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SOLUTIONS MANUAL FOR Horngrens Accounting The Financial Chapters

11th Edition By Miller-Nobles ISBN13-9780133866889

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Chapter 2 Recording Business Transactions Review Questions 1. The three categories of the accounting equation are assets, liabilities, and equity. Assets include Cash, Accounts Receivable, Notes Receivable, Prepaid Expenses, Land, Building, Equipment, Furniture, and Fixtures. Liabilities include Accounts Payable, Notes Payable, Accrued Liability, and Unearned Revenue. Equity includes Owner, Capital; Owner, Withdrawals; Revenue; and Expenses. 2. Companies need a way to organize their accounts so they use a chart of accounts. Accounts starting with 1 are usually Assets, 2 – Liabilities, 3 – Equity, 4 – Revenues, and 5 – Expenses. The second and third digits in account numbers indicate where the account fits within the category. 3. A chart of accounts and a ledger are similar in that they both list the account names and account numbers of the business. A ledger, though, provides more detail. It includes the increases and decreases of each account for a specific period and the balance of each account at a specific point in time. 4. With a double-entry you need to record the dual effects of each transaction. Every transaction affects at least two accounts. 5. A T-account is a shortened form of each account in the ledger. The debit is on the left side, credit on the right side, and the account name is shown on top. 6. Debits are increases for assets, owner’s withdrawals, and expenses. Debits are decreases for liabilities, owner’s capital, and revenue. 7. Credits are increases for liabilities, owner’s capital, and revenue. Credits are decreases for assets, owner’s withdrawals, and expenses. 8. Assets, owner’s withdrawals, and expenses have a normal debit balance. Liabilities, owner’s capital, and revenue have a normal credit balance. 9. Source documents provide the evidence and data for accounting transactions. Examples of source documents a business would have are: bank deposit slips, purchase invoices, bank checks, and sales invoices 10. Transactions are first recorded in a journal, which is the record of transactions in date order.

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11. Step 1: Identify the accounts and the account type. You need this information before you can complete the next step. Step 2: Decide if each account increases or decreases, then apply the rules of debits and credits. Reviewing the rules of debits and credits, we use the accounting equation to help determine debits and credits for each account. Step 3: Record transactions in the journal using journal entries. Step 4: Post the journal entry to the ledger. When journal entries are posted from the journal to the ledger, the dollar amount is transferred from the debit and credit columns to the specific accounts in the ledger. The date on the journal entry should also be transferred to the accounts in the ledger. Step 5: Determine whether the accounting equation is in balance. After each entry the accounting equation should always be in balance. 12. Part 1: Date of the transaction. Part 2: Debit account name and dollar amount. Part 3: Credit account name and dollar amount. The credit account name is indented. Part 4: Brief explanation. 13. When transactions are posted from the journal to the ledger, the dollar amount is transferred from the debit and credit columns to the specific accounts in the ledger. The date of the journal entry is also transferred to the accounts in the ledger. The posting reference columns in the journal and ledger are also completed. In a computerized system, this step is completed automatically when the transaction is recorded in the journal. 14. The trial balance is used to prove the equality of total debits and total credits of all accounts in the ledger; it is also used to prepare the financial statements. 15. A trial balance verifies the equality of total debits and total credits of all accounts on the trial balance and is an internal document used only by employees of the company. The balance sheet, on the other hand, presents the business’s accounting equation and is a financial statement that can be used by both internal and external users. 16. If total debits equal total credits on the trial balance, it does not mean that the trial balance is errorfree. An incorrect amount could have been used, an entry could have been completely missed, or the wrong account title could have been debited or credited. 17. The debt ratio is calculated by dividing total liabilities by total assets and shows the proportion of assets financed with debt. It can be used to evaluate a business’s ability to pay its debts.

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Short Exercises S2-1 a. Notes Receivable (A) b. New, Capital (E) c. Prepaid Insurance (A) d. Notes Payable (L) e. Rent Revenue (E)

f. Taxes Payable (L) g. Rent Expense (E) h. Furniture (A) i. New, Withdrawals (E) j. Unearned Revenue (L)

S2-2 a. Increase to Accounts Receivable (DR) b. Decrease to Unearned Revenue (DR) c. Decrease to Cash (CR) d. Increase to Interest Expense (DR) e. Increase to Salaries Payable (CR)

f. Decrease to Prepaid Rent (CR) g. Increase to Perry, Capital (CR) h. Increase to Notes Receivable (DR) i. Decrease to Accounts Payable (DR) j. Increase to Interest Revenue (CR)

S2-3 a. Notes Payable (CR) b. Hernandez, Withdrawals (DR) c. Service Revenue (CR) d. Land (DR) e. Unearned Revenue (CR)

f. Hernandez, Capital (CR) g. Utilities Expense (DR) h. Office Supplies (DR) i. Advertising Expense (DR) j. Interest Payable (CR)

S2-4 Date Accounts and Explanation Jan. 1 Cash Davis, Capital Owner contribution. 2 Medical Supplies Accounts Payable Purchased medical supplies on account. 4 Cash Service Revenue Performed services for patients. 12 Rent Expense Cash Paid rent with cash.

Debit 35,000

Credit 35,000

13,000 13,000

1,900 1,900

2,600 2,600

15 Accounts Receivable Service Revenue Performed services for patients on account.

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10,000 10,000

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S2-5 Date Accounts and Explanation Jan. 22 Accounts Receivable Service Revenue Performed services for customers on account.

Debit 9,000

30 Cash Accounts Receivable Received cash on account from customers.

7,000

31 Utilities Expense Utilities Payable Received a utility bill due in February.

9,000

7,000

210 210

31 Salaries Expense Cash Paid monthly salary to salesman.

2,400

31 Cash Unearned Revenue Received cash for 3 months consulting services in advance.

2,475

31 Henry, Withdrawals Cash Owner withdrawal.

Credit

2,400

2,475

900 900

S2-6 Accounts Payable May 2 6,000 14,000 May 1 May 22 12,000 1,000 May 5 7,000 May 15 500 May 23 4,500 Bal.

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S2-7 Requirement 1 Date Accounts and Explanation Mar. 15 Office Supplies Accounts Payable Purchased office supplies on account.

Debit 2,600

Credit 2,600

28 Accounts Payable Cash Paid cash on account.

1,300 1,300

Requirement 2 Cash Bal. 23,000 1,300 Bal. 21,700

Mar. 15 Bal.

Mar. 28

Mar. 28

Accounts Payable 1,300 2,600 1,300

Mar. 15 Bal.

Office Supplies 2,600 2,600

S2-8 HENDERSON FLOOR COVERINGS Trial Balance December 31, 2016 Account Title Cash Accounts Receivable Equipment Accounts Payable Salaries Payable Interest Payable Henderson, Capital Henderson, Withdrawals Service Revenue Rent Expense Salaries Expense Utilities Expense Total

Balance Debit $ 12,000 4,000 45,000

Credit

$ 1,500 15,000 7,500 25,000 12,900 38,000 10,000 1,800 1,300 $ 87,000

$ 87,000

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S2-9 Debt ratio = Total liabilities / Total assets = $60,000 / $240,000 = 0.25 = 25%

Exercises E2-10 1. g 2. a 3. e 4. d 5. j 6. i 7. f 8. b 9. h 10. c E2-11 Assets 100 – Cash 110 – Automotive Supplies 120 – Equipment Liabilities 200 – Accounts Payable 210 – Unearned Revenue

Equity 300 – Raymond, Capital 310 – Raymond, Withdrawals Revenues 400 – Service Revenue Expenses 500 – Utilities Expense 510 – Advertising Expense

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E2-12

Account Name a. b. c. d. e. f. g. h. i. j.

Interest Revenue Accounts Payable Curtis, Capital Office Supplies Advertising Expense Unearned Revenue Prepaid Rent Utilities Expense Curtis, Withdrawals Service Revenue

Requirement 1

Requirement 2

Type of Account

Increase with Debit/Credit

E L E A E L A E E E

CR CR CR DR DR CR DR DR DR CR

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Requirement 3 Normal Balance Debit/Credit CR CR CR DR DR CR DR DR DR CR

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E2-13 (a) Assets

=

Assets (e) Incr. Decr.

=

Debit

(n) Credit

Liabilities

+

(b) Equity

Owner, (c) Liabilities + Capital Decr. (f) Incr. (g) Decr. (h) Incr. (o) Debit

Credit

(p) Debit

Credit

(d) Owner, + Revenues Withdrawals (i) Incr. (j) Decr. (k) Decr. (l) Incr. (q) Debit

Credit

Debit

(a) Assets (b) Equity (c) Liabilities (d) Owner, Withdrawal (e) Incr. (f) Incr. (g) Decr. (h) Incr. (i) Incr. (j) Decr. (k) Decr. (l) Incr. (m) Decr. (n) Credit (o) Debit (p) Debit (q) Debit (r) Debit

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Credit

Expenses Incr. (m) Decr. (r) Debit

Credit


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E2-14 a. Bank deposit slip b. Purchase invoice c. Sales invoice E2-15 a. b. c. d. e. f. g.

Purchased equipment with cash. Paid cash withdrawals to owner. Paid wages owed to employees, previously recorded. Received equipment for the business in exchange for capital. Received cash from customer for work to be completed in the future. Paid for advertising with cash. Performed services that were paid by the customer.

E2-16 Date Accounts and Explanation Jul. 2 Cash London, Capital Owner contribution. 4 Utilities Expense Cash Paid utility expense.

Debit Credit 12,000 12,000

410 410

5 Equipment Accounts Payable Purchased equipment on account.

2,200 2,200

10 Accounts Receivable Service Revenue Performed services for client on account.

2,800

12 Cash Notes Payable Borrowed cash by signing note.

7,500

19 London, Withdrawals Cash Owner withdrawal.

2,800

7,500

750 750

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E2-16, cont. 21 Office Supplies Cash Purchased office supplies with cash.

860 860

27 Accounts Payable Cash Paid cash on account.

2,200 2,200

E2-17 Requirements 1, 2, and 3 Cash Jul. 2 12,000 410 Jul. 12 7,500 750 860 2,200 Balance 15,280

Jul. 4 Jul. 19 Jul. 21 Jul. 27

Jul. 27

Accounts Payable 2,200 2,200 Jul. 5 0 Balance

Accounts Receivable Jul. 10 2,800 Balance 2,800

Jul. 21 Balance

Office Supplies 860 860

Jul. 5 Balance

Equipment 2,200 2,200

Notes Payable 7,500 7,500

Jul. 12 Balance

London, Capital 12,000 12,000

Jul. 2 Balance

London, Withdrawals Jul. 19 750 Balance 750 Service Revenue 2,800 Jul. 10 2,800 Balance

Jul. 4 Balance

Utilities Expense 410 410

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E2-18 Date Accounts and Explanation May 1 Cash Wilson, Capital Owner contribution.

Post. Ref.

Debit Credit 85,000 85,000

2 Office Supplies Accounts Payable Purchased office supplies on account.

550

4 Building Land Cash Purchased building and land for cash.

48,000 9,000

6 Cash Service Revenue Performed services for customers for cash.

3,600

9 Accounts Payable Cash Paid cash on account.

550

57,000

3,600

450 450

17 Accounts Receivable Service Revenue Performed services for customers on account.

3,400

19 Rent Expense Cash Paid rent for the month.

1,400

20 Cash Unearned Revenue Received cash from customers for services to be performed next month.

1,300

21 Prepaid Advertising Cash Paid for next month’s advertising.

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3,400

1,400

1,300

300 300

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E2-18, cont. 23 Cash Accounts Receivable Received cash on account from customer.

2,600

31 Salaries Expense Cash Paid salaries.

1,200

2,600

1,200

E2-19 Requirement 2

Date Accounts and Explanation May 1 Cash Wilson, Capital Owner contribution.

Post. Ref. 110 310

Debit Credit 85,000 85,000

2 Office Supplies Accounts Payable Purchased office supplies on account.

130 210

550

4 Building Land Cash Purchased building and land for cash.

150 160 110

48,000 9,000

6 Cash Service Revenue Performed services for customers for cash.

110 410

3,600

9 Accounts Payable Cash Paid cash on account.

210 110

450

120 410

3,400

17 Accounts Receivable Service Revenue Performed services for customers on account.

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550

57,000

3,600

450

3,400

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E2-19, cont. 19 Rent Expense Cash Paid rent for the month.

510 110

1,400

20 Cash Unearned Revenue Received cash from customers for services to be performed next month.

110 220

1,300

21 Prepaid Advertising Cash Paid for next month’s advertising.

140 110

300

23 Cash Accounts Receivable Received cash on account from customer.

110 120

2,600

31 Salaries Expense Cash Paid salaries.

520 110

1,200

1,400

1,300

300

2,600

1,200

Requirements 1 and 2 CASH Date May 1 May 4 May 6 May 9 May 19 May 20 May 21 May 23 May 31

Item

Post Ref. J10 J10 J10 J10 J10 J10 J10 J10 J10

Debit 85,000

Credit 57,000

3,600 450 1,400 1,300 300 2,600 1,200

ACCOUNTS RECEIVABLE Date May 17 May 23

Item

Post Ref. J10 J10

Debit 3,400

Credit 2,600

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Account No. 110 Balance Debit Credit 85,000 28,000 31,600 31,150 29,750 31,050 30,750 33,350 32,150

Account No. 120 Balance Debit Credit 3,400 800

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E2-19, cont. OFFICE SUPPLIES Date May 2

Item

Post Ref. J10

Debit 550

Credit

PREPAID ADVERTISING Date May 21

Item

Post Ref. J10

Debit 300

Credit

BUILDING Date May 4

Item

Post Ref. J10

Debit 48,000

Credit

LAND Date May 4

Item

Post Ref. J10

Debit 9,000

Credit

ACCOUNTS PAYABLE Date May 2 May 9

Item

Post Ref. J10 J10

Debit

Credit 550

450

UNEARNED REVENUE Date May 20

Item

Post Ref. J10

Debit

Item

Post Ref. J10

Debit

Account No. 140 Balance Debit Credit 300 Account No. 150 Balance Debit Credit 48,000 Account No. 160 Balance Debit Credit 9,000 Account No. 210 Balance Debit Credit 550 100

Credit 1,300

Account No. 220 Balance Debit Credit 1,300

Credit 85,000

Account No. 310 Balance Debit Credit 85,000

WILSON, CAPITAL Date May 1

Account No. 130 Balance Debit Credit 550

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E2-19, cont. SERVICE REVENUE Date May 6 May 17

Item

Post Ref. J10 J10

Debit

Credit 3,600 3,400

RENT EXPENSE Date May 19

Item

Post Ref. J10

Debit 1,400

Credit

SALARIES EXPENSE Date May 31

Item

Post Ref. J10

Debit 1,200

Credit

Account No. 410 Balance Debit Credit 3,600 7,000 Account No. 510 Balance Debit Credit 1,400 Account No. 520 Balance Debit Credit 1,200

E2-20 1. The business received cash of $370,000 and gave capital to owner. 2. Paid $360,000 cash for a building. 3. Borrowed $260,000 cash, signing a note payable. 4. Purchased office supplies on account, $1,500. 5. Paid $1,200 on accounts payable. 6. Paid property tax expense, $1,500. 7. Paid rent $1,400 and salaries $2,500. 8. The owner withdrew $7,000 cash from the business. 9. Performed services for customers and received cash, $21,000.

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E2-21

Date 1.

2.

3.

4.

5.

Accounts and Explanation

Posting Ref.

Cash Atkins, Capital Owner contribution. Office Supplies Accounts Payable Purchased office supplies on account.

Debit Credit 56,000 56,000

200 200

Building Cash Purchased building for cash.

37,000

Cash Notes Payable Borrowed money signing a note payable.

49,000

Equipment Cash Purchased equipment for cash.

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37,000

49,000

5,900 5,900

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E2-22 AKER MOVING COMPANY Trial Balance August 31, 2016 Account Title Cash Accounts Receivable Office Supplies Trucks Building Accounts Payable Notes Payable Aker, Capital Aker, Withdrawals Service Revenue Salaries Expense Fuel Expense Insurance Expense Utilities Expense Advertising Expense Total

Balance Debit $ 5,000 8,700 300 132,000 48,000

Credit

$

4,200 62,000 53,300

6,200 92,000 7,000 3,000 600 500 200 $ 211,500

$ 211,500

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E2-23 MORRIS FARM EQUIPMENT REPAIR Trial Balance May 31, 2016 Account Title

Balance Debit Credit $ 12,680 3,100 18,000 32,000 12,000 $ 3,400 27,600 47,000 1,200 7,200 5,600 300 320 $ 85,200 $ 85,200

Cash Accounts Receivable Equipment Building Land Salaries Payable Notes Payable Morris, Capital Morris, Withdrawals Service Revenue Salaries Expense Property Tax Expense Advertising Expense Total

E2-24 Requirement 2

Date Accounts and Explanation June 1 Cash Office Furniture Peel, Capital

Post Ref. 110 140 310

Debit 13,500 5,400

Credit

18,900

5 Rent Expense Cash

520 110

1,300

9 Office Supplies Accounts Payable

130 210

800

14 Salaries Expense Cash

510 110

1,700

18 Utilities Expense Utilities Payable

530 220

250

1,300

800

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1,700

250

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E2-24, cont. 21 Accounts Payable Cash

210 110

600

25 Accounts Receivable Service Revenue

120 410

5,900

28 Peel, Withdrawals Cash

320 110

6,900

600

5,900

6,900

Requirements 1 & 2 CASH Date June 1 June 5 June 14 June 21 June 28

Item

Post Ref. J10 J10 J10 J10 J10

Debit 13,500

Credit 1,300 1,700 600 6,900

ACCOUNTS RECEIVABLE Date June 25

Item

Post Ref. J10

Debit 5,900

Credit

OFFICE SUPPLIES Date June 9

Item

Post Ref. J10

Debit 800

Credit

OFFICE FURNITURE Date June 1

Item

Post Ref. J10

Debit 5,400

Credit

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Account No. 110 Balance Debit Credit 13,500 12,200 10,500 9,900 3,000

Account No. 120 Balance Debit Credit 5,900

Account No. 130 Balance Debit Credit 800

Account No. 140 Balance Debit Credit 5,400

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E2-24, cont. ACCOUNTS PAYABLE Date June 9 June 21

Item

Post Ref. J10 J10

Debit

Credit 800

600

UTILITIES PAYABLE Date June 18

Item

Post Ref. J10

Debit

Credit 250

Account No. 220 Balance Debit Credit 250

Credit 18,900

Account No. 310 Balance Debit Credit 18,900

PEEL, CAPITAL Date June 1

Item

Post Ref. J10

Debit

PEEL, WITHDRAWALS Date June 28

Item

Post Ref. J10

Debit 6,900

Credit

SERVICE REVENUE Date June 25

Item

Post Ref. J10

Debit

Credit 5,900

SALARIES EXPENSE Date June 14

Item

Post Ref. J10

Debit 1,700

Account No. 210 Balance Debit Credit 800 200

Credit

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Account No. 320 Balance Debit Credit 6,900 Account No. 410 Balance Debit Credit 5,900 Account No. 510 Balance Debit Credit 1,700

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E2-24, cont. Account No. 520

RENT EXPENSE Date June 5

Item

Post Ref. J10

Debit 1,300

Balance Debit Credit 1,300

Credit

UTILITIES EXPENSE Date June 18

Item

Post Ref. J10

Debit 250

Account No. 530 Balance Debit Credit 250

Credit

Requirement 3 TORI PEEL, CPA Trial Balance June 30, 2016 Acct. No. 110 120 130 140 210 220 310 320 410 510 520 530

Account Title Cash Accounts Receivable Office Supplies Office Furniture Accounts Payable Utilities Payable Peel, Capital Peel, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Total

Balance Debit $ 3,000 5,900 800 5,400

Credit

$

200 250 18,900

6,900 5,900 1,700 1,300 250 $ 25,250

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$ 25,250

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E2-25 Requirements 1 and 2

a. b. c.

Debits equal Credits, Yes or No No No Yes

d. e.

No Yes

Accounts Notes Receivable Utilities Expense Furniture Accounts Payable Cash Office Supplies Accounts Payable

Amount High or Low $4,000 Low 450 High 300 High 300 High 990 Low 90 Low 90 Low

E2-26 TOWN AND COUNTRY PAINTING SPECIALISTS Trial Balance November 30, 2016 Account Title

Balance

Cash Accounts Receivable Office Supplies Painting Equipment Accounts Payable Unearned Revenue Wilson, Capital Wilson, Withdrawals Service Revenue Advertising Expense Rent Expense Salaries Expense Utilities Expense Total

Debit $ 12,900 1,100 300 13,000

Credit

$ 3,100 2,000 15,000 7,000 19,650 450 2,700 2,100 200 $ 39,750

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$ 39,750

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E2-27 CARLA MADOCK TUTORING SERVICE Trial Balance May 31, 2016 Account Title

Balance

Cash Accounts Receivable Office Supplies Computer Equipment Accounts Payable Utilities Payable Madock, Capital Madock, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Total

Debit $ 3,500 1,200 700 15,800

Credit

$ 12,000 800 12,500 10,200 9,600 1,900 800 800 $ 34,900

$ 34,900

Explanation: a. Increase Cash by $600, decrease Accounts Receivable by $600. b. Increase Accounts Payable by $900 ($1,000 – $100). c. Increase Utilities Expense and Utilities Payable by $300 each. d. Increase Madock, Capital by $900.

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E2-28 Liabilities: Accounts Payable Utilities Payable Unearned Revenue Notes Payable Total liabilities Assets: Cash Accounts Receivable Office Supplies Office Equipment Building Land Total assets

$

1,800 700 18,290 77,000 $ 97,790

$ 37,000 7,200 2,600 22,000 85,000 24,000 $ 177,800

Debt ratio = Total liabilities / Total assets = $97,790 / $177,800 = 0.55 = 55%

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Problems (Group A) P2-29A Requirement 1

Date Accounts and Explanation July 1 Cash Yarwood, Capital

Post Ref.

5 Rent Expense Cash

Debit 68,000

Credit 68,000

550 550

9 Land Cash

17,000 17,000

10 Office Supplies Accounts Payable

1,800 1,800

19 Cash Notes Payable

24,000

22 Accounts Payable Cash

1,700

24,000

1,700

28 Advertising Expense Advertising Payable

290 290

31 Cash Accounts Receivable Service Revenue

6,000 5,500

31 Salaries Expense Rent Expense Utilities Expense Cash

2,000 1,000 550

31 Cash Unearned Revenue

1,260

31 Yarwood, Withdrawals Cash

7,400

11,500

3,550

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1,260

7,400

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P2-29A, cont. Requirement 2

Jul. 1 Jul. 19 Jul. 31 Jul. 31 Bal.

Cash 68,000 550 24,000 17,000 6,000 1,700 1,260 3,550 7,400 69,060

Jul. 5 Jul. 9 Jul. 22 Jul. 31 Jul. 31

Accounts Payable 1,700 1,800 100

Jul. 22

Advertising Payable 290 Jul. 28 290 Bal.

Accounts Receivable Jul. 31 5,500 Bal. 5,500

Jul. 10 Bal.

Office Supplies 1,800 1,800

Jul. 9 Bal.

Land 17,000 17,000

Jul. 10 Bal.

Jul. 31 Bal.

Unearned Revenue 1,260 1,260

Jul. 31 Bal.

Notes Payable 24,000 24,000

Jul. 19 Bal.

Yarwood, Capital 68,000 68,000

Jul. 1 Bal.

Yarwood, Withdrawals 7,400 7,400 Service Revenue 11,500 11,500

Jul. 31 Bal.

Salaries Expense 2,000 2,000

Jul. 5 Jul. 31 Bal.

Rent Expense 550 1,000 1,550

Jul. 31 Bal.

Utilities Expense 550 550

Jul. 31 Bal.

Advertising Expense Jul. 28 290 Bal. 290 P2-

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cont. Requirement 3 VINCENT YARWOOD, MD Trial Balance July 31, 2017 Account Title Cash Accounts Receivable Office Supplies Land Accounts Payable Advertising Payable Unearned Revenue Notes Payable Yarwood, Capital Yarwood, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Advertising Expense Total

Balance Debit $ 69,060 5,500 1,800 17,000

Credit

$

100 290 1,260 24,000 68,000

7,400 11,500 2,000 1,550 550 290 $ 105,150

$ 105,150

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P2-30A Requirement 1 Date Accounts and Explanation Sep. 1 Cash Stann, Capital

Posting Ref.

Debit Credit 47,000 47,000

4 Office Supplies Furniture Accounts Payable

700 1,600

6 Cash Service Revenue

1,400

7 Land Cash

2,300

1,400 20,000 20,000

10 Accounts Receivable Service Revenue

900 900

14 Accounts Payable Cash

1,600

15 Salaries Expense Cash

1,480

1,600

1,480

17 Cash Accounts Receivable

700

20 Accounts Receivable Service Revenue

700

700

700

25 Cash Unearned Revenue

2,200

28 Cash Service Revenue

2,600

29 Prepaid Insurance Cash

2,400

30 Salaries Expense Cash

1,480

2,200

2,600

2,400

1,480

30 Rent Expense Cash

500 500

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P2-30A, cont.

30

30

Utilities Expense Utilities Payable

400 400

Stann, Withdrawals Cash

3,000 3,000

Requirements 2 and 3

Sep. 1 Sep. 6 Sep. 17 Sep. 25 Sep. 28

Bal.

Sep. 10 Sep. 20 Bal.

Cash 47,000 20,000 1,400 1,600 700 1,480 2,200 2,400 2,600 1,480 500 3,000 23,440

Accounts Receivable 900 700 Sep. 17 700 900

Sep. 4 Bal.

Office Supplies 700 700

Sep. 29 Bal.

Prepaid Insurance 2,400 2,400

Sep. 4 Bal.

Sep. 7 Bal.

Sep. 7 Sep. 14 Sep. 15 Sep. 29 Sep. 30 Sep. 30 Sep. 30

Furniture 1,600 1,600 Land 20,000 20,000

Sep. 14

Accounts Payable 1,600 2,300 Sep. 4 700 Bal.

Utilities Payable 400 Sep. 30 400 Bal.

Unearned Revenue 2,200 Sep. 25 2,200 Bal.

Stann, Capital 47,000 47,000

Sep. 1 Bal.

Stann, Withdrawals Sep. 30 3,000 Bal. 3,000 Service Revenue 1,400 900 700 2,600 5,600

© 2016 Pearson Education, Inc.

Sep. 6 Sep. 10 Sep. 20 Sep. 28 Bal.

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P2-30A, cont.

Sep. 15 Sep. 30 Bal.

Salaries Expense 1,480 1,480 2,960

Sep. 30 Bal.

Rent Expense 500 500

Sep. 30 Bal.

Utilities Expense 400 400

Requirement 4 DORIS STANN, DESIGNER Trial Balance September 30, 2017 Account Title Cash Accounts Receivable Office Supplies Prepaid Insurance Furniture Land Accounts Payable Utilities Payable Unearned Revenue Stann, Capital Stann, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Total

Balance Debit $ 23,440 900 700 2,400 1,600 20,000

Credit

$

700 400 2,200 47,000

3,000 5,600 2,960 500 400 $ 55,900

$ 55,900

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P2-31A Requirements 1 and 3 Date Accounts and Explanation Jan. 1 Cash Monroe, Capital

Posting Ref. 101 301

Debit Credit 62,000 62,000

3 Office Supplies Furniture Accounts Payable

121 141 201

500 2,000

4 Cash Service Revenue

101 411

1,600

7 Building Land Cash Notes Payable

151 161 101 221

70,000 29,000

11 Accounts Receivable Service Revenue

111 411

300

15 Salaries Expense Cash

511 101

1,180

16 Accounts Payable Cash

201 101

500

18 Cash Service Revenue

101 411

2,000

19 Accounts Receivable Service Revenue

111 411

1,400

25 Utilities Expense Utilities Payable

531 211

550

29 Cash Accounts Receivable

101 111

700

30 Prepaid Insurance Cash

131 101

840

30 Salaries Expense Cash

511 101

1,180

© 2016 Pearson Education, Inc.

2,500

1,600

35,000 64,000

300

1,180

500

2,000

1,400

550

700

840

1,180

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P2-31A, cont. 31 Rent Expense Cash

521 101

1,300

31 Monroe, Withdrawals Cash

311 101

2,900

1,300

2,900

Requirements 2 and 3 CASH Date Jan. 1 Jan. 4 Jan. 7 Jan. 15 Jan. 16 Jan. 18 Jan. 29 Jan. 30 Jan. 30 Jan. 31 Jan. 31

Item

Post Ref. J1 J1 J1 J1 J1 J1 J1 J1 J1 J1 J1

Debit 62,000 1,600

Credit

35,000 1,180 500 2,000 700 840 1,180 1,300 2,900

ACCOUNTS RECEIVABLE Date Jan. 11 Jan. 19 Jan. 29

Item

Post Ref. J1 J1 J1

Debit 300 1,400

Credit

700

OFFICE SUPPLIES Date Jan. 3

Item

Post Ref. J1

Debit 500

Credit

© 2016 Pearson Education, Inc.

Account No. 101 Balance Debit Credit 62,000 63,600 28,600 27,420 26,920 28,920 29,620 28,780 27,600 26,300 23,400

Account No. 111 Balance Debit Credit 300 1,700 1,000 Account No. 121 Balance Debit Credit 500

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P2-31A, cont. PREPAID INSURANCE Date Jan. 30

Item

Post Ref. J1

Debit 840

Credit

Account No. 141

FURNITURE Date Jan. 3

Item

Post Ref. J1

Debit 2,000

Credit

BUILDING Date Jan. 7

Item

Post Ref. J1

Debit 70,000

Credit

LAND Date Jan. 7

Item

Post Ref. J1

Debit 29,000

Credit

ACCOUNTS PAYABLE Date Jan. 3 Jan. 16

Item

Post Ref. J1 J1

Debit

Credit 2,500

500

UTILITIES PAYABLE Date Jan. 25

Item

Post Ref. J1

Debit

Item

Post Ref. J1

Debit

Balance Debit Credit 2,000 Account No. 151 Balance Debit Credit 70,000 Account No. 161 Balance Debit Credit 29,000 Account No. 201 Balance Debit Credit 2,500 2,000

Credit 550

Account No. 211 Balance Debit Credit 550

Credit 64,000

Account No. 221 Balance Debit Credit 64,000

NOTES PAYABLE Date Jan. 7

Account No. 131 Balance Debit Credit 840

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P2-31A, cont. MONROE, CAPITAL Date Jan. 1

Item

Post Ref. J1

Debit

Credit 62,000

MONROE, WITHDRAWALS Date Jan. 31

Item

Post Ref. J1

Debit 2,900

Credit

SERVICE REVENUE Date Jan. 4 Jan. 11 Jan. 18 Jan. 19

Item

Post Ref. J1 J1 J1 J1

Debit

Credit 1,600 300 2,000 1,400

SALARIES EXPENSE Date Jan. 15 Jan. 30

Item

Post Ref. J1 J1

Debit 1,180 1,180

Credit

RENT EXPENSE Date Jan. 31

Item

Post Ref. J1

Debit 1,300

Credit

UTILITIES EXPENSE Date Jan. 25

Item

Post Ref. J1

Debit 550

Credit

© 2016 Pearson Education, Inc.

Account No. 301 Balance Debit Credit 62,000 Account No. 311 Balance Debit Credit 2,900 Account No. 411 Balance Debit Credit 1,600 1,900 3,900 5,300 Account No. 511 Balance Debit Credit 1,180 2,360 Account No. 521 Balance Debit Credit 1,300 Account No. 531 Balance Debit Credit 550

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P2-31A, cont. Requirement 4 TIMOTHY MONROE, ATTORNEY Trial Balance January 31, 2017 Account Title Cash Accounts Receivable Office Supplies Prepaid Insurance Furniture Building Land Accounts Payable Utilities Payable Notes Payable Monroe, Capital Monroe, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Total

Balance Debit $ 23,400 1,000 500 840 2,000 70,000 29,000

Credit

$ 2,000 550 64,000 62,000 2,900 5,300 2,360 1,300 550 $ 133,850

$ 133,850

P2-32A Requirement 1 Date Accounts and Explanation Apr. 4 Cash Accounts Receivable Received cash from client on account. 8 Accounts Receivable Service Revenue Performed tax services for client on account. 13 Accounts Payable Cash Paid cash on account.

Post. Ref. 11 12

Debit Credit 1,000 1,000

12 41

5,800

21 11

1,500

© 2016 Pearson Education, Inc.

5,800

1,500

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P2-32A, cont. Apr. 14 Furniture Accounts Payable Purchased furniture on account.

14 21

4,600

15 Automobile Mentz, Capital Owner contribution.

15 31

8,000

18 Office Supplies Accounts Payable Purchased office supplies on account.

13 21

500

19 Cash Accounts Receivable Received cash on account.

11 12

2,900

20 Mentz, Withdrawals Cash Owner withdrawal.

33 11

8,000

21 Cash Service Revenue Received cash for consulting work.

11 41

5,400

24 Cash Unearned Revenue Received payment for services to be performed next month.

11 22

1,200

27 Rent Expense Cash Paid office rent.

52 11

700

28 Salaries Expense Cash Paid employee salary.

51 11

1,600

© 2016 Pearson Education, Inc.

4,600

8,000

500

2,900

8,000

5,400

1,200

700

1,600

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P2-32A, cont. Requirements 2 and 3 CASH Date Mar. 31 Apr. 4 Apr. 13 Apr. 19 Apr. 20 Apr. 21 Apr. 24 Apr. 27 Apr. 28

Item Balance

Post Ref. J5 J5 J5 J5 J5 J5 J5 J5

Debit

Credit

1,000 1,500 2,900 8,000 5,400 1,200 700 1,600

ACCOUNTS RECEIVABLE Date Mar. 31 Apr. 4 Apr. 8 Apr. 19

Item Balance

Post Ref. J5 J5 J5

Debit

Credit 1,000

5,800 2,900

OFFICE SUPPLIES Date Mar. 31 Apr. 18

Item Balance

Post Ref. J5

Item

Post Ref. J5

500

Debit 4,600

Account No. 14 Balance Debit Credit 4,600

Debit

Credit

Credit

AUTOMOBILE Date Apr. 15

Item

Post Ref. J5

Account No. 12 Balance Debit Credit 9,500 8,500 14,300 11,400 Account No. 13 Balance Debit Credit 1,000 1,500

FURNITURE Date Apr. 14

Account No. 11 Balance Debit Credit 18,000 19,000 17,500 20,400 12,400 17,800 19,000 18,300 16,700

Debit 8,000

Credit

© 2016 Pearson Education, Inc.

Account No. 15 Balance Debit Credit 8,000

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P2-32A, cont. LAND Date Mar. 31

Item Balance

Post Ref.

Debit

Credit

ACCOUNTS PAYABLE Date Mar. 31 Apr. 13 Apr. 14 Apr. 18

Item Balance

Post Ref. J5 J5 J5

Debit

4,600 500

Account No. 21 Balance Debit Credit 5,500 4,000 8,600 9,100

Credit 1,200

Account No. 22 Balance Debit Credit 1,200

Credit

1,500

UNEARNED REVENUE Date Apr. 24

Item

Post Ref. J5

Debit

MENTZ, CAPITAL Date Mar. 31 Apr. 15

Item Balance

Post Ref.

Debit

J5

Credit 8,000

MENTZ, WITHDRAWALS Date Apr. 20

Item

Post Ref. J5

Debit 8,000

Credit

SERVICE REVENUE Date Mar. 31 Apr. 8 Apr. 21

Item Balance

Post Ref. J5 J5

Debit

Account No. 16 Balance Debit Credit 26,000

Credit 5,800 5,400

© 2016 Pearson Education, Inc.

Account No. 31 Balance Debit Credit 44,100 52,100

Account No. 33 Balance Debit Credit 8,000

Account No. 41 Balance Debit Credit 10,800 16,600 22,000

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P2-32A, cont. SALARIES EXPENSE Date Mar. 31 Apr. 28

Item Balance

Post Ref. J5

Debit

Credit

Account No. 51 Balance Debit Credit 5,000 6,600

Credit

Account No. 52 Balance Debit Credit 900 1,600

1,600

RENT EXPENSE Date Mar. 31 Apr. 27

Item Balance

Post Ref.

Debit

J5

700

Requirement 4 STEVE MENTZ, CPA Trial Balance April 30, 2017 Acct. No. 11 12 13 14 15 16 21 22 31 33 41 51 52

Account Title Cash Accounts Receivable Office Supplies Furniture Automobile Land Accounts Payable Unearned Revenue Mentz, Capital Mentz, Withdrawals Service Revenue Salaries Expense Rent Expense Total

Balance Debit $ 16,700 11,400 1,500 4,600 8,000 26,000

Credit

$ 9,100 1,200 52,100 8,000 22,000 6,600 1,600 $ 84,400

© 2016 Pearson Education, Inc.

$ 84,400

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P2-33A CREATIVE CHILD CARE Trial Balance August 31, 2017 Account Title Cash Accounts Receivable Office Supplies Prepaid Insurance Equipment Accounts Payable Notes Payable Tarrago, Capital Tarrago, Withdrawals Service Revenue Salaries Expense Rent Expense Advertising Expense Total

Balance Debit $ 10,200 15,000 2,500 3,900 76,500

Credit

$ 4,400 47,000 50,000 3,400 14,500 3,500 700 200 $ 115,900

$ 115,900

Explanations: a. Increase Cash by $1,400. b. Increase Accounts Receivable by $7,800 ($3,900 × 2). c. Increase Office Supplies and Accounts Payable by $1,300 each. d. Decrease Equipment by $7,800 ($84,300 − $76,500). e. Decrease Salaries Expense by $300. f. Advertising Expense should have a debit balance of $200. Decrease Cash by $200. g. Tarrago, Withdrawals should decrease by $2,160 and Cash should increase by $2,160 ($2,400 − $240). h. Service Revenue should increase by $4,500. i. Prepaid Insurance should increase by $3,600 ($1,800 × 2).

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P2-34A Requirement 1 SANDRA SOUSA, REGISTERED DIETICIAN Income Statement Month Ended July 31, 2017 Revenues: Service Revenue Expenses: Salaries Expense Rent Expense Utilities Expense Total Expenses Net Income

$ 11,840 $ 2,300 800 250 3,350 $ 8,490

Requirement 2 SANDRA SOUSA, REGISTERED DIETICIAN Statement of Owner’s Equity Month Ended July 31, 2017 Sousa, Capital, July 1, 2017 $ 0 Owner contribution 24,000 Net income for the month 8,490 32,490 Owner withdrawal (2,600) $ 29,890 Sousa, Capital, July 31, 2017

© 2016 Pearson Education, Inc.

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P2-34A, cont. Requirements 3 SANDRA SOUSA, REGISTERED DIETICIAN Balance Sheet July 31, 2017 Assets Cash Accounts Receivable Office Supplies Prepaid Insurance Equipment

Total Assets

Liabilities $ 33,000 9,500 1,500 2,000 15,000

$ 61,000

Accounts Payable Unearned Revenue Notes Payable Total Liabilities Owner’s Equity Sousa, Capital Total Liabilities and Owner’s Equity

$

3,300 2,810 25,000 31,110

29,890 $ 61,000

Requirement 4 Debt ratio = Total liabilities / Total assets = $31,110 / $61,000 = 0.51 = 51%

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Problems (Group B) P2-35B Requirement 1 Date Accounts and Explanation Mar. 1 Cash York, Capital

Posting Ref.

5 Rent Expense Cash

Debit Credit 64,000 64,000 630 630

9 Land Cash

13,000 13,000

10 Office Supplies Accounts Payable

1,800 1,800

19 Cash Notes Payable

24,000

22 Accounts Payable Cash

1,200

24,000

1,200

28 Advertising Expense Advertising Payable

270 270

31 Cash Accounts Receivable Service Revenue

6,600 5,800

31 Salaries Expense Rent Expense Utilities Expense Cash

2,700 1,500 400

31 Cash Unearned Revenue

1,450

31 York, Withdrawals Cash

6,600

12,400

4,600

1,450

6,600

© 2016 Pearson Education, Inc.

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P2-35B, cont. Requirement 2

Mar. 1 Mar. 19 Mar. 31 Mar. 31 Bal.

Cash 64,000 630 24,000 13,000 6,600 1,200 1,450 4,600 6,600 70,020

Accounts Payable Mar. 22 1,200 1,800 Mar. 10 600 Bal.

Mar. 5 Mar. 9 Mar. 22 Mar. 31 Mar. 31

Advertising Payable 270 Mar. 28 270 Bal.

Accounts Receivable Mar. 31 5,800 Bal. 5,800

Unearned Revenue 1,450 Mar. 31 1,450 Bal.

Mar. 10 Bal.

Office Supplies 1,800 1,800

Notes Payable 24,000 24,000

Mar. 19 Bal.

Mar. 9 Bal.

Land 13,000 13,000

York, Capital 64,000 64,000

Mar. 1 Bal.

Mar. 31 Bal.

York, Withdrawals 6,600 6,600 Service Revenue 12,400 12,400

Mar. 31 Bal.

Salaries Expense 2,700 2,700

Mar. 5 Mar. 31 Bal.

Rent Expense 630 1,500 2,130

Mar. 31 Bal.

Utilities Expense 400 400

Mar. 28 Bal.

Advertising Expense 270 270

© 2016 Pearson Education, Inc.

Mar. 31 Bal.

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P2-35B, cont. Requirement 3 VITO YORK, MD Trial Balance March 31, 2017 Account Title Cash Accounts Receivable Office Supplies Land Accounts Payable Advertising Payable Unearned Revenue Notes Payable York, Capital York, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Advertising Expense Total

Balance Debit $ 70,020 5,800 1,800 13,000

Credit

$

600 270 1,450 24,000 64,000

6,600 12,400 2,700 2,130 400 270 $ 102,720

$ 102,720

© 2016 Pearson Education, Inc.

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P2-36B Requirement 1 Date Accounts and Explanation Nov. 1 Cash Sikes, Capital

Posting Ref.

Debit Credit 39,000 39,000

4 Office Supplies Furniture Accounts Payable

900 1,800

6 Cash Service Revenue

2,000

7 Land Cash

2,700

2,000 24,000 24,000

10 Accounts Receivable Service Revenue

1,200

14 Accounts Payable Cash

1,800

15 Salaries Expense Cash

1,410

17 Cash Accounts Receivable

1,000

1,200

1,800

1,410

20 Accounts Receivable Service Revenue

1,000 900 900

25 Cash Unearned Revenue

2,100

28 Cash Service Revenue

2,800

29 Prepaid Insurance Cash

1,080

30 Salaries Expense Cash

1,410

2,100

2,800

1,080

1,410

30 Rent Expense Cash

800 800

© 2016 Pearson Education, Inc.

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P2-36B, cont. Nov. 30 Utilities Expense Utilities Payable

600 600

30 Sikes, Withdrawals Cash

4,000 4,000

Requirements 2 and 3

Nov. 1 Nov. 6 Nov. 17 Nov. 25 Nov. 28

Bal.

Cash 39,000 24,000 2,000 1,800 1,000 1,410 2,100 1,080 2,800 1,410 800 4,000 12,400

Nov. 7 Nov. 14 Nov. 15 Nov. 29 Nov. 30 Nov. 30 Nov. 30

Accounts Payable Nov. 14 1,800 2,700 Nov. 4 900 Bal.

Utilities Payable 600 Nov. 30 600 Bal.

Accounts Receivable Nov. 10 1,200 1,000 Nov. 17 Nov. 20 900 Bal. 1,100

Nov. 4 Bal.

Office Supplies 900 900

Nov. 29 Bal.

Prepaid Insurance 1,080 1,080

Nov. 4 Bal.

Nov. 7 Bal.

Unearned Revenue 2,100 Nov. 25 2,100 Bal.

Sikes, Capital 39,000 39,000

Nov. 30 Bal.

Furniture 1,800 1,800

Sikes, Withdrawals 4,000 4,000 Service Revenue 2,000 1,200 900 2,800 6,900

Land 24,000 24,000

Nov. 15 Nov. 30 Bal.

Nov. 1 Bal.

Nov. 6 Nov. 10 Nov. 20 Nov. 28 Bal.

Salaries Expense 1,410 1,410 2,820

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P2-36B, cont.

Nov. 30 Bal.

Rent Expense 800 800

Nov. 30 Bal.

Utilities Expense 600 600

Requirement 4 DEB SIKES, DESIGNER Trial Balance November 30, 2017 Account Title Cash Accounts Receivable Office Supplies Prepaid Insurance Furniture Land Accounts Payable Utilities Payable Unearned Revenue Sikes, Capital Sikes, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Total

Balance Debit $ 12,400 1,100 900 1,080 1,800 24,000

Credit

$

900 600 2,100 39,000

4,000 6,900 2,820 800 600 $ 49,500

$ 49,500

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P2-37B Requirement 1 Date Accounts and Explanation Apr. 1 Cash Moore, Capital

Posting Ref. 101 301

Debit 76,000

76,000

3 Office Supplies Furniture Accounts Payable

121 141 201

400 2,200

4 Cash Service Revenue

101 411

900

7 Building Land Cash Notes Payable

151 161 101 221

120,000 29,000

11 Accounts Receivable Service Revenue

111 411

800

15 Salaries Expense Cash

511 101

1,230

16 Accounts Payable Cash

201 101

400

18 Cash Service Revenue

101 411

2,800

19 Accounts Receivable Service Revenue

111 411

1,500

25 Utilities Expense Utilities Payable

531 211

650

28 Cash Accounts Receivable

101 111

1,700

29 Prepaid Insurance Cash

131 101

4,800

29 Salaries Expense Cash

511 101

1,230

© 2016 Pearson Education, Inc.

Credit

2,600

900

45,000 104,000

800

1,230

400

2,800

1,500

650

1,700

4,800

1,230

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P2-37B, cont. Apr. 30 Rent Expense Cash 30 Moore, Withdrawals Cash

521 101

1,100

311 101

2,000

1,100

2,000

Requirements 2 and 3 CASH Date Apr. 1 Apr. 4 Apr. 7 Apr. 15 Apr. 16 Apr. 18 Apr. 28 Apr. 29 Apr. 29 Apr. 30 Apr. 30

Item

Post Ref. J1 J1 J1 J1 J1 J1 J1 J1 J1 J1 J1

Debit 76,000 900

Credit

45,000 1,230 400 2,800 1,700 4,800 1,230 1,100 2,000

ACCOUNTS RECEIVABLE Date Apr. 11 Apr. 19 Apr. 28

Item

Post Ref. J1 J1 J1

Debit 800 1,500

Credit

1,700

OFFICE SUPPLIES Date Apr. 3

Item

Post Ref. J1

Debit 400

Credit

PREPAID INSURANCE Date Apr. 29

Item

Post Ref. J1

Debit 4,800

Credit

© 2016 Pearson Education, Inc.

Account No. 101 Balance Debit Credit 76,000 76,900 31,900 30,670 30,270 33,070 34,770 29,970 28,740 27,640 25,640

Account No. 111 Balance Debit Credit 800 2,300 600

Account No. 121 Balance Debit Credit 400

Account No. 131 Balance Debit Credit 4,800

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P2-37B, cont. FURNITURE Date Apr. 3

Item

Post Ref. J1

Debit 2,200

Credit

BUILDING Date Apr. 7

Item

Post Ref. J1

Debit 120,000

Credit

LAND Date Apr. 7

Item

Post Ref. J1

Debit 29,000

Credit

ACCOUNTS PAYABLE Date Apr. 3 Apr. 16

Item

Post Ref. J1 J1

Debit

Credit 2,600

400

UTILITIES PAYABLE Date Apr. 25

Item

Post Ref. J1

Debit

Item

Post Ref. J1

Debit

Item

Post Ref. J1

Debit

Account No. 161 Balance Debit Credit 29,000

Account No. 201 Balance Debit Credit 2,600 2,200

Credit 650

Credit 104,000

Account No. 221 Balance Debit Credit 104,000

Credit 76,000

Account No. 301 Balance Debit Credit 76,000

MOORE, CAPITAL Date Apr. 1

Account No. 151 Balance Debit Credit 120,000

Account No. 211 Balance Debit Credit 650

NOTES PAYABLE Date Apr. 7

Account No. 141 Balance Debit Credit 2,200

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P2-37B, cont. MOORE, WITHDRAWALS Date Apr. 30

Item

Post Ref. J1

Debit 2,000

Credit

SERVICE REVENUE Date Apr. 4 Apr. 11 Apr. 18 Apr. 19

Item

Post Ref. J1 J1 J1 J1

Debit

Credit 900 800 2,800 1,500

SALARIES EXPENSE Date Apr. 15 Apr. 29

Item

Post Ref. J1 J1

Debit 1,230 1,230

Credit

RENT EXPENSE Date Apr. 30

Item

Post Ref. J1

Debit 1,100

Credit

UTILITIES EXPENSE Date Apr. 25

Item

Post Ref. J1

Debit 650

Credit

© 2016 Pearson Education, Inc.

Account No. 311 Balance Debit Credit 2,000

Account No. 411 Balance Debit Credit 900 1,700 4,500 6,000

Account No. 511 Balance Debit Credit 1,230 2,460

Account No. 521 Balance Debit Credit 1,100

Account No. 531 Balance Debit Credit 650

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P2-37B, cont. Requirement 4 TREVOR MOORE, ATTORNEY Trial Balance April 30, 2017 Account Title Cash Accounts Receivable Office Supplies Prepaid Insurance Furniture Building Land Accounts Payable Utilities Payable Notes Payable Moore, Capital Moore, Withdrawals Service Revenue Salaries Expense Rent Expense Utilities Expense Total

Balance Debit $ 25,640 600 400 4,800 2,200 120,000 29,000

Credit

$

2,200 650 104,000 76,000

2,000 6,000 2,460 1,100 650 $ 188,850

$ 188,850

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P2-38B Requirement 1 Date

Accounts and Explanation

Apr. 4 Cash Accounts Receivable Received cash from client on account. 8 Accounts Receivable Service Revenue Performed tax services for client on account.

Posting Ref. 11 12

Debit 2,000

2,000

12 41

5,400

13 Accounts Payable Cash Paid cash on account.

21 11

3,300

14 Furniture Accounts Payable Purchased furniture on account.

14 21

4,600

15 Automobile Howe, Capital Owner contribution.

15 31

10,000

18 Office Supplies Accounts Payable Purchased office supplies on account.

13 21

1,000

19 Cash Accounts Receivable Received cash on account.

11 12

2,700

20 Howe, Withdrawals Cash Owner withdrawal.

33 11

4,000

21 Cash Service Revenue Received cash for consulting work.

11 41

3,800

24 Cash Unearned Revenue Received payment for services to be performed next month.

11 22

1,400

© 2016 Pearson Education, Inc.

Credit

5,400

3,300

4,600

10,000

1,000

2,700

4,000

3,800

1,400

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P2-38B, cont. Apr. 27 Rent Expense Cash Paid office rent. 28 Salaries Expense Cash Paid employee salary.

52 11

600

51 11

1,000

600

1,000

Requirements 2 and 3 CASH Date Mar. 31 Apr. 4 Apr. 13 Apr. 19 Apr. 20 Apr. 21 Apr. 24 Apr. 27 Apr. 28

Item Balance

Post Ref. J5 J5 J5 J5 J5 J5 J5 J5

Debit

Credit

2,000 3,300 2,700 4,000 3,800 1,400 600 1,000

ACCOUNTS RECEIVABLE Date Mar. 31 Apr. 4 Apr. 8 Apr. 19

Item Balance

Post Ref. J5 J5 J5

Debit

Credit 2,000

5,400 2,700

OFFICE SUPPLIES Date Mar. 31 Apr. 18

Item Balance

Post Ref. J5

Debit

Credit

1,000

© 2016 Pearson Education, Inc.

Account No. 11 Balance Debit Credit 10,000 12,000 8,700 11,400 7,400 11,200 12,600 12,000 11,000

Account No. 12 Balance Debit Credit 7,500 5,500 10,900 8,200

Account No. 13 Balance Debit Credit 400 1,400

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P2-38B, cont. FURNITURE Date Apr. 14

Item

Post Ref. J5

Debit 4,600

Credit

AUTOMOBILE Date Apr. 15

Item

Post Ref. J5

Debit 10,000

Credit

LAND Date Mar. 31

Item Balance

Post Ref.

Debit

Credit

ACCOUNTS PAYABLE Date Mar. 31 Apr. 13 Apr. 14 Apr. 18

Item Balance

Post Ref. J5 J5 J5

Debit

Item

Post Ref. J5

Credit 1,400

Account No. 22 Balance Debit Credit 1,400

HOWE, CAPITAL Date Mar. 31 Apr. 15

Item Balance

Post Ref.

Debit

J5

Credit 10,000

HOWE, WITHDRAWALS Date Apr. 20

Item

Post Ref. J5

Debit 4,000

Account No. 16 Balance Debit Credit 27,000

4,600 1,000

Credit

3,300

Debit

Account No. 15 Balance Debit Credit 10,000

Account No. 21 Balance Debit Credit 4,200 900 5,500 6,500

UNEARNED REVENUE Date Apr. 24

Account No. 14 Balance Debit Credit 4,600

Credit

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Account No. 31 Balance Debit Credit 33,300 43,300

Account No. 33 Balance Debit Credit 4,000

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P2-38B, cont. SERVICE REVENUE Date Mar. 31 Apr. 8 Apr. 21

Item Balance

Post Ref.

Debit

J5 J5

Credit 5,400 3,800

SALARIES EXPENSE Date Mar. 31 Apr. 28

Item Balance

Post Ref. J5

Debit

Credit

Account No. 51 Balance Debit Credit 2,500 3,500

Credit

Account No. 52 Balance Debit Credit 900 1,500

1,000

RENT EXPENSE Date Mar. 31 Apr. 27

Item Balance

Post Ref.

Debit

J5

Account No. 41 Balance Debit Credit 10,800 16,200 20,000

600

Requirement 4 JAMES HOWE, CPA Trial Balance April 30, 2017 Acct. No. 11 12 13 14 15 16 21 22 31 33 41 51 52

Account Title Cash Accounts Receivable Office Supplies Furniture Automobile Land Accounts Payable Unearned Revenue Howe, Capital Howe, Withdrawals Service Revenue Salaries Expense Rent Expense Total

Balance Debit $ 11,000 8,200 1,400 4,600 10,000 27,000

Credit

$ 6,500 1,400 43,300 4,000 20,000 3,500 1,500 $ 71,200

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$ 71,200

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P2-39B LEARN FOR LIFE CHILD CARE Trial Balance May 31, 2017 Account Title Cash Accounts Receivable Office Supplies Prepaid Insurance Equipment Accounts Payable Notes Payable Emerald, Capital Emerald, Withdrawals Service Revenue Salaries Expense Rent Expense Advertising Expense Total

Balance Debit $ 10,500 15,900 2,100 3,600 81,500

Credit

$

4,700 48,000 54,000

2,700 15,700 4,600 900 600 $ 122,400

$ 122,400

Explanations: a. Increase Cash by $1,800. b. Increase Accounts Receivable by $7,800 ($3,900 × 2). c. Increase Office Supplies and Accounts Payable by $1,200 each. d. Decrease Equipment by $7,800 ($89,300 − $81,500). e. Decrease Salaries Expense by $500. f. Advertising Expense should have a debit balance of $600. Decrease Cash by $600. g. Emerald, Withdrawals should decrease by $900 and Cash should increase by $900 ($1,000 − $100). h. Service Revenue should increase by $4,200. i. Prepaid Insurance should increase by $2,600 ($1,300 × 2).

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P2-40B Requirement 1 SARAH SILK, REGISTERED DIETICIAN Income Statement Month Ended July 31, 2017 Revenues: Service Revenue Expenses: Salaries Expense Rent Expense Utilities Expense Total Expenses Net Income

$ 9,858 $ 1,300 800 250 2,350 $ 7,508

Requirement 2 SARAH SILK, REGISTERED DIETICIAN Statement of Owner’s Equity Month Ended July 31, 2017 Silk, Capital, July 1, 2017 $ 0 Owner contribution 26,000 Net income for the month 7,508 33,508 Owner withdrawal (2,500) $ 31,008 Silk, Capital, July 31, 2017

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P2-40B, cont. Requirement 3 SARAH SILK, REGISTERED DIETICIAN Balance Sheet July 31, 2017 Assets Cash Accounts Receivable Office Supplies Prepaid Insurance Equipment

Total Assets

Liabilities $ 30,000 9,700 2,200 2,700 20,000

$ 64,600

Accounts Payable Unearned Revenue Notes Payable Total Liabilities Owner’s Equity Silk, Capital Total Liabilities and Owner’s Equity

$

3,400 5,192 25,000 $ 33,592

31,008 $ 64,600

Requirement 4 Debt ratio = Total liabilities / Total assets = $33,592 / $64,600 = 0.52 = 52%

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Continuing Problem P2-41 Requirement 1 Date Accounts and Explanation Dec. 2 Cash Daniels, Capital

Posting Ref.

Debit Credit 20,000 20,000

2 Rent Expense Cash

2,000

3 Equipment Cash

3,600

4 Furniture Accounts Payable

3,000

5 Office Supplies Accounts Payable

800

2,000

3,600

9 Accounts Receivable Service Revenue 12 Utilities Expense Cash

3,000

800 2,500 2,500 150 150

18 Cash Service Revenue

2,100

21 Cash Unearned Revenue

2,400

2,100

2,400

21 No entry needed 26 Accounts Payable Cash

200

28 Cash Accounts Receivable

400

200

30 Daniels, Withdrawals Cash

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400 1,000 1,000

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P2-41, cont. Requirements 2 and 3

Dec. 2 Dec. 18 Dec. 21 Dec. 28 Balance

Cash 20,000 2,000 2,100 3,600 2,400 150 400 200 1,000 17,950

Dec. 2 Dec. 3 Dec. 12 Dec. 26 Dec. 30

Accounts Payable Dec. 26 200 3,000 800 3,600

Accounts Receivable Dec. 9 2,500 400 Dec. 28 Balance 2,100

Dec. 5 Balance

Office Supplies 800 800

Dec. 3 Balance

Equipment 3,600 3,600

Dec. 4 Balance

Furniture 3,000 3,000

Dec. 4 Dec. 5 Balance

Unearned Revenue 2,400 Dec. 21 2,400 Balance Daniels, Capital 20,000 20,000

Dec. 2 Balance

Daniels, Withdrawals Dec. 30 1,000 Balance 1,000 Service Revenue 2,500 Dec. 9 2,100 Dec. 18 4,600 Balance

Dec. 2 Balance

Rent Expense 2,000 2,000

Dec. 12 Balance

Utilities Expense 150 150

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P2-41, cont. Requirement 4 DANIELS CONSULTING Trial Balance December 31, 2016 Account Title

Balance

Cash Accounts Receivable Office Supplies Equipment Furniture Accounts Payable Unearned Revenue Daniels, Capital Daniels, Withdrawals Service Revenue Rent Expense Utilities Expense Total

Debit $ 17,950 2,100 800 3,600 3,000

Credit

$ 3,600 2,400 20,000 1,000 4,600 2,000 150 $ 30,600

$ 30,600

Requirement 5 DANIELS CONSULTING Income Statement Month Ended December 31, 2016 Revenues: Service Revenue Expenses: Rent Expense Utilities Expense Total Expenses Net Income

$ 4,600 $ 2,000 150 2,150 $ 2,450

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P2-41, cont. Requirement 6 DANIELS CONSULTING Statement of Owner’s Equity Month Ended December 31, 2016 Daniels, Capital, December 1, 2016 Owner contribution Net income for the month Owner withdrawals Daniels, Capital, December 31, 2016

$

0 20,000 2,450 22,450 (1,000) $ 21,450

Requirement 7 DANIELS CONSULTING Balance Sheet December 31, 2016 Assets Cash Accounts Receivable Office Supplies Equipment Furniture

Total Assets

Liabilities $ 17,950 2,100 800 3,600 3,000

$ 27,450

Accounts Payable Unearned Revenue Total Liabilities Owner’s Equity Daniels, Capital Total Liabilities and Owner’s Equity

$

3,600 2,400 $ 6,000

21,450 $ 27,450

Requirement 8 Debt ratio = Total liabilities / Total assets = $6,000 / $27,450 = 0.22* = 22% * rounded

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Practice Set P2-42 Requirement 1 Date Accounts and Explanation Nov. 1 Cash Truck Habib, Capital

Posting Ref.

Debit Credit 35,000 7,000 42,000

2 Prepaid Rent Cash

2,000

3 Prepaid Insurance Cash

1,800

2,000

1,800

4 Cleaning Supplies Accounts Payable

220

5 Equipment Accounts Payable

2,000

7 Equipment Cash

1,200

9 Accounts Receivable Service Revenue

3,800

220

2,000

1,200

3,800

10 Cash Accounts Receivable

300

15 Salaries Expense Cash

350

300

350

16 Cash Unearned Revenue 17 Cash Service Revenue 18 Utilities Expense Accounts Payable 20 Cash Notes Payable

12,000 12,000 1,000 1,000 250 250 96,000 96,000

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P2-42, cont.

Nov. 21 Cash Accounts Receivable

900 900

25 Accounts Payable Cash

1,000 1,000

29 Advertising Expense Cash

500

30 Habib, Withdrawals Cash

200

Requirements 2 and 3 Cash Nov. 1 35,000 2,000 Nov. 10 300 1,800 Nov. 16 12,000 1,200 Nov. 17 1,000 350 Nov. 20 96,000 1,000 Nov. 21 900 500 200 Balance 138,150

500

200

Nov. 2 Nov. 3 Nov. 7 Nov. 15 Nov. 25 Nov. 29 Nov. 30

Accounts Receivable 3,800 300 Nov. 10 900 Nov. 21 Balance 2,600 Nov. 9

Nov. 25

Accounts Payable 1,000 220 Nov. 4 2,000 Nov. 5 250 Nov. 18 1,470 Balance

Unearned Revenue 12,000 Nov. 16 12,000 Balance

Nov. 4 Balance

Cleaning Supplies 220 220

Notes Payable 96,000 96,000

Nov. 20 Balance

Nov. 2 Balance

Prepaid Rent 2,000 2,000

Habib, Capital 42,000 42,000

Nov. 1 Balance

Nov. 3 Balance

Prepaid Insurance 1,800 1,800

Habib, Withdrawals Nov. 30 200 Balance 200

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P2-42, cont. Requirements 2 and 3

Nov. 5 Nov. 7 Balance

Equipment 2,000 1,200 3,200

Nov. 1 Balance

Truck 7,000 7,000

Service Revenue 3,800 Nov. 9 1,000 Nov. 17 4,800 Balance

Nov. 15 Balance

Salaries Expense 350 350

Nov. 29 Balance

Advertising Expense 500 500

Nov. 18 Balance

Utilities Expense 250 250

Requirement 4 CRYSTAL CLEAR CLEANING Trial Balance November 30, 2017 Account Title Cash Accounts Receivable Cleaning Supplies Prepaid Rent Prepaid Insurance Equipment Truck Accounts Payable Unearned Revenue Notes Payable Habib, Capital Habib, Withdrawals Service Revenue Salaries Expense Advertising Expense Utilities Expense Total

Balance Debit $ 138,150 2,600 220 2,000 1,800 3,200 7,000

Credit

$ 1,470 12,000 96,000 42,000 200 4,800 350 500 250 $ 156,270

$ 156,270

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Critical Thinking Decision Case 2-1 Requirements 1 and 2 Cash a. 10,000 300 b. f. 1,200 2,400 d. Bal. 8,500

Accounts Payable 700 c. 700 Bal.

Accounts Receivable e. 8,800 1,200 f. Bal. 7,600

McChesney, Capital 10,000 a. 10,000 Bal.

Office Supplies b. 300 Bal. 300

Service Revenue 8,800 e. 8,800 Bal. Salaries Expense d. 1,400 Bal. 1,400 Rent Expense d. 1,000 Bal. 1,000 Advertising Expense c. 700 Bal. 700

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Decision Case 2-1, cont. Requirement 3 A-PLUS TRAVEL PLANNERS Trial Balance June 30, 2016 Account Title Cash Accounts Receivable Office Supplies Accounts Payable McChesney, Capital Service Revenue Salaries Expense Rent Expense Advertising Expense Total

Balance Debit $ 8,500 7,600 300

Credit

$

1,400 1,000 700 $ 19,500

700 10,000 8,800

$ 19,500

Requirement 4 Revenues: Service Revenue Expenses: Salaries Expense Rent Expense Advertising Expense Total Expenses Net Income

$ 8,800 $ 1,400 1,000 700 3,100 $ 5,700

McChesney should discontinue the business because net income falls below the target amount. Ethical Issue 2-1 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.

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Ethical Issue 2-1, cont. Some students may point out that the agreement was for times when donations were 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 “unwise” (poor business management), or (b) if they believe he is exceeding the terms of the agreement.

Fraud Case 2-1 Requirement 1 By changing an expense to an asset, the total expenses will decrease and net income will increase. Requirement 2 The CEO gained by earning a bonus, and the accounting manager may have gained by getting favorable treatment from the CEO. The shareholders of the company lost, because the company paid out the bonus under fraudulent conditions. Financial Statement Case 2-1 Requirement 1 Debt ratio = Total liabilities / Total assets = $7,034.4 (in millions) / $11,516.7 (in millions) = 0.611* = 61.1% * rounded Requirement 2 Starbucks debt ratio is significantly higher than Green Mountain (30.0%). Communication Activity 2-1 Debits are on the left, credits are on the right. Normal balance for assets, expenses, and owner’s withdrawals is a debit. For liability, owner’s capital, and revenue accounts, the normal balance is a credit.

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Solutions Manual for Horngrens Accounting The Financial Chapters 11th Edition Miller-Nobles  

Horngrens Accounting The Financial Chapters 11th Edition Miller-Nobles Solutions Manual 2016 (9780133866889) (0133866882). Instant solutions...

Solutions Manual for Horngrens Accounting The Financial Chapters 11th Edition Miller-Nobles  

Horngrens Accounting The Financial Chapters 11th Edition Miller-Nobles Solutions Manual 2016 (9780133866889) (0133866882). Instant solutions...