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CHAPTER 2ANALYZING TRANSACTIONSDISCUSSION QUESTIONS1.An account is a form designed to record changes in a particular asset, liability, owner’s equity,revenue, or expense. A ledger is a group of related accounts.2.The terms debit and credit may signify either an increase or a decrease, depending upon the natureof the account. For example, debits signify an increase in asset and expense accounts but a decreasein liability, owner’s capital, and revenue accounts.3.a.b.Assuming that no errors have occurred, the credit balance in the cash account resulted fromdrawings checks for 1,850 in excess of the amount of cash on deposit.The 1,850 credit balance in the cash account as of December 31 is a liability owed to the bank.It is usually referred to as an “overdraft.”4.a.b.5.No. Errors may have been made that had the same erroneous effect on both debits and credits, suchas failing to record and/or post a transaction, recording the same transaction more than once, andposting a transaction correctly but to the wrong account.6.Recording 9,800 instead of the correct amount of 8,900 is a transposition. Recording 100 insteadof the correct amount of 1,000 is a slide.7.a.b.The revenue was earned in October.(1) Debit Accounts Receivable and credit Fees Earned or another appropriately titled revenueaccount in October.(2) Debit Cash and credit Accounts Receivable in November.No. Because the same error occurred on both the debit side and the credit side of the trialbalance, the trial balance would not be out of balance.Yes. The trial balance would not balance. The error would cause the debit total of the trialbalance to exceed the credit total by 90.8.a.b.The equality of the trial balance would not be affected.On the income statement, total operating expenses (salary expense) would be overstated by 7,500, and net income would be understated by 7,500. On the statement of owner’s equity,the beginning and ending owner’s capital would be correct. The understatement of net incomeunderstates owner’s equity by 7,500, while the understatement of withdrawals overstatesowner’s equity by 7,500. Thus, ending owner’s equity is correct. The balance sheet is notaffected by the error.9.a.b.The equality of the trial balance would not be affected.On the income statement, revenues (fees earned) would be overstated by 300,000, and netincome would be overstated by 300,000. On the statement of owner’s equity, the beginningcapital would be correct. However, net income and ending capital would be overstated by 300,000. The balance sheet total assets is correct. However, liabilities (notes payable) isunderstated by 300,000, and owner’s equity is overstated by 300,000. The understatementof liabilities is offset by the overstatement of owner’s equity, and thus, total liabilities andowner’s equity is correct.10.a.b.From the viewpoint of Surety Storage, the balance of the checking account represents an asset.From the viewpoint of Ada Savings Bank, the balance of the checking account represents aliability.2-1 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsPRACTICE EXERCISESPE 2-1A1.2.3.4.5.6.Debit and credit entries (c), normal debit balanceCredit entries only (b), normal credit balanceCredit entries only (b), normal credit balanceDebit entries only (a), normal debit balanceCredit entries only (b), normal credit balanceDebit and credit entries (c), normal credit balancePE 2-1B1.2.3.4.5.6.Debit and credit entries (c), normal credit balanceDebit and credit entries (c), normal debit balanceDebit entries only (a), normal debit balanceDebit entries only (a), normal debit balanceDebit entries only (a), normal debit balanceCredit entries only (b), normal credit balancePE 2-2AFeb.19 Office EquipmentCashAccounts Payable18,50030 Office SuppliesCashAccounts Payable2,5004,50014,000PE 2-2BSept.8001,7002-2 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsPE 2-3AApr.30 Accounts ReceivableFees Earned11,25011,250PE 2-3BAug.13 CashFees Earned9,0009,000PE 2-4ADec.23 Steve Buckley, DrawingCash20,00030 Dawn Pierce, DrawingCash11,50020,000PE 2-4BJune11,500PE 2-5AUsing the following T account, solve for the amount of cash receipts (indicatedby ? below).CashJuly 1 Bal.Cash receiptsJuly 31 Bal.37,450?29,600115,860Cash payments 29,600 37,450 Cash receipts – 115,860Cash receipts 29,600 115,860 – 37,450 108,010PE 2-5BUsing the following T account, solve for the amount of supplies expense(indicated by ? below).SuppliesAug. 1 Bal.Supplies purchasedAug. 31 Bal.1,0253,1101,324?Supplies expense 1,324 1,025 3,110 – Supplies expenseSupplies expense 1,025 3,110 – 1,324 2,8112-3 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsPE 2-6Aa.The trial balance totals are unequal. The debit total is higher by 900 ( 5,400 – 4,500).b.The trial balance totals are equal because both the debit and credit entries werejournalized and posted for 720.c.The trial balance totals are unequal. The debit total is higher by 3,200 ( 1,600 1,600).PE 2-6Ba.The trial balance totals are equal because both the debit and credit entries werejournalized and posted for 12,900.b.The trial balance totals are unequal. The credit total is higher by 1,656 ( 1,840 – 184).c.The trial balance totals are unequal. The debit total is higher by 4,500 ( 8,300 – 3,800).PE 2-7Aa.Rent ExpenseMiscellaneous Expense4,650Rent ExpenseCash4,6504,6504,650Note: The first entry in (a) reverses the incorrect entry, and the second entryrecords the correct entry. These two entries could also be combined into oneentry as shown below; however, preparing two entries would make it easierfor someone to understand later what happened and why the entries werenecessary.b.Rent ExpenseMiscellaneous ExpenseCash9,300Accounts PayableAccounts Receivable3,7004,6504,6503,7002-4 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsPE 2-7Ba.b.CashAccounts Receivable8,400SuppliesOffice Equipment2,500SuppliesAccounts Payable2,5008,4002,5002,500Note: The first entry in (b) reverses the incorrect entry, and the second entryrecords the correct entry. These two entries could also be combined into oneentry as shown below; however, preparing two entries would make it easierfor someone to understand later what happened and why the entries werenecessary.SuppliesOffice EquipmentAccounts Payable5,0002,5002,500PE 2-8AFULLER COMPANYIncome StatementsFor Years Ended December 312019Fees earnedOperating expensesNet income 680,000541,875 138,1252018 850,000637,500 212,500Increase/(Decrease)AmountPercent (170,000)(95,625) (74,375)–20.0%–15.0%–35.0%PE 2-8BPARAGON COMPANYIncome StatementsFor Years Ended December 312019Fees earnedOperating expensesNet income 1,416,0001,044,000 372,0002018 1,200,000900,000 300,000Increase/(Decrease)AmountPercent 216,000144,000 72,00018.0%16.0%24.0%2-5 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEXERCISESEx. 2-1Balance Sheet AccountsIncome Statement AccountsAssetsAdvanced Payments for EquipmentaCashFlight EquipmentFuel InventoryParts and SuppliesPrepaid ExpensesRevenueCargo RevenuePassenger RevenueLiabilitiesAccounts PayableAir Traffic LiabilitybFrequent Flyer (Obligations)cTaxes PayableExpensesAircraft Fuel (Expense)Aircraft Maintenance (Expense)Aircraft Rent (Expense)dContract Carrier Arrangements (Expense)Landing Fees (Expense)efPassenger Commissions (Expense)Owner’s EquityNoneabcdefAdvance payments (deposits) on aircraft to be delivered in the futurePassenger ticket sales for future flightsObligations to provide frequent flyers future travel and other benefitsPayments to other airlines for passenger travel under Delta ticketsFees paid to airports for landing rightsCommissions paid to travel agents for passenger bookingsEx. 2-2AccountAccountNumberAccounts PayableAccounts ReceivableCashFees EarnedFred Biggs, CapitalFred Biggs, DrawingLandMiscellaneous ExpenseSupplies ExpenseWages Expense21121141313213535251Note: Expense accounts are normally listed in order of magnitude from largest tosmallest with Miscellaneous Expense always listed last. Since Wages Expense isnormally larger than Supplies Expense, Wages Expense is listed as accountnumber 51 and Supplies Expense as account number 52.2-6 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-3Balance Sheet Accounts1112131415Income Statement Accounts1. AssetsCashAccounts ReceivableSuppliesPrepaid InsuranceEquipment4. Revenue41 Fees Earned515253592. Liabilities21 Accounts Payable22 Unearned Rent5. ExpensesWages ExpenseRent ExpenseSupplies ExpenseMiscellaneous Expense3. Owner’s Equity31 Lorri Ross, Capital32 Lorri Ross, DrawingNote: The order of some of the accounts within the major classifications issomewhat arbitrary, as in accounts 13–14, accounts 21–22, and accounts 51–53.In a new business, the order of magnitude of balances in such accounts is notdeterminable in advance. The magnitude may also vary from period to period.Ex. h.i.j.k.l.debitcreditdebitcreditdebitdebitEx. 2-51.2.3.4.5.6.7.debit and credit entries (c)debit and credit entries (c)debit and credit entries (c)credit entries only (b)debit entries only (a)debit entries only (a)debit entries only (a)2-7 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. s equity(Ashley Griffin, Capital)—creditOwner’s equity(Ashley Griffin, pense—debitEx. 2-72019Oct.1 Rent ExpenseCash3,6003 Advertising ExpenseCash1,2003,6001,2005 SuppliesCash7507506 Office EquipmentAccounts Payable8,0008,00010 CashAccounts Receivable14,80014,80015 Accounts PayableCash7,1107,11027 Miscellaneous ExpenseCash40030 Utilities ExpenseCash25040025031 Accounts ReceivableFees Earned33,10033,10031 Utilities ExpenseCash1,05031 Jason Payne, DrawingCash2,5001,0502,5002-8 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 8 SuppliesAccounts PayablePurchased supplies on account.1521Debit87Credit2,4752,475b., c., d.Account:SuppliesDate2019Sept.Account:Item1 Balance18e.Post.Ref. 87DebitCreditItem1 Balance18DebitBalanceCreditAccount No.Post.Ref.Debit 87158403,3152,475Accounts PayableDate2019Sept.Account No.CreditDebit21BalanceCredit10,90013,3752,475Yes. The rules of debit and credit apply to all companies.Ex. 2-9a. (1)(2)(3)(4)Accounts ReceivableFees Earned73,900SuppliesAccounts Payable1,96073,9001,960CashAccounts Receivable62,77062,770Accounts PayableCash8208202-9 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-9 nts Receivable73,900(3)(1)c.820(4)Accounts Payable820 (2)1,960Fees Earned(1)73,90062,770No. An error may not have necessarily occurred. A credit balancein Accounts Receivable could occur if a customer overpaid his orher account. Regardless, the credit balance should be investigated toverify that an error has not occurred.Ex. 2-10a.The increase of 140,000 ( 515,000 – 375,000) in the cash account does notindicate net income of that amount. Net income is the excess of revenuesover expenses and is normally not the same as the change in the cash account.b. 60,000 ( 200,000 – 140,000)orCashX515,000200,000375,000X 515,000 – 375,000 200,000X 200,000 – 515,000 375,000X 60,0002-10 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-11Accounts PayableFeb.1186,500Feb. 28a.X201,40059,900X 201,400 – 186,500 59,900X 59,900 186,500 – 201,400X 45,000b.Oct.1Oct.31Accounts Receivable115,800X130,770449,600 115,800 X – 449,600 130,770X 130,770 449,600 – 115,800X 464,570c.Apr.1Apr.30Cash46,220248,60056,770X 46,220 248,600 – X 56,770X 46,220 248,600 – 56,770X 238,050Ex. 2-12a.Credit balance of 170,000 ( 500,000 – 10,000 – 320,000).b.Yes. The balance sheet prepared at December 31 will balance, with TerraceWaters, Capital, being reported in the owner’s equity section as 170,000.2-11 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-13a. and b.Account DebitedTransactionTypeAccount CreditedEffect(1)(2)(3)assetassetasset edrawing – TypeEffectowner’s etasset –– – ––––Ex. 2-14(1) CashBeth Worley, Capital75,00075,000(2) SuppliesCash900900(3) EquipmentAccounts PayableCash8,000(4) Operating ExpensesCash6,280(5) Accounts ReceivableFees Earned12,3006,4001,6006,28012,300(6) Accounts PayableCash2,700(7) CashAccounts Receivable8,1502,7008,150(8) Operating ExpensesSupplies660660(9) Beth Worley, DrawingCash2,5002,5002-12 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-15a.NATIONAL PARK TOURS CO.Unadjusted Trial BalanceMay 31, 2019DebitBalancesCashAccounts ReceivableSuppliesEquipmentAccounts PayableBeth Worley, CapitalBeth Worley, DrawingService RevenueOperating ,0002,50012,3006,94091,00091,000Net income, 5,360 ( 12,300 – 6,940)2-13 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-16HICKORY FURNITURE COMPANYUnadjusted Trial BalanceDecember 31, 21,60050,000CashAccounts ReceivableSuppliesPrepaid insuranceLandAccounts PayableUnearned RentNotes PayableElaine Wells, CapitalElaine Wells, DrawingFees EarnedWages ExpenseRent ExpenseUtilities ExpenseSupplies ExpenseInsurance ExpenseMiscellaneous 048,00026,8506,2553,6009,500925,000925,000* 33,320 925,000 – 9,500 – 3,600 – 6,255 – 26,850 – 48,000 – 580,700 – 24,000– 50,000 – 21,600 – 4,275 – 116,900Ex. 2-17Inequality of trial balance totals would be caused by errors described in (c) and(e). For (c), the debit total would exceed the credit total by 9,900 ( 4,950 4,950).For (e), the credit total would exceed the debit total by 17,100 ( 19,000 – 1,900).Errors (b), (c), (d), and (e) would require correcting entries. Although it is not acorrecting entry, the entry that was not made in (a) should also be entered in thejournal.2-14 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-18RANGER CO.Unadjusted Trial BalanceAugust 31, 2019DebitBalancesCashAccounts ReceivablePrepaid InsuranceEquipmentAccounts PayableUnearned RentCarmen Meeks, CapitalCarmen Meeks, DrawingFees EarnedWages ExpenseAdvertising ExpenseMiscellaneous 000525,000Ex. 2-19Error(a)Out of Balance(b)Difference(c)Larger Total1.2.3.4.5.6.7.yesnoyesyesnoyesyes itcredit2-15 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-201.2.3.4.5.6.The Debit column total is added incorrectly. The sum is 890,700 rather than 1,189,300.The trial balance should be dated “July 31, 2019,” not “For the MonthEnding July 31, 2019.”The Accounts Receivable balance should be in the Debit column.The Accounts Payable balance should be in the Credit column.The Samuel Parson, Drawing, balance should be in the Debit column.The Advertising Expense balance should be in the Debit column.A corrected trial balance would be as follows:MASCOT CO.Unadjusted Trial BalanceJuly 31, 2019AccountNo.CashAccounts ReceivablePrepaid InsuranceEquipmentAccounts PayableSalaries PayableSamuel Parson, CapitalSamuel Parson, DrawingService RevenueSalary ExpenseAdvertising ExpenseMiscellaneous 00Ex. 2-21a. The correction could be made with one or two entries as shown below.Prepaid InsuranceInsurance ExpenseCash36,00018,00018,000or (reverses original entry)b.Prepaid InsuranceInsurance Expense18,000Prepaid InsuranceCash18,000Brian Phillips, DrawingWages Expense10,00018,00018,00010,0002-16 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-22The correction could be made with one or two entries as shown below.a.CashFees EarnedAccounts Receivable17,6008,8008,800or (reverses original entry)b.CashFees8,800CashAccounts Receivable8,800Accounts Payable*Supplies Expense1,760SuppliesCash1,7608,8008,8001,7601,760* The first entry reverses the original entry. The second entry is the entry that shouldhave been made initially.Ex. 2-23a.b.1.Revenue: 1,339 million increase ( 72,618 – 71,279)1.9% increase ( 1,339 71,279)2.Operating expenses: 1,974 million increase ( 68,083 – 66,109)3.0% increase ( 1,974 66,109)3.Operating income:– 635 million decrease ( 4,535 – 5,170)–12.3% decrease (– 635 5,170)During the recent year, revenue increased by 1.9%, while operating expensesincreased by 3.0%. As a result, operating income decreased by –12.3%, from theprior year.2-17 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsEx. 2-24a.1.Revenue: 3,559 million increase ( 116,199 – 112,640)3.2% increase ( 3,559 112,640)2.Operating expenses: 3,155 million increase ( 112,575 – 109,420)2.9% increase ( 3,155 109,420)3.Operating income: 404 million increase ( 3,624 – 3,220)12.5% increase ( 404 3,220)b.During the recent year, revenue increased by 3.2%, while operating expensesincreased by 2.9%. As a result, operating income increased by 12.5% from theprior year.c.Because of the size differences between Target and Costco (Costco has morethan 1.6 times the revenue), it is best to compare the two companies on thebasis of percent changes from the prior year. Costco's revenues increased by3.2%, while Target's revenues increased by only 1.9%. The expenses of Costcoincreased by 2.9%, which is less than the percentage increase in revenues. Asa result, Costco's operating income increased by 12.5%. In contrast, Target'sexpenses increased by 3.0%, which is more than the percentage increase inrevenues. As a result, Target's operating income decreased by 12.3%. Overall,Costco had a better operating performance than Target.2-18 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsPROBLEMSProb. 2-1A1. and 2.(a)(g)Bal.(l)(e)(f)(c)Cash36,000 (b)12,200 8154,5005,0006,4501,020(d)(i)(j)Accounts Receivable18,300Supplies2,150Prepaid nts Payable4,500 (d)(k)Bal.9,0002,8907,390Notes Payable5,000 (c)Bal.25,00020,000Connie Young, Capital(a)36,000Professional Fees(g)(l)Bal.12,20018,30030,500(m)Salary Expense6,450(k)Blueprint Expense2,890(b)Rent Expense2,400(n)Automobile Expense1,020(h)Miscellaneous Expense8152-19 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-1A (Concluded)3.CONNIE YOUNG, ARCHITECTUnadjusted Trial BalanceOctober 31, 2019DebitBalancesCashAccounts ReceivableSuppliesPrepaid InsuranceAutomobilesEquipmentAccounts PayableNotes PayableConnie Young, CapitalProfessional FeesSalary ExpenseBlueprint ExpenseRent ExpenseAutomobile ExpenseMiscellaneous 1593,89093,890Net income, 16,925 ( 30,500 – 6,450 – 2,890 – 2,400 – 1,020 – 815)2-20 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-2A1.(a)(b)(c)(d)(e)(f)(g)(h)(i)CashSharon Matthews, Capital40,00040,000Rent ExpenseCash6,000SuppliesAccounts Payable3,200Accounts PayableCash1,7506,0003,2001,750CashFees Earned18,25018,250Automobile ExpenseMiscellaneous ExpenseCash1,880420Office Salaries ExpenseCash5,000Supplies ExpenseSupplies1,400Sharon Matthews, DrawingCash2,0002,3005,0001,4002,0002-21 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-2A 00 (b)18,250 (d)(f)(g)(i)41,200(c)Bal.Supplies3,200 (h)1,8001,400(a)(e)(d)Accounts Payable1,750 (c)Bal.3,2001,450Sharon Matthews, Capital(a)40,000(i)Sharon Matthews, Drawing2,000Fees Earned(e)(b)Rent Expense6,000(g)Office Salaries Expense5,000(f)Automobile Expense1,880(h)Supplies Expense1,400(f)Miscellaneous Expense42018,2502-22 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-2A (Concluded)3.TRI-CITY REALTYUnadjusted Trial BalanceJanuary 31, 2019DebitBalancesCashSuppliesAccounts PayableSharon Matthews, CapitalSharon Matthews, DrawingFees EarnedRent ExpenseOffice Salaries ExpenseAutomobile ExpenseSupplies ExpenseMiscellaneous ,2506,0005,0001,8801,40042059,70059,7004.a. 18,250b. 14,700 ( 6,000 5,000 1,880 1,400 420)c. 3,550 ( 18,250 – 14,700)5. 41,550, which is the initial investment of 40,000 plus net income of 3,550 minusthe withdrawals of 2,000.2-23 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 5,0001 Rent ExpenseCash53114,7506 EquipmentAccounts Payable162214,1008 VanCashNotes Payable18112128,50010 SuppliesCash13112,38012 CashFees Earned114112,20015 Prepaid InsuranceCash14113,60023 Accounts ReceivableFees Earned124111,90024 Van ExpenseAccounts Payable55221,500JOURNAL2019JuneDebit1 CashKris Storey, geDebit29 Utilities ExpenseCash54113,10029 Miscellaneous ExpenseCash5911950Credit3,1009502-24 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-3A (Continued) 30 Cash117,330Accounts Receivable127,33030 Wages ExpenseCash51115,07030 Accounts PayableCash22116,82530 Kris Storey, DrawingCash32111,6005,0706,8251,6002.GENERAL ounts ReceivableAccount:ItemDate2019JuneAccount ount ceCredit11,9004,5702-25 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-3A 4,000Account No.Post.Ref.1828,500Accounts PayableAccount:BalanceCreditAccount No.Post.Ref.1614,100Notes PayableDateDebitAccount No.Post.Ref.14BalanceDebitCreditAccount edit13BalanceDebitCreditAccount .Ref.Prepaid InsuranceAccount:2019JuneAccount No.22BalanceDebitCredit14,10015,6008,7752-26 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-3A (Continued)Kris Storey, 0Account No.Post.Ref.51BalanceDebitCreditAccount No.Post.Ref.415,070Utilities ExpenseAccount:Debit12,20011,900Rent ExpenseAccount:BalanceDebitCreditAccount No.Post.Ref.321,600Wages ExpenseDate35,000Account No.Post.Ref.31BalanceDebitCreditAccount No.2ItemAccount:2019JuneCreditFees EarnedDate2019June1ItemAccount:2019JuneDebitKris Storey, nt No.CreditDebit54BalanceCredit3,1002-27 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-3A (Continued)Van 500Miscellaneous ExpenseAccount:2019JuneAccount No.Account No.59BalanceDebit2950CreditDebitCredit9502-28 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-3A (Concluded)3.ECO-CENTRIC DESIGNSUnadjusted Trial BalanceJune 30, 2019AccountNo.CashAccounts ReceivableSuppliesPrepaid InsuranceEquipmentVanNotes PayableAccounts PayableKris Storey, CapitalKris Storey, DrawingFees EarnedWages ExpenseRent ExpenseUtilities ExpenseVan ExpenseMiscellaneous 91,87591,8754. 8,730 ( 24,100 – 5,070 – 4,750 – 3,100 – 1,500 – 950)5.Some supplies may have been used during June but no supplies expense hasbeen recorded.As will be discussed in Chapter 3, adjustments are necessary at the end of theaccounting period to bring the accounts up to date. For example, adjustmentsfor supplies used, insurance expired, and depreciation would probably berequired by Eco-Centric Designs.Note to Instructors: At this point, students have not been exposed to depreciation,but some insightful students might recognize the need for recording supplies usedand insurance expired. You might use this as an opportunity to discuss what iscoming in Chapter 3.2-29 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-4A2. and 3.JOURNAL2019Apr.Post.Ref.DescriptionDatePage1 Rent ExpenseCash52116,5002 Office SuppliesAccounts Payable14212,3005 Prepaid InsuranceCash13116,00010 CashAccounts Receivable111252,30015 LandCashNotes Payable161123200,00017 Accounts PayableCash21116,45020 Accounts PayableOffice Supplies211432523 Advertising 3254,300PagePost.Ref.18Debit27 CashSalary and Commission Expense11512,50028 Automobile ExpenseCash54111,50029 Miscellaneous ExpenseCash59111,40019Credit2,5001,5001,4002-30 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2Analyzing TransactionsProb. 2-4A (Continued) 30 Accounts Receivable1257,000Fees Earned4157,00030 Salary and Commission ExpenseCash511111,90030 Lester Wagner, DrawingCash32114,00030 CashUnearned Rent112210,00011,9004,00010,0001. and 3.GENERAL LEDGERAccount:CashItemDate2019Apr.Account:1 Balance1510151723272829303030Post.Ref. ccounts ReceivableItemDate2019Apr.Account
CHAPTER 2 Analyzing Transactions PE 2-6A a. The trial balance totals are unequal. The debit total is higher by 900 ( 5,400 - 4,500). b. The trial balance totals are equal because both the debit and credit entries were journalized and posted for 720. c. The trial balance totals are unequal. The debit total is higher by 3,200 ( 1,600
