 0

Solutions Manual

(continued)

P2-47B

Req. 2 Yung, drawing Nov 30 2,70 0 Bal 2,70 0

Salary expense Nov 15 540 540 30 Bal 1,08 0

Service revenue Nov 1,200 6 1,200 10 800 20 2,200 28 Bal 5,400

Rent expense Nov 30 830 Bal 830

Req. 3 Beth Yung, Designer Trial Balance November 30, 2012 ACCOUNT DEBIT Cash $ 6,390 Accounts receivable 1,500 Supplies 500 Chapter 2

Recording Business Transactions

CREDIT

193

Furniture Land Accounts payable Yung, capital Yung, drawing Service revenue Salary expense Rent expense Total

194

Accounting 9/e

1,900 25,000 $ 500 34,000 2,700 5,400 1,080 830 $ 39,900

Solutions Manual

$ 39,900

(45-60 min.)

P 2-48B

Req. 1

Journal DATE

Apr

POST. ACCOUNTS AND EXPLANATIONS REF.

2 Cash Smith, capital

DEBIT

32,000 32,000

3 Supplies Furniture Accounts payable

500 2,000

4 Cash Service revenue

1,900

7 Land Cash 11 Accounts receivable Service revenue

2,500

1,900 24,000 24,000 1,100 1,100

15 Salary expense Cash

460

16 Accounts payable Cash

500

18 Cash Service revenue

1,700

Chapter 2

Recording Business Transactions

CREDIT

460

500

1,700

195

19 Accounts receivable Service revenue

700

29 Cash Accounts receivable

800

30 Salary expense Cash

460

30 Rent expense Cash

730

700

800

460

730

30 Smith, drawing Cash

2,700 2,700

(continued)

P 2-48B

Req. 2

Apr 2 4 18 29

Cash 32,00 Apr 0 7 1,900 15 1,700 16 800 30

24,00 0 460 500

Accounts receivable Apr 1,100 Apr 29 800 11 700 19 Bal 1,000

460 730

Supplies

30 196

Accounting 9/e

Solutions Manual

2,700 Apr

3

500

30 Bal

7,550

Bal

Furniture Apr 3 2,000

Apr 7

Bal

Bal

2,000

Accounts payable Apr. 500 Apr 3 2,500 16 Bal 2,000

Chapter 2

Recording Business Transactions

500 Land 24,00 0 24,00 0 Smith, capital Apr 2 32,00 0 Bal 32,00 0

197

(continued)

P2-48B

Req. 2 Smith, drawing Apr 30 2,70 0 Bal 2,70 0

Salary expense Apr 15 460 460 30 Bal 920

Service revenue Apr 1,900 4 1,100 11 1,700 18 700 19 Bal 5,400

Rent expense Apr 30 730 Bal 730

Req. 3 Vince Smith, Attorney Trial Balance April 30, 2012 ACCOUNT DEBIT Cash $ 7,550 Accounts receivable 1,000 Supplies 500 Furniture 2,000 198

Accounting 9/e

Solutions Manual

CREDIT

Land Accounts payable Smith, capital Smith, drawing Service revenue Salary expense Rent expense Total

Chapter 2

Recording Business Transactions

24,000 $ 2,000 32,000 2,700 5,400 920 730 $ 39,400

$ 39,400

199

(45-60 min.)

P 2-49B

Req. 1

Journal Page 3 DATE

ACCOUNTS AND EXPLANATIONS

Apr

POST . REF.

Cash

DEBIT

CREDIT

7,000

4 Accounts receivable Received cash on account. Accounts receivable

7,000

5,000

8 Service revenue Performed services on account. 13 Accounts payable Cash Paid on account.

2,500 2,500

18 Supplies Accounts payable Purchased supplies on account. 2 0

600 600

Hilton, drawing

2,300

Cash Owner drawing 2 1

200

2,300

Not a transaction of the business

Accounting 9/e

5,000

Solutions Manual

2 2

Cash

2,100

Service revenue Performed service for cash. 2 7

Rent expense

2,100

300

Cash Paid rent. 2 8

Salary expense Cash Paid employee salary.

Chapter 2

Recording Business Transactions

300

1,300 1,300

201

(continued)

P 2-49B

Req. 2 ACCOUNT

DATE

Mar

ITEM

3 Bal 1 4 1 3 2 0 2 2 2 7 2 9

Apr

ACCOUNT

DATE

Mar Apr 202

Cash JRN L. REF.

ACCOUNT NO. 11 BALANCE DEBIT

DEBIT

CREDIT

5,000 7,000 2,500

12,000 9,500

2,300

7,200

2,100

Accounts receivable JRN L. ITEM REF. DEBIT

3 Bal 1 4 8

CREDIT

9,300 300

9,000

1,300

7,700

ACCOUNT NO. 12 BALANCE CREDIT

DEBIT

8,100 7,000 5,000 Accounting 9/e

Solutions Manual

1,100 6,100

CREDIT

ACCOUNT

DATE

Mar Apr

Supplies JRN L. ITEM REF.

3 Bal 1 1 8

Chapter 2

ACCOUNT NO. 13 BALANCE DEBIT

CREDIT

DEBIT

CREDIT

800 600

Recording Business Transactions

1,400

203

(continued)

P 2-49B

Req. 2 ACCOUNT

DATE

Mar

ITEM

DATE

Apr

Mar

204

DEBIT

CREDIT

DEBIT

CREDIT

14,000

Accounts payable JRN L. ITEM REF. DEBIT

3 Bal 1 1 3 1 8

ACCOUNT

DATE

JRN L. REF.

ACCOUNT NO. 14 BALANCE

3 Bal 1

ACCOUNT

Mar

Land

ACCOUNT NO. 21 BALANCE CREDIT

DEBIT

CREDIT

4,200 2,500

1,700 600

Hilton, capital JRN L. ITEM REF. DEBIT

2,300

ACCOUNT NO. 31 BALANCE CREDIT

3 Bal 1

DEBIT

CREDIT

23,700

Accounting 9/e

Solutions Manual

ACCOUNT

DATE

Apr

Hilton, drawing JRNL . ITEM REF. DEBIT

2 0

Chapter 2

ACCOUNT NO. 32 BALANCE CREDIT

2,300

Recording Business Transactions

DEBIT

CREDIT

2,300

205

(continued)

P 2-49B

Req. 2 ACCOUNT

DATE

Apr

8 2 2

ACCOUNT

DATE

Apr

2 8

ACCOUNT

DATE

Apr

206

Service revenue JRN L. ITEM REF. DEBIT

2 7

ACCOUNT NO. 41 BALANCE CREDIT

DEBIT

5,000 2,100

Salary expense JRN L. ITEM REF. DEBIT

CREDIT

DEBIT

CREDIT

1,300

ACCOUNT NO. 52 BALANCE CREDIT

300

Accounting 9/e

5,000 7,100

ACCOUNT NO. 51 BALANCE

1,300

Rent expense JRN L. ITEM REF. DEBIT

CREDIT

DEBIT

300

Solutions Manual

CREDIT

(continued)

P 2-49B

Req. 3 John Hilton, CPA Trial Balance March 31, 2012 Account No.

11 12 13 14 21 31 32 41 51 52

Chapter 2

Account

Cash Accounts receivable Supplies Land Accounts payable Hilton, capital Hilton, drawing Service revenue Salary expense Rent expense Total

Recording Business Transactions

Debit

Credit

$ 7,700 6,100 1,400 14,000 $ 2,300 23,700 2,300 7,100 1,300 300 $33,100

$33,100

207

(45-60 min.)

P 2-50B

Req. 1

Journal DATE

ACCOUNTS AND EXPLANATIONS

Jul

POST . REF.

Cash

DEBIT

CREDIT

7,000

4 Accounts receivable Received cash on account. Accounts receivable

7,000

4,900

7 Service revenue Performed services on account. 16 Supplies Accounts payable Purchased supplies on account.

4,900

800 800

19 Peters, drawing Cash Owner drawing

2,200

2 0

2,300

2,200

Accounts payable Cash Paid on account.

2 4

2,300

Cash

2,100

Service revenue 208

Accounting 9/e

2,100 Solutions Manual

Performed service for cash. 2 5

Rent expense

300

Cash Paid rent. 3 1

Salary expense Cash Paid employee salary.

Chapter 2

Recording Business Transactions

300

1,500 1,500

209

(continued)

P 2-50B

Req. 2 ACCOUNT

DATE

Jun

ITEM

3 Bal 0 4 1 9 2 0 2 4 2 5 3 1

Jul

ACCOUNT

DATE

Jun Jul

210

Cash JRN L. REF.

ACCOUNT NO. 11 BALANCE DEBIT

DEBIT

CREDIT

4,000 7,000 2,200

11,000 8,800

2,300

6,500

2,100

Accounts receivable JRN L. ITEM REF. DEBIT

3 Bal 0 4 7

CREDIT

8,600 300

8,300

1,500

6,800

ACCOUNT NO. 12 BALANCE CREDIT

DEBIT

7,600 7,000 4,900 Accounting 9/e

Solutions Manual

600 5,500

CREDIT

ACCOUNT

DATE

Jun Jul

Supplies JRN L. ITEM REF.

3 Bal 0 1 6

Chapter 2

ACCOUNT NO. 13 BALANCE DEBIT

CREDIT

DEBIT

CREDIT

600 800

Recording Business Transactions

1,400

211

(continued)

P 2-50B

Req. 2 ACCOUNT

DATE

Jun

DATE

Jul

Jun

212

DEBIT

CREDIT

DEBIT

CREDIT

16,000

Accounts payable JRN L. ITEM REF. DEBIT

3 Bal 0 1 6 2 0

ACCOUNT

DATE

ACCOUNT NO. 14 BALANCE

3 Bal 0

ACCOUNT

Jun

Equipment JRN L. ITEM REF.

ACCOUNT NO. 21 BALANCE CREDIT

DEBIT

CREDIT

5,200 800

6,000

2,300

Peters, capital JRN L. ITEM REF. DEBIT

3,700

ACCOUNT NO. 31 BALANCE CREDIT

3 Bal 0

DEBIT

CREDIT

23,000

Accounting 9/e

Solutions Manual

ACCOUNT

DATE

Jul

Peters, drawing

ITEM

19

Chapter 2

JRNL . REF.

DEBIT

ACCOUNT NO. 32 BALANCE CREDIT

2,200

Recording Business Transactions

DEBI T

CREDIT

2,20 0

213

(continued)

P 2-50B

Req. 2 ACCOUNT

DATE

Jul

7 2 4

ACCOUNT

DATE

Jul

3 1

ACCOUNT

DATE

Jul

214

Service revenue JRN L. ITEM REF. DEBIT

2 5

ACCOUNT NO. 41 BALANCE CREDIT

DEBIT

4,900 2,100

Salary expense JRN L. ITEM REF. DEBIT

CREDIT

DEBIT

CREDIT

1,500

ACCOUNT NO. 52 BALANCE CREDIT

300

Accounting 9/e

4,900 7,000

ACCOUNT NO. 51 BALANCE

1,500

Rent expense JRN L. ITEM REF. DEBIT

CREDIT

DEBIT

300

Solutions Manual

CREDIT

(continued)

P 2-50B

Req. 3 Shermana Peters, Registered Dietician Trial Balance July 31, 2012 Account No.

11 12 13 14 21 31 32 41 51 52

ACCOUNT

Cash Accounts receivable Supplies Equipment Accounts payable Peters, capital Peters, drawing Service revenue Salary expense Rent expense Total

Chapter 2

Recording Business Transactions

DEBIT

CREDIT

$ 6,800 5,500 1,400 16,000 $ 3,700 23,000 2,200 7,000 1,500 300 $33,700 $33,700

215

(45-60 min.)

P 2-51B

Req. 2

Journal DATE

a.

ACCOUNTS AND EXPLANATIONS

POST. REF.

Cash

DEBIT

40,00 0 26,00 0

Building Stubbs, capital Owner investment. b.

c.

66,000

Office supplies Accounts payable Purchased supplies on account.

2,400

Office furniture

18,00 0

2,400

Cash Purchased furniture for cash. d.

e.

216

CREDIT

18,000

Salary expense Cash Paid salary.

1,900

Accounts receivable Service revenue

3,600

Accounting 9/e

1,900

3,600 Solutions Manual

Performed service on account. f.

g.

Accounts payable Cash Paid on account.

500

Advertising expense Accounts payable Received advertising bill.

300

500

300

(continued)

P 2-51B

Req. 2 (continued)

Journal DATE

h.

i.

j.

ACCOUNTS AND EXPLANATIONS

Cash Service revenue Performed service and received cash. Cash Accounts receivable Collected cash on account. Rent expense Utilities expense Cash Paid expenses. Chapter 2

Recording Business Transactions

POST. REF.

DEBIT

CREDIT

800 800

1,400 1,400

700 500 1,200

217

k.

218

Stubbs, drawing Cash Owner drawing

Accounting 9/e

2,400 2,400

Solutions Manual

(continued)

P 2-51B

Reqs. 1 and 3

DATE

ACCOUNT NO.

Cash

ACCOUNT

ITEM

JRNL . REF.

a. c. d. f. h. i. j. k.

BALANCE DEBIT

CREDIT

40,000 18,000 1,900 500 800 1,400 1,200 2,400

Accounts receivable

ACCOUNT

DATE

ITEM

JRNL . REF.

e. i.

DEBIT

DATE

ITEM

b.

ACCOUNT NO.

DEBIT

1,400

3,600 2,200

CREDIT

ACCOUNT NO. BALANCE

DEBIT

CREDIT

2,400

Chapter 2

40,000 22,000 20,100 19,600 20,400 21,800 20,600 18,200

CREDIT

Office supplies JRNL . REF.

CREDIT

BALANCE

3,600

ACCOUNT

DEBIT

Recording Business Transactions

DEBIT

CREDIT

2,400

219

ACCOUNT

DATE

c.

220

ACCOUNT NO.

Office furniture ITEM

JRNL . REF.

BALANCE DEBIT

18,000

Accounting 9/e

CREDIT

DEBIT

18,000

Solutions Manual

CREDIT

(continued)

P 2-51B

Reqs. 1 and 3

DATE

ACCOUNT NO.

Building

ACCOUNT

ITEM

JRNL . REF.

a.

BALANCE DEBIT

CREDIT

26,000

DATE

ITEM

JRNL . REF.

b. f. g.

ACCOUNT NO. BALANCE

DEBIT

CREDIT

DEBIT

2,400 300

DATE

ACCOUNT NO.

Stubbs, capital ITEM

JRNL . REF.

BALANCE DEBIT

a.

CREDIT

DEBIT

66,000

DATE

ITEM

k.

JRNL . REF.

66,000

BALANCE DEBIT

CREDIT

2,400

Chapter 2

CREDIT

ACCOUNT NO.

Stubbs, drawing

ACCOUNT

CREDIT

2,400 1,900 2,200

500

ACCOUNT

CREDIT

26,000

Accounts payable

ACCOUNT

DEBIT

Recording Business Transactions

DEBIT

CREDIT

2,400

221

ACCOUNT

DATE

ITEM

JRNL . REF.

BALANCE DEBIT

e. h.

222

ACCOUNT NO.

Service revenue CREDIT

3,600 800

Accounting 9/e

Solutions Manual

DEBIT

CREDIT

3,600 4,400

(continued)

P 2-51B

Resq. 1 and 3

DATE

ACCOUNT NO.

Salary expense

ACCOUNT

ITEM

JRNL . REF.

d.

BALANCE DEBIT

CREDIT

1,900

DATE

ITEM

JRNL . REF.

j.

ACCOUNT NO. BALANCE

DEBIT

CREDIT

700

DATE

ITEM

JRNL . REF.

g.

DEBIT

CREDIT

DATE

ITEM

j.

DEBIT

CREDIT

ACCOUNT NO. BALANCE

DEBIT

CREDIT

500

Chapter 2

ACCOUNT NO.

300

Utilities expense JRNL . REF.

CREDIT

BALANCE

300

ACCOUNT

DEBIT

700

Advertising expense

ACCOUNT

CREDIT

1,900

Rent expense

ACCOUNT

DEBIT

Recording Business Transactions

DEBIT

CREDIT

500

223

(continued)

P 2-51B

Req. 4 Stubbs Environmental Consulting Company Trial Balance October 31, 2012 ACCOUNT DEBIT CREDIT Cash $ 18,200 Accounts receivable 2,200 Office supplies 2,400 Office furniture 18,000 Building 26,000 Accounts payable $ 2,200 Stubbs, capital 66,000 Stubbs, drawing 2,400 Service revenue 4,400 Salary expense 1,900 Rent expense 700 Advertising expense 300 Utilities expense 500 Total $72,600 $72,600

224

Accounting 9/e

Solutions Manual

(15-25 min.)

P 2-52B

Req. 1 Building Blocks Child Care Trial Balance May 31, 2012 ACCOUNT DEBIT CREDIT Cash $ 10,300* Accounts receivable 7,000* Supplies 1,900* Equipment 87,700* Accounts payable $ 58,200* Estella, capital 50,400 Estella, drawing 2,600 Service revenue 4,700 Salary expense 3,100* Rent expense 700 Total $113,300 $113,300 *Calculations: a. Cash:

$6,300 + $4,000 = $10,300

b. Accounts receivable: $3,000 + $2,000 + $2,000 = $7,000 c. Supplies:

$700 + $1,200 = $1,900

Accounts payable: d. Equipment: Chapter 2

$57,000 + $1,200 = $58,200 $88,000 - $10,800 = $87,700

Recording Business Transactions

225

e. Salary expense:

226

$3,200 – $100 = $3,100

Accounting 9/e

Solutions Manual

(15-25 min.)

P 2-53B

Req. 1 Treasure Hunt Exploration Company Trial Balance July 31, 2012 ACCOUNT DEBIT CREDIT Cash $ 5,600* Accounts receivable 9,450* Supplies 800* Exploration equipment 17,160* Computers 46,000 Accounts payable $ 3,500* Note payable 18,900 Indiana, capital 50,100 Indiana, drawing 1,000 Service revenue 10,900* Salary expense 1,800 Rent expense 700* Advertising expense 100 Utilities expense 790* Total $83,400 $83,400 *Calculations: a. Cash:

$6,600 - $1,000 = $5,600

b. Rent expense:

$100 + $300 + $300 = $700

c. Service revenue:

$4,900 + $6,000 = $10,900

d. Accounts receivable:

$9,000 + $450 = $9,450

Chapter 2

Recording Business Transactions

227

e. Utilities expense:

$700 + $90 = $790

f. Supplies:

$200 + $600 = $800

Accounts payable:

$2,900 + $600 = $3,500

g. Exploration equipment: $22,600 - $5,440 = $17,160

228

Accounting 9/e

Solutions Manual

(20-30 min.)

P 2-54B

Req. 1 Party Time Amusements Company Income Statement Month Ended August 31, 2012 Revenue: Service revenue $ 25,000 Expenses: Salary expense $ 2,700 Rent expense 1,700 Property tax expense 1,200 Total expenses 5,600 Net income $19,40 0

Req. 2 Party Time Amusements Company Statement of Owner’s Equity Month Ended August 31, 2012 Smith, capital, August 1, 2012 $ 0 Owner investment 400,000 Net income 19,400 419,400 Drawing (8,000) Smith, capital, August 31, 2012 $411,400 Chapter 2

Recording Business Transactions

229

230

Accounting 9/e

Solutions Manual

(continued)

P 2-54B

Req. 3 Party Time Amusements Company Balance Sheet August 31, 2012 ASSETS LIABILITIES Cash $260,3 Accounts payable $ 00 200 Supplies 1,300 Notes payable 200,00 0 Building 350,00 Total liabilities 200,20 0 0 OWNER’S EQUITY Smith, capital 411,40 0 Total liabilities and Total assets $611,60 owner’s equity $611,60 0 0

Chapter 2

Recording Business Transactions

231

(20-30 min.)

P 2-55B

Req. 1 Vince Rockford, M.D. Income Statement Month Ended March 31, 2012 Revenue: Service revenue Expenses: Rent expense Salary expense

$ 11,800 $2,160 2,000

Utilities expense Total expenses Net income

320 4,480 $7,320

Req. 2 Vince Rockford, M.D. Statement of Owner’s Equity Month Ended March 31, 2012 Rockford capital, March 1, 2012 $ 0 Owner investment 74,000 Net income 7,320 81,320 Drawing (8,000) Rockford capital, March 31, 2012 $ 73,320 232

Accounting 9/e

Solutions Manual

Chapter 2

Recording Business Transactions

233

(continued)

P 2-55B

Req. 3 Vince Rockford, M.D. Balance Sheet March 31, 2012 ASSETS LIABILITIES Cash $ Accounts payable $ 62,720 400 Accounts 4,700 Notes payable 19,000 receivable Supplies 1,300 Total liabilities 19,400 Land 24,000 OWNER’S EQUITY Rockford, capital 73,320 Total liabilities and Total assets $ owner’s equity $ 92,720 92,720

234

Accounting 9/e

Solutions Manual

(20-30 min.)

P 2-56B

Req. 1 Beth Yung, Designer Income Statement Month Ended November 30, 2012 Revenue: Service revenue Expenses: Salary expense Rent expense

$ 5,400

$ 1,080 830

Total expenses Net income

1,910 $3,490

Req. 2 Beth Yung, Designer Statement of Owner’s Equity Month Ended November 30, 2012 Yung, capital, November 1, 2012 $ Owner investment Net income Drawing Chapter 2

0 34,000 3,490 37,490 (2,700)

Recording Business Transactions

235

Yung, capital, November 30, 2012

236

Accounting 9/e

Solutions Manual

$ 34,790

(continued)

P 2-56B

Req. 3 Beth Yung, Designer Balance Sheet November 30, 2012 ASSETS LIABILITIES Cash $ 6,390 Accounts payable $ 500 Accounts 1,500 receivable Supplies 500 OWNER’S EQUITY Furniture 1,900 Land 25,000 Yung, capital 34,79 0 Total liabilities and owner’s equity Total assets $ $ 35,290 35,290

Chapter 2

Recording Business Transactions

237

(20-30 min.)

P 2-57B

Req. 1 Vince Smith, Attorney Income Statement Month Ended April 30, 2012 Revenue: Service revenue Expenses: Salary expense Rent expense Total expenses Net income

$ 5,400 $ 920 730 1,650 $ 3,750

Req. 2 Vince Smith, Attorney Statement of Owner’s Equity Month Ended April 30, 2012 Smith, capital, April 1, 2012 $ 0 Owner investment 32,000 Net income 3,750 35,750 Drawing (2,700) Smith capital, April 30, 2012 $33,050

238

Accounting 9/e

Solutions Manual

(continued)

P 2-57B

Req. 3 Vince Smith, Attorney Balance Sheet April 30, 2012 ASSETS LIABILITIES Cash $ Accounts payable $ 7,550 2,000 Accounts 1,000 receivable Supplies 500 OWNER’S EQUITY Furniture 2,000 Land 24,000 Smith, capital 33,05 0 Total liabilities and Total assets $ owner’s equity $ 35,050 35,050

Chapter 2

Recording Business Transactions

239

(20-30 min.)

P 2-58B

Req. 1 John Hilton, CPA Income Statement Month Ended April 30, 2012 Revenue: Service revenue Expenses: Salary expense Rent expense Total expenses Net income

$ 7,100 $1,300 300 1,600 $5,500

Req. 2 John Hilton, CPA Statement of Owner’s Equity Month Ended April 30, 2012 Hilton, capital, April 1, 2012 $ 0 Owner investment 23,700 Net income 5,500 29,200 Drawing Hilton, capital, April 30, 2012

240

Accounting 9/e

Solutions Manual

(2,300) $26,900

(continued)

P 2-58B

Req. 3 John Hilton, CPA Balance Sheet April 30, 2012 ASSETS LIABILITIES Cash $ Accounts payable $2,30 7,700 0 Accounts 6,100 receivable Supplies 1,400 OWNER’S EQUITY Land 14,000 Hilton, capital 26,90 0 Total liabilities and Total assets

Chapter 2

$29,20 0

owner’s equity

Recording Business Transactions

$29,20 0

241

(20-30 min.)

P 2-59B

Req. 1 Shermana Peters, Registered Dietician Income Statement Month Ended July 31, 2012 Revenue: Service revenue $7,000 Expenses: Salary expense $1,500 Rent expense 300 Total expenses 1,800 Net income $5,200

Req. 2 Shermana Peters, Registered Dietician Statement of Owner’s Equity Month Ended July 31, 2012 Peters, capital, July 1, 2012 $ 0 Owner investment 23,000 Net income 5,200 28,200 Drawing Peters, capital, July 31, 2012

242

Accounting 9/e

Solutions Manual

(2,200) $26,000

(continued)

P 2-59B

Req. 3

Cash

Shermana Peters, Registered Dietician Balance Sheet July 31, 2012 ASSETS LIABILITIES $ 6,800 Accounts payable

Accounts receivable Supplies Equipment Total assets

Chapter 2

$ 3,700

5,500 1,400 OWNER’S EQUITY 16,000 Peters, capital 26,000 Total liabilities and owner’s equity $29,70 $29,70 0 0

Recording Business Transactions

243

(20-30 min.)

P 2-60B

Req. 1 Stubbs Environmental Consulting Company Income Statement Month Ended October 31, 2012 Revenue: Service revenue $4,400 Expenses: Salary expense $1,900 Rent expense 700 Utilities expense 500 Advertising expense 300 Total expenses 3,400 Net income $1,000

Req. 2 Stubbs Environmental Consulting Company Statement of Owner’s Equity Month Ended October 31, 2012 Stubbs, capital, October 1, 2012 $ 0 Owner investment 66,000 Net income 1,000 67,00 0 Drawing (2,40 0) 244

Accounting 9/e

Solutions Manual

Stubbs, capital, October 31, 2012

Chapter 2

Recording Business Transactions

$64,600

245

(continued)

P 2-60B

Req. 3

Stubbs Environmental Consulting Company Balance Sheet October 31, 2012 ASSETS LIABILITIES Cash $ Accounts payable $2,2 18,200 00 Accounts 2,200 receivable Office supplies 2,400 OWNER’S EQUITY Office furniture 18,000 Building 26,000 Stubbs, capital 64,600 Total liabilities and Total assets $ owner’s equity $66,800 66,800

246

Accounting 9/e

Solutions Manual

Continuing Exercise (30-45 min.)

E 2-61

Req. 2

Journal DATE

May

POST. ACCOUNTS AND EXPLANATIONS REF.

DEBIT

1 Cash Lawlor, capital

1,700

3 Equipment Accounts payable

1,440

5 Fuel expense Cash

1,700

1,440 30 30

6 Accounts receivable Service revenue

150

8 Lawn supplies Cash

150

150

150

17 Cash Service revenue

800

31 Cash Accounts receivable

100

Chapter 2

Recording Business Transactions

CREDIT

800

100 247

(continued)

E 2-61

Reqs. 1 and 3

May 1 17 31 Bal

Cash 1,700 May 5 800 8 100

Accounts receivable 30 May 6 150 May 100 31 150 Bal 50

2,420 May 8 Bal

May 3 Bal

150

Equipment 1,440 1,440 Accounts payable May 1,440 3 Bal 1,440

Service revenue 150 248

Lawn supplies 150

Accounting 9/e

Lawlor, capital May 1 1,700 Bal

Fuel expense May 5 30

Solutions Manual

1,700

May 6 17 Bal

Chapter 2

800

Bal

30

950

Recording Business Transactions

249

(continued)

E 2-61

Req. 4 Lawlor Lawn Service Trial Balance May 31, 2012 ACCOUNT DEBIT Cash $ 2,420 Accounts receivable 50 Lawn supplies 150 Equipment 1,440 Accounts payable Lawlor, capital Service revenue Fuel expense 30 Total $ 4,090

250

Accounting 9/e

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CREDIT

$1,440 1,700 950 $4,090

Continuing Problem (40-50 min.)

P 2-62

Req. 2

Journal ACCOUNTS AND EXPLANATIONS

DATE

Dec

Cash

POST. REF.

DEBIT

CREDIT

18,000

2 Draper, capital

Rent expense

18,00 0 550

2 Cash Equipment

550 1,800

3 Cash Furniture

1,800 4,200

4 Accounts payable Supplies

4,200 900

5 Accounts payable Accounts receivable

900 1,500

9 Chapter 2

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251

Service revenue

1,500

12 Utilities expense Cash

250 250

18 Cash Service revenue

252

Accounting 9/e

1,100 1,100

Solutions Manual

(continued)

P 2-62

Reqs. 1 and 3 Cash Dec 2 18,00 Dec 0 2 1,100 18 3

550 1,800

Accounts receivable Dec 9 1,500 Bal

1,500

Dec 3 Bal

Equipment 1,800 1,800

250 12 Bal

16,50 0

Dec 5 Bal

Supplies 900 900

Dec 4

Furniture 4,200

Bal

4,200

Draper, capital Dec 2 18,00 0 Bal 18,00 0

Chapter 2

Accounts payable Dec 4,20 4 0 900 5 Bal 5,10 0 Utilities expense Dec 12 250 Bal

Recording Business Transactions

250

253

Service revenue Dec 1,500 9 1,100 18 Bal 2,600

254

Accounting 9/e

Rent expense Dec 2 550 Bal

550

Solutions Manual

(continued)

P 2-62

Req.4 Draper Consulting Trial Balance December 18, 2012 ACCOUNT DEBIT Cash $16,500 Accounts receivable 1,500 Supplies 900 Equipment 1,800 Furniture 4,200 Accounts payable Draper, capital Service revenue Rent expense 550 Utilities expense 250 Total $25,700

Chapter 2

Recording Business Transactions

CREDIT

$ 5,100 18,000 2,600

$25,700

255

PRACTICE SET: Chapter 2 (45-60 min.) Req. 1

Journal DATE

ACCOUNTS AND EXPLANATIONS

Nov

POS T REF.

Cash Truck Hudson, capital

43,00 0

2 Prepaid rent Cash

2,000

3 Prepaid insurance Cash

2,400

2,000

2,400

4 Supplies Accounts payable

270 270

5 Equipment Accounts payable

1,000

7 Equipment Cash

1,200

9 Accounts receivable Service revenue

3,000

1,000

1,200

10 Cash

3,000 100

Accounting 9/e

CREDIT

35,00 0 8,000

1

256

DEBIT

Solutions Manual

Accounts receivable 15 Contract labor expense Cash 16 Cash Unearned service revenue

100 500 500 3,600 3,600

17 Cash Service revenue

800

18 Utilities expense Accounts payable

175

2 Cash 0 Note payable

800

175 40,00 0 40,00 0

2 Cash 1 Accounts receivable

900

2 Accounts payable 5 Cash

500

2 Advertising expense 9 Cash

100

Chapter 2

Recording Business Transactions

900

500

100 257

3 Hudson, drawing 0 Cash

600 600 (continued)

Practice set

Req. 2 Cash Accounts payable Nov 1 35,000 Nov 2 2,000 Nov 500 Nov 270 25 4 10 100 3 2,400 5 1,00 0 16 3,600 7 1,200 18 175 17 800 1 500 Bal 945 5 20 40,000 2 500 5 21 900 2 100 Unearned service 9 revenue 30 600 Nov 3,600 16 Bal 73,100 Bal 3,600

258

Accounting 9/e

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(continued)

Practice set

Req. 2 (continued) Accounts receivable Nov 9 3,00 Nov 100 0 10 21 900 Bal

2,00 0

Nov 4 Bal

Note payable Nov 40,00 20 0 Bal 40,00 0

Supplies 270

Hudson, capital Nov 1 43,00 0 Bal 43,00 0

270

Prepaid rent Nov 2 2,00 0 Bal 2,00 0

Hudson, drawing Nov 600 30 Bal 600

Prepaid insurance Nov 3 2,40 0 Bal 2,40 0

Service revenues Nov 9 3,00 0 17 800 Bal

Chapter 2

Recording Business Transactions

3,80 0 259

Nov 1 Bal

Truck 8,00 0 8,00 0

Contract labor expense Nov 500 15 Bal 500

Equipment Nov 5 1,00 0 7 1,20 0 Bal 2,20 0

Utilities expense Nov 175 18 Bal 175

Advertising expense Nov 100 29 Bal 100

260

Accounting 9/e

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(continued)

Practice set

Req. 3 Shine King Cleaning Trial Balance November 30, 2012 ACCOUNT DEBIT Cash $ 73,100 Accounts receivable 2,000 Supplies 270 Prepaid rent 2,000 Prepaid insurance 2,400 Truck 8,000 Equipment 2,200 Accounts payable Unearned service revenue Note payable Hudson, capital Hudson, drawing 600 Service revenue Contract labor expense 500 Utilities expense 175 Advertising expense 100 Total $91,345

Chapter 2

Recording Business Transactions

CREDIT

$

945 3,600 40,000 43,000 3,800

$91,345

261

Ch 2: Apply Your Knowledge Decision Cases Decision Case 2-1 Reqs. 1 and 2

(f)

Cash 10,00 (b) 0 1,200 (d)

Bal

8,400

(a)

300 2,50 0

Accounts receivable (e) 8,800 (f) 1,200 Bal

(b) Bal

Accounts payable (c) 700

262

Accounting 9/e

7,60 0

Supplies 300 300

McChesney capital (a) 10,00 0

Solutions Manual

Service revenue (e) 8,80 0

(d)

Rent expense 1,100

Chapter 2

(d)

Salary expense 1,400

Advertising expense (c) 700

Recording Business Transactions

263

(continued) Decision Case 2-1

Req. 3 A-Plus Travel Planners Trial Balance June 30, 2014 ACCOUNT DEBIT Cash $ 8,400 Accounts receivable 7,600 Supplies 300 Accounts payable McChesney, capital Service revenue Salary expense 1,400 Rent expense 1,100 Advertising expense 700 Total $19,500

CREDIT

$

700 10,000 8,800

$19,500

Req. 4 A-Plus Travel Planners Revenues: Service revenue Expenses: Salary expense Rent expense Advertising expense Total expenses Net income for month 264

Accounting 9/e

$8,800 $1,400 1,100 700 3,200 $5,600 Solutions Manual

Recommendation: Discontinue the business, because net income falls below the target amount.

Chapter 2

Recording Business Transactions

265

Decision Case 2-2 Req. 1 Double-entry bookkeeping has the advantage that it records both sides (the “giving” side and the “receiving” side) of a business transaction in the precise language of accounting, i.e. “debits” and “credits.” This allows for the exact description of balances in all accounts, and helps ensure that the entire system is always in balance.

Req. 2 The bank is not misusing the term credit. From the perspective of the bank’s ledger, when you deposit money in the bank, the bank debits Cash (received from you) and credits a payable (payable to you on demand). It is this payable, a liability account, that is the source of the term credit. This is why a bank credit is good for the depositor. It means you have more money in the bank.

*Students probably will not be this complete.

266

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Ethical Issue 2-1 Req. 1 The bank has a standing agreement with Better Days Ahead for overdrafts, so as long as transactions are compliant with terms of the agreement, there is no ethical issue. The exercise refers to Better Days Ahead managing funds “wisely.” However, whether funds are managed wisely or not is a matter of prudent business management and not an ethical issue.

Presumably if

Better Days Ahead was exceeding the terms of the agreement, the bank would cancel the arrangement. Some students may point out that the agreement was for times when donations are running low, whereas the reasons given for the overdraft are for expansion and fundraising.

If this is interpreted to mean that Better

Days Ahead is abusing the privilege according to the terms of the agreement, then there may be an ethical issue involved, but that is not made clear by the information given. Students may approve of Henson’s cash management if the arrangement is beneficial to Better Days Ahead, and

thus

helps

them

accomplish

their

charitable

mission more effectively. Students may disapprove of Henson’s cash management if (a) they feel it is Chapter 2

Recording Business Transactions

267

“unwise”, i.e. poor business management, or (b) if they believe he is exceeding the terms of the agreement.

268

Accounting 9/e

Solutions Manual

Fraud Case 2-1 Req. 1 By changing an expense to an asset, the total expenses will decrease and net income will increase.

Req. 2 The CEO gained by earning a bonus, and the accounting manager

may

have

gained

treatment from the CEO.

by

getting

favorable

The shareholders of the

company lost, because the company paid out the bonus under fraudulent conditions.

Chapter 2

Recording Business Transactions

269

Financial Statement Case 2-1 Req. 1

Journal DATE

Dec .

ACCOUNTS AND EXPLANATIONS

POST. REF.

1 Cash & cash equivalents Net sales revenue

60,000

9 Cash & cash equivalents Long-term debt

200,00 0

60,000

10,000 10,000

2 Accounts payable 2 Cash & cash equivalents ($10,000 × ½)

5,000

2 General & admin 8 expense

3,000

Accounting 9/e

CREDIT

200,000

12 Fixed assets Accounts payable

270

DEBIT

5,000

Solutions Manual

Cash & cash equivalents 3 Long-term debt 1 Interest expense Cash & cash equivalents

3,000

100,00 0 1,000 101,000

Note: Amazon.com financial statements use slightly different terminology: “cash and cash equivalents” instead of “cash,”

“net sales” instead of “sales

revenue,” “long-term debt” instead of “note payable,” “Fixed Assets” instead of “Equipment,” “General and Administrative Expense” instead of “Administrative Expense.”

Team Project 2-1 Suggested Answer

Req. 1 Student answers will vary widely, as the various groups use the charts of accounts of different businesses. The financial statements that the students prepare should be consistent with the business’s chart of accounts. Chapter 2

Recording Business Transactions

271

Communication Activity 2-1 Debits are on the left, credits are on the right. Normal balance for assets, expenses, and drawings is a debit. For liability, equity, and revenue accounts, the normal balance is a credit.

272

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