SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Financial information is used to evaluate performance and make decisions about a business or a nonprofit organization. 2. The manager makes financial decisions based upon the financial information provided by the accountant. 3. Every business needs an efficient accounting system which accumulates financial data, classifies and summarizes the information. Without an accounting system, suppliers, lenders, investors, and governmental tax authorities would not be able to accurately make decisions based on the financial information of the company. 4. Analyze financial statements and review accounting procedures for internal controls. 5. Keep your employees, creditors, and investors happy. Yes, financial information is a tool for making business decisions that will yield the above results. 6. Inaccurate accounting records and poor business decisions. 7. These standards are important to management because they enhancecomparability of reporting practices. 8. Yes. The firm’s financial records need to be separate from the owner’s personal financial records in order to evaluate and measure the performance of the business. Ethical Dilemma: Yes. Ethics and accounting are intertwined. Financial Statement Analysis: Analyze Online: 1. Economic entity because it is a business for profit. 2. Clothing, accessories, outerwear and footwear. 3. Investors, suppliers, and banks. To assist the users when making financial decisions. 4. 15 to 25 year-olds. Teamwork: Balance Sheet, Income Statement and Cash Flow Statement should be required. Anticipated cost of expansion and future income projections may also be requeted. Banks might also require a list of your customers and vendors. There is no requirement to indicate to the bank problems you are having with certain customers and vendors. Internet Connection: As of June 2009, 168 statements have been issued. The statements are listed in reverse chronological order.
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Chapter 1 3
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. TRUE 3. TRUE 4. FALSE 5. FALSE 6. FALSE 7. TRUE 8. TRUE 9. FALSE 10. TRUE 11. FALSE 12. FALSE 13. FALSE Part B Completion 1. IRS 2. stockholders or shareholders 3. shares of stock 4. partnerships 5. social entity 6. recording, classifying 7. financial statements 8. language of business 9. international accounting 10. FBI 11. governmental accounting 12. AAA 13. AICPA 14. generally accepted accounting principles 15. SEC
4 Chapter 1
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CHAPTER 2 ANALYZING BUSINESS TRANSACTIONS Chapter Opener: Thinking Critically Answers will vary but students should recognize that happy employees are more productive and present a positive image to the company. Happy employees are also loyal which leads to lower employee turnover, and lower training and recruiting expenses. Happy employees are much less likely to steal from the company, and of course, happy employees mean happy customers who become repeat customers. Fast Facts • Southwest Airlines opened in 1971 with three planes flying between Houston, Dallas, and San Antonio. Southwest Airlines currently flies almost 100 million passengers a year to 63 cities all across the country. • For the fiscal year 2009, the company’s net income was $99 million while its total operating revenue was $10.4 billion. • In 2009 Southwest served 63.2 million cans of soda, juices, and water; 14.3 million alcoholic beverages; 14 million bags of pretzels; 90 million bags of peanuts; 17.7 million Select-A-Snacks; and 33.5 million other snacks. Managerial Implications: Thinking Critically Answers will vary. Students should mention total assets and the type of assets, the liabilities the business would be responsible for, and whether the business is making a profit. Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Assets = Liabilities + Owner’s Equity 2. Outflow of money/assets for costs used to produce revenue 3. Inflow of money/assets resulting from sales or use of property 4. a. assets increase, owner’s equity increase b. one asset increase and another decrease; no change in total assets c. assets decrease, liabilities decrease d. assets increase, owner’s equity increase e. assets decrease, owner’s equity decrease f. assets increase, liabilities increase 5. Revenue and expenses; net income or loss 6. Subtract total expenses from revenue 7. Firm name, title of statement, date of statement or the period of time covered 8. Balance sheet shows position at particular date; increase of operations for a period of time 9. Beginning-of-period capital balance, additional investments, net income/loss for period, less withdrawal ending capital balance
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Chapter 2 5
Discussion Questions (continued) 10. Increases owner’s equity 11. Assets: property owned. Liabilities: debts. Owners’ equity: owner’s financial interest. 12. Assets, liabilities, and owner’s equity. EXERCISE 2.1 Assets: Liabilities: Owners’ Equity
$122,900 $24,975 $97,925
EXERCISE 2.2 1. 2. 3. 4. 5.
$21,740 $18,520 $5,425 $35,975 $8,625
EXERCISE 2.3 Transaction 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Assets I I I/D I/D I D I I/D D D
=
Liabilities
+
Owners’ Equity I
I = Increase D = Decrease
I
I D I D D
EXERCISE 2.4 Assets 1. Cash $12,500 2. Dental Supplies 3,150
=
3. Dental Equipment 25,550 4. Office Furniture 7,000 5. Total $48,200
= = =
6 Chapter 2
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=
Liabilities Accounts Payable
+ $21,680
$21,680
Owner’s Equity
+ Donna Wells, Capital $26,520 + + + $26,520
EXERCISE 2.5 Assets
Cash 1.
=
+
Accounts Receivable
+
Liabilities
+
Equipment
Accounts = Payable
+
+$50,000 +$17,000 +$2,100
4.
-$3,600
+$17,000
+$3,600 +$4,550
-$3,950
7.
+$2,200
8. Totals
-$9,000 $37,750
Expenses
+$2,100
5. 6.
-
+$50,000
2. 3.
Owner’s Equity Amos Roberts Capital + Revenue
+$4,550 +$3,950
-$2,200 +
$2,350
+
$20,600
=
-$9,000 $8,000
+
$50,000
+
$6,650
-
$3,950
EXERCISE 2.6 Net income of $20,000 Revenue Repair Fees …………………………………… $45,150 Expenses Advertising Expense ………… $5,300 Salaries Expense ……………… 18,100 Telephone Expense ………… 650 Utilities Expense …………… 1,100 Total Expenses ……………………………… $25,150 Net Income …………………………………… $20,000 EXERCISE 2.7 1. 2. 3. 4. 5. 6. 7.
Services were performed for cash. Equipment was purchased for cash. A payment was made on the amount owed to a creditor. An expense was paid in cash. Cash was received from charge customer. Services were performed on credit. An expense was paid in cash.
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Chapter 2 7
EXERCISE 2.8 Parker Investment Services Income Statement Month Ended September 30, 2013 Revenue Fees Income
72 8 0 0 00
Expenses Advertising Expense Salaries Expense Telephone Expense Total Expenses
5 5 0 0 00 15 0 0 0 00 7 0 0 00 21 2 0 0 00 51 6 0 0 00
Net Income
EXERCISE 2.9 Net loss of $950 Revenue $4,800 Service Revenue ………………………………………….. Expenses Advertising Expense…………… $2,600 700 Telephone Expense……………… 2,100 Salaries Expense ………………… 350 Cleaning Expense ……………… $5,750 Total Expense ………………………………………….. ($950) Net Loss ……………………………………………….. EXERCISE 2.10 Parker Investment Services Statement of Owner’s Equity Month Ended September 30, 2013 Alexander Parker, Capital, September 1, 2013 Net Income for September Less Withdrawals for September Increase in Capital Alexander Parker, Capital, September 30, 2013
8 Chapter 2
25 7 0 0 00 51 6 0 0 00 8 0 0 0 00 43 6 0 0 00 69 3 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 2.10 (continued) Parker Investment Services Balance Sheet Month Ended September 30, 2013 Assets Cash Accounts Receivable Office Supplies Office Equipment Total Assets
Liabilities 32 1 0 0 00 Accounts Payable 3 0 0 0 00 2 4 0 0 00 Owner's Equity 36 5 0 0 00 Alexander Parker, Capital 74 0 0 0 00 Total Liabilities and Owner's Equity
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4 7 0 0 00
69 3 0 0 00 74 0 0 0 00
Chapter 2 9
-$3,000 +$2,500 -$5,460 -$8,000 $80,690
-$10,800 +$25,000 +$7,200
+
$1,800 +
-$2,500
+$4,300
$5,460
+ $5,460
Assets Accounts + Receivable + Supplies
+
New Balances
New Balances
Beginning Balances
3.
2.
1.
Cash
58,400 +10,200
60,000 -1,600
$60,000
PROBLEM 2.2A
+
+
+
22,180 -10,200
22,180
$15,600 +6,580
+
+
+
36,400
34,800 +1,600
$34,800
Auto
+ $22,500
+ $22,500
+ $22,500
Assets + Receivable + Furniture +
$1,600 +
=
=
=
10,200
10,200
$10,200
+
+
+
= Liabilities + = Payable +
$31,150 =
90,500
90,500
$90,500
Capital
-$8,000 $117,500
= Liabilities + Owner's Equity Accounts Owner’s Capital + Equipment = Payable + +$92,000 +$18,750 +$12,400 +$12,400 -$10,800 +$25,000 +$7,200 +$4,300 -$3,000
Analyze: The ending balance in the Cash account is $80,690.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Totals
Cash +$92,000 -$18,750
PROBLEM 2.1A
+
+
+
62,180
62,180
$55,600 +6,580
-
-
-
Owner’s Equity + Revenue -
23,400
23,400
$23,400
Expenses
10.
9.
8.
7.
6.
5.
4.
$62,850
62,850
65,100 -2,250
55,600 +9,500
56,620 -1020
65,320 -8,700
67,820 -2,500
68,600 -780
Cash
+
+ +
+
+
+
+
+
+
$23,480
11,980 +11,500
11,980
11,980
11,980
11,980
11,980
11,980
Analyze: Total assets equal $145,230.
New Balances
New Balances
New Balances
New Balances
New Balances
New Balances
New Balances
New Balances
Assets + Accounts
PROBLEM 2.2A (continued)
+
+
+
+
+
+
+
+
+
$36,400
36,400
36,400
36,400
36,400
36,400
36,400
36,400
Office
Auto
+ $22,500
+ $22,500
+ $22,500
+ $22,500
+ $22,500
+ $22,500
+ $22,500
+ $22,500
+
=
=
=
=
=
=
=
=
$7,700
7,700
7,700
7,700
7,700
7,700
10,200 -2,500
10,200
+
+
+
+
+
+
+
+
= Liabilities + = Payable +
$90,500
90,500
90,500
90,500
90,500
90,500
90,500
90,500
Capital
+
+
+
+
+
+
+
+
$83,180
71,680 +11,500
71,680
62,180 +9,500
62,180
62,180
62,180
62,180
-
-
-
-
-
-
-
-
Owner’s Equity + Revenue -
$36,150
36,150
33,900 +2,250
33,900
32,880 +1020
24,180 +8,700
24,180
23,400 +780
Expenses
PROBLEM 2.3A Valdez Equipment Repair Balance Sheet February 28, 2013 Assets Cash Supplies Accounts Receivable Equipment Total Assets
Liabilities 33 3 0 0 00 Accounts Payable 23 0 0 0 00 5 3 8 0 00 12 2 0 0 00 Owner's Equity 77 0 0 0 00 Francisco Valdez, Capital 104 8 8 0 00 127 8 8 0 00 Total Liabilities and Owner's Equity 127 8 8 0 00
Analyze: Owner's Equity is $104,880 at February 28, 2013. PROBLEM 2.4A West Cleaning Service Income Statement Month Ended May 31, 2013 Revenue Fees Income Expenses Utilities Expense Salaries Expense Telephone Expense Total Expenses Net Loss
7 2 8 0 00 8 8 0 00 8 4 0 0 00 3 0 4 00 9 5 8 4 00 (2 3 0 4 00)
West Cleaning Service Statement of Owner's Equity Month Ended May 31, 2013 Carol West, Capital, May 1, 2013 Net Loss for May Less Withdrawal for May Decrease in Capital Carol West, Capital, May 31, 2013
12 Chapter 2
47 6 0 0 00 (2 3 0 4 00) 2 0 0 0 00 (4 3 0 4 00) 43 2 9 6 00
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PROBLEM 2.4A (continued) West Cleaning Service Balance Sheet May 31, 2013 Assets Cash Accounts Receivable Supplies Equipment Total Assets
5 6 9 6 00 4 4 0 0 00 4 8 0 0 00 32 8 0 0 00 47 6 9 6 00
Liabilities Accounts Payable
4 4 0 0 00
Owner's Equity Carol West, Capital Total Liabilities and Owner's Equity
43 2 9 6 00 47 6 9 6 00
Analyze: The amount of $43,296 (Carol West, Capital) was transferred to the balance sheet.
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Chapter 2 13
-$2,600 +$2,500 -$3,150 -$5,000 $18,950
-$3,000 +$6,000 +$4,200
+
$1,150
-$2,500
+$3,650
+
$3,150
+ $3,150
Assets Accounts + Receivable + Supplies
+
New Balances
New Balances
Beginning Balances
3.
2.
1.
Cash
17,560 +5,000
19,000 -1,440
$19,000
PROBLEM 2.2B
+
+
+
10,000
10,000
$6,000 +4,000
+
+
+
Assets Accounts + Receivable +
6,400
6,400
$6,400
Supplies
+
+
+
+
12,000
12,000
$12,000
Office Furniture
$22,000
$3,000
+
=
=
=
5,000
5,000
$5,000
+
+
+
= Liabilities + Accounts = Payable +
=
24,900
24,900
$24,900
R. Johnson Capital
-$5,000 $42,250
= Liabilities + Owner's Equity Accounts Owner’s Capital + Equipment = Payable + +$36,000 +$16,000 +$6,000 +$6,000 -$3,000 +$6,000 +$4,200 +$3,650 -$2,600
Analyze: Transaction 3 increased the Company's debt by $6,000.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Totals
Cash +$36,000 -$16,000
PROBLEM 2.1B
+
+
+
+
30,000 +5,000
30,000
$26,000 +4,000
Revenue
Owner’s Equity
-
-
-
-
13,940
12,500 +1,440
$12,500
Expenses
PROBLEM 2.3B Taylor's Tax Service Balance Sheet December 1, 2013 Assets
Liabilities
Cash
24 0 0 0 00
Furniture
8 0 0 0 00
Equipment
9 6 0 0 00 Owner's Equity David Taylor, Capital
41 6 0 0 00
41 6 0 0 00 Total Liabilities and Owner's Equity
41 6 0 0 00
Total Assets
Analyze: The amount reported on the balance sheet for owner’s equity would be $33,600. PROBLEM 2.4B Linda Carter, Attorney and Counselor of Law Income Statement Month Ended August 31, 2013 Revenue Fees Income
10 8 0 0 00
Expenses Utilities Expense Salaries Expense Telephone Expense
6 0 0 00 5 4 0 0 00 6 0 0 00
Total Expenses
6 6 0 0 00
Net Income
4 2 0 0 00
Linda Carter, Attorney and Counselor of Law Statement of Owner's Equity Month Ended August 31, 2013 Linda Carter, Capital, Aug. 1, 2013 Net Income for August Less Withdrawals for August
23 2 0 0 00 4 2 0 0 00 1 2 0 0 00
Increase in Capital
3 0 0 0 00
Linda Carter, Capital, Aug. 31, 2013
26 2 0 0 00
16 Chapter 2
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PROBLEM 2.4B (continued) Linda Carter, Attorney and Counselor at Law Balance Sheet August 31, 2013 Assets Cash Accounts Receivable Supplies Equipment Total Assets
Liabilities 4 8 0 0 00 Accounts Payable 6 6 0 0 00 5 4 0 0 00 Owner's Equity 10 0 0 0 00 Linda Carter, Capital 26 8 0 0 00 Total Liabilities and Owner's Equity
6 0 0 00
26 2 0 0 00 26 8 0 0 00
Analyze: Net income of $4,200 was transferred from the income statement.
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Chapter 2 17
CRITICAL THINKING PROBLEM 2.1 Body Builders Fitness Center Income Statement Month Ended November 30, 2013 Revenue Fees Earned Expenses Rent Expense Cleaning Expense Advertising Expense
9 7 6 0 00 8 0 0 0 00 2 1 0 0 00 8 0 0 00 Total Expenses
Net Loss
10 9 0 0 00 (1 1 4 0 00)
Some students may include the warm-up suits as a business expense. If the suits are a type of uniform, their inclusion is appropriate; if they are to be worn at home and at work, their cost is not a business expense. The parking ticket is a personal expense. The cleaning of the studio and the printing of the flyers are business expenses. Payment of expenses with the owner’s personal credit card would be considered an additional investment by the owner. It is not unusual for new businesses to operate at a loss. James should project his income and expenses for the next several months to determine how much new business he will need to earn an income. Students’ suggestions for improving the accounting system might include opening a business checking account, not using a personal credit card for business expenses, setting up a filing system for business records, and purchasing a computer to maintain financial records.
18 Chapter 2
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Accounts Payable $12,800
= Liabilities + D. Garcia + Capital + ? D. Garcia Drawing $5,200 + +
Revenue $23,800
Owner’s Equity
Advertising Expense Maintenance Expense Salaries Expense Total Expenses
Dolly Garcia, Capital, April 1, 2013 =
$55,800 -
$3,750 4,400 9,000 $17,150
$55,800 = $14,250 = $41,550 = $41,550
$14,250 $14,250 X
+ -
X $14,250 +
X
Solving for X: $55,800 (Total Assets) = $12,800 (Accounts Payable) - $5,200 (Drawing) + $23,800 (Revenue) - $17,150 (Expenses) + X
Let Dolly Garcia, Capital = X.
Cash $26,000
Assets Accounts + Receivable + Machinery = + $10,800 + $19,000 =
Determine the balance for Dolly Garcia, April 30, 2013.
CRITICAL THINKING PROBLEM 2.2
-
Expenses $17,150
CRITICAL THINKING PROBLEM 2.2 (continued) Dolly Garcia, Certified Public Accountant Income Statement Month Ended April 30, 2013 Revenue Fees Earned
23 8 0 0 00
Expenses Advertising Expense Maintenance Expense Salaries Expense
3 7 5 0 00 4 4 0 0 00 9 0 0 0 00
Total Expenses
17 1 5 0 00
Net Income
6 6 5 0 00
Dolly Garcia, Certified Public Accountant Statement of Owner's Equity Month Ended April 30, 2013 Dolly Garcia, Capital, April 1, 2013 Net Income for April Less Withdrawals for April
41 5 5 0 00 6 6 5 0 00 5 2 0 0 00
Increase in Capital
1 4 5 0 00
Dolly Garcia, Capital, April 30, 2013
43 0 0 0 00
Dolly Garcia, Certified Public Accountant Balance Sheet April 30, 2013 Assets Cash Accounts Receivable Equipment
Liabilities 26 0 0 0 00 Accounts Payable 10 8 0 0 00 Owner's Equity 19 0 0 0 00 Dolly Garcia, Capital
Total Assets
55 8 0 0 00 Total Liabilities and Owner's Equity
12 8 0 0 00 43 0 0 0 00 55 8 0 0 00
Analyze: The increase in owner's equity was $1,450.
20 Chapter 2
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SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Organized financial information can be used to evaluate operating efficiency and to make decisions about current and future activities. 2. The firm’s obligations must be met as they become due. 3. No. Early development is expensive, risky, and time consuming. Profits may not be achieved for a year or more. 4. Not necessarily. Reinvestments in assets or use of cash to pay debts affect cash. In addition, sales or revenue may have been "on account." Ethical Dilemma: Sarineh should not record the sale until she receives the purchase order from the customer. If she enters the sale and for some reason the customer doesn’t make the order, Joseph would need to pay the bonus back. Sarineh’s job would be in jeopardy. Financial Statement Analysis: 1. Southwest Airlines Co., Consolidated Statement of Income, Years Ended December 31, 2. Passenger, Freight, Other. 3. Statement of Owner’s Equity (Consolidated Statement of Stockholders’ Equity). 4. Total operating revenue was $3,712,000,000 for the quarter ended September 30, 2010. 5. See current topic on website. Internet Connection: Macy’s, Bloomingdales, and now May is included in the Federated Corporation. Shopping online is on every home page. To record an online sale it must debit a credit card receivable and credit sales. A general job announcement and requirements are given at the site. Team Work: Accounts Payable Clerk would use Purchases (Increase), A/P (increase and decrease) and Cash (decrease). Accounts Receivable Clerk would use Sales (increase), A/R (increase and decrease) and Cash (increase). Full charge bookkeeper would use accounts Cash (increase and decrease), Bank Charges (increase) and Miscellaneous account (increase), Interest Income (increase), Interest Expense (increase). Accurate numbers are developed when it is determined that all transactions have been entered and that total assets equal total liabilities plus owner’s equity.
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Chapter 2 21
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. FALSE 3. TRUE 4. TRUE 5. TRUE 6. 7. 8. 9. 10.
FALSE TRUE FALSE TRUE FALSE
Part B Matching 1. a 2. g 3. c 4. e 5. b 6. 7. 8.
f h d
Part C Completion 1. analyze 2. accounts payable or liability 3. equal 4. profit 5. credit on account 6. reduced or decreased 7. assets 8. asset or property
22 Chapter 2
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CHAPTER 3 ANALYZING BUSINESS TRANSACTIONS USING T ACCOUNTS Chapter Opener: Thinking Critically Answers will vary, but students should recognize that a sale would have been recorded as revenue from goods or services sold on a T account. The sale would be entered on the left (increase) side of an asset account. Fast Facts • One of the world’s most advanced global backbone networks, carrying 18.7 petabytes of data traffic on an average business day to nearly every continent and country, with up to 99.999 percent reliability. •
The nation’s fastest mobile broadband network serving 85.1 million customers offering voice coverage in more than 220 countries, data roaming in more than 195 and 3G in more than 125 countries.
• •
The nation’s largest directory publisher, delivering print directories to 173 million customers. The leading U.S. provider of local and long distance voice services.
Managerial Implications: Thinking Critically Answers will vary but could include the following: • Cash is overstated and checks bounce. • The credit rating of the business is affected. • The business loses customers because payments on account are not recorded properly. Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. a. debit b. credit c. credit d. credit e. debit 2. Written records for all assets, liabilities, and owner’s equity of a business. 3. Adding the figures on both sides of the account and subtracting the smaller total from the larger total. 4. To provide a classified list of the names and numbers of a firm’s accounts. 5. Order in which they appear on financial statements. Balance sheet accounts listed first, followed by income statement accounts. 6. Additional accounts can be added when needed. 7. Permanent account balances are carried forward to start a new accounting period. Temporary account balances are transferred to a summary account at the end of the period and are zero at the start of a new accounting period. 8. Payment of rent in advance affords the right to occupy the facility the number of months covered by
the payment. 9. Each transaction produces at least two effects. 10. Debit: entry on the left side of an account. Credit: entry on the right side of an account. 11. a, b, h, i, k: temporary
c, d, e, f, g, j, l: permanent
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Chapter 3 23
EXERCISE 3.1 Cash 18,000
Equipment 45,000
Accounts Payable
Wade Williams, Capital 39,800
23,200
EXERCISE 3.2
(1) (3)
Cash 80,000 (2) 8,000 (4) (5)
Fees Income (3)
(5)
Supplies 2,000
20,000 2,800 2,000
8,000
(2)
Equipment 20,000
(4)
Advertising Expense 2,800
Donna Wells, Capital (1) 80,000
EXERCISE 3.3 1. Credit 2. Debit 3. Credit 4. Credit
5. Debit 6. Debit 7. Debit 8. Debit
EXERCISE 3.4 1. Credit, Credit, Debit 2. Debit, Debit, Credit 3. Credit, Credit, Debit 4. Debit, Debit, Credit 5. Credit, Credit, Debit
24 Chapter 3
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EXERCISE 3.5 Cash, $151,400 Dr. Accounts Receivable, $6,000 Dr. Supplies, $36,000 Dr. Equipment, $70,000 Dr. Accounts Payable, $70,000 Cr.
David Thomas, Capital $180,000 Cr. Fees Income, $28,000 Cr. Telephone Expense, $600 Dr. Salaries Expense, $10,000 Dr. David Thomas, Drawing, $4,000 Dr.
EXERCISE 3.6 Apartment Locators Trial Balance December 31, 2013 ACCOUNT NAME Cash Accounts Receivable Supplies Equipment Accounts Payable David Thomas, Capital David Thomas, Drawing Fees Income Salaries Expense Telephone Expense Totals
151 6 36 70
DEBIT 4 0 0 00 0 0 0 00 0 0 0 00 0 0 0 00
CREDIT
70 0 0 0 00 180 0 0 0 00 4 0 0 0 00 28 0 0 0 00 10 0 0 0 00 6 0 0 00 278 0 0 0 00
278 0 0 0 00
Apartment Locators Income Statement Month Ended December 31, 2013 Revenue Fees Income Expenses Salaries Expense Telephone Expense
28 0 0 0 00 10 0 0 0 00 6 0 0 00 Total Expenses
Net Income
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10 6 0 0 00 17 4 0 0 00
Chapter 3 25
EXERCISE 3.7 Apartment Locators Statement of Owner's Equity Month Ended December 31, 2013 David Thomas, Capital, Dec. 1, 2013 Net Income for December Less Withdrawals for December Increase in Capital David Thomas, Capital, Dec. 31, 2013
180 0 0 0 00 17 4 0 0 00 4 0 0 0 00 13 4 0 0 00 193 4 0 0 00
Apartment Locators Balance Sheet December 31, 2013 Assets Cash Accounts Receivable Supplies Equipment Total Assets
26 Chapter 3
Liabilities 151 4 0 0 00 Accounts Payable 6 0 0 0 00 36 0 0 0 00 Owner's Equity 70 0 0 0 00 David Thomas, Capital 263 4 0 0 00 Total Liabilities & Owner's Equity
70 0 0 0 00
193 4 0 0 00 263 4 0 0 00
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EXERCISE 3.8
Account Number 100-199 101 111 121 131 141 200-299 202
Zant Moving Company Chart of Accounts Account Name Account Number ASSETS 300-399 Cash 301 Accounts Receivable 302 Office Supplies 400-499 Prepaid Rent 401 Office Equipment 500-599 LIABILITIES 511 Accounts Payable 514 517
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Account Name OWNER'S EQUITY Sue Zant, Capital Sue Zant, Drawing REVENUE Fees Income EXPENSES Salaries Expense Utilities Expense Telephone Expense
Chapter 3 27
PROBLEM 3.1A 1.
Cash + 16,000
2.
Equipment + 9,000
James Walker, Capital + 16,000
Cash - 9,000
3.
Cash + 1,200
Office Furniture - 1,200
4.
Office Equipment + 2,700
Accounts Payable + 2,700
5.
Office Equipment + 10,200
Accounts Payable + 10,200
6.
Carol Rose, Drawing + 5,000
7.
Delivery Truck + 32,000
8.
Accounts Payable - 2,500
Cash - 5,000
Accounts Payable + 32,000
Cash - 2,500
Analyze: Transactions 1 and 6 directly affect the owner's equity account.
28 Chapter 3
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PROBLEM 3.2A 1.
Cash + 60,000
2.
Office Furniture + 16,000
Greta Davis, Capital + 60,000
Cash - 16,000
3.
Office Equipment + 950
4.
Automobile + 16,000
Cash
5.
Cash + 10,000
Greta Davis, Capital + 10,000
6.
Office Equipment + 3,000
Accounts Payable + 3,000
7.
Accounts Payable - 950
Cash
Greta Davis, Drawing + 4,000
Cash
8.
Accounts Payable + 950
- 16,000
- 950
- 4,000
Analyze: All transactions affected asset accounts.
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Chapter 3 29
PROBLEM 3.3A 1.
Office Supplies + 2,000
2.
Cash + 21,000
3.
Rent Expense + 4,000
4.
Accounts Receivable + 3,000
Cash - 2,000
Fees Income + 21,000
Cash - 4,000
Fees Income + 3,000
5.
Cash + 1,000
6.
Salaries Expense + 3,600
Cash
Telephone Expense + 480
Cash
7.
Accounts Receivable - 1,000
- 3,600
- 480
8.
Accounts Receivable + 2,000
Fees Income + 2,000
9.
Office Supplies + 1,000
Accounts Payable + 1,000
10.
Salaries Expense + 3,600
30 Chapter 3
Cash - 3,600
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PROBLEM 3.3A (continued) 11.
Cash + 2,000
Accounts Receivable - 2,000
12.
Cash + 8,100
Fees Income + 8,100
Analyze: $13,680 in cash was spent in June.
PROBLEM 3.4A
Bal.
Cash + 150,000 (b) + 7,200 (c) + 6,500 (e) + 13,500 (g) + 7,000 (i) (k) (l) (p) (q) (r) 111,810 (s)
(g) (k) Bal.
Office Equipment + 36,000 + 30,000 66,000
(a) (d) (h) (m) (o)
(p)
Accounts Payable - 2,400 (g) (j) (k) Bal.
- 5,000 - 15,720 - 1,150 - 12,000 - 3,000 - 15,000 - 8,400 - 2,400 - 600 - 1,120 - 8,000
+ 24,000 + 4,800 + 15,000 41,400
(f) (n) Bal.
Accounts Receivable + 13,000 (h) + 15,000 (o) 14,500
(c) (j) Bal.
Office Furniture + 15,720 + 4,800 20,520
John Wilson, Capital (a)
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- 6,500 - 7,000
+ 150,000
Chapter 3 31
PROBLEM 3.4A (continued)
(s)
John Wilson, Drawing + 8,000
(r)
Utilities Expense + 1,120
Fees Income (d) + 7,200 (f) + 13,000 (m) + 13,500 (n) + 15,000 Bal. 48,700
(l)
Salaries Expense + 8,400
(b)
Rent Expense + 5,000
Telephone Expense (e) + 1,150
Miscellaneous Expense (i) + 3,000 (q) + 600
Analyze: The company owes $41,400 (accounts payable).
32 Chapter 3
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 3.5A John Wilson, Landscape Consultant Trial Balance June 30, 2013 ACCOUNT NAME Cash Accounts Receivable Office Equipment Office Furniture Accounts Payable John Wilson, Capital John Wilson, Drawing Fees Income Copy Expense Office Cleaning Expense Rent Expense Salaries Expense Telephone Expense Utilities Expense Total
DEBIT 111 8 1 0 00 14 5 0 0 00 66 0 0 0 00 20 5 2 0 00
CREDIT
41 4 0 0 00 150 0 0 0 00 8 0 0 0 00 48 7 0 0 00 6 0 0 00 3 0 0 0 00 5 0 0 0 00 8 4 0 0 00 1 1 5 0 00 1 1 2 0 00 240 1 0 0 00
240 1 0 0 00
John Wilson, Landscape Consultant Income Statement Month Ended June 30, 2013 Revenue Fees Income Expenses Copy Expense Office Cleaning Expense Rent Expense Salaries Expense Telephone Expense Utilities Expense Total Expenses Net Income
48 7 0 0 00 6 0 0 00 3 0 0 0 00 5 0 0 0 00 8 4 0 0 00 1 1 5 0 00 1 1 2 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
19 2 7 0 00 29 4 3 0 00
Chapter 3 33
PROBLEM 3.5A (Continued) John Wilson, Landscape Consultant Statement of Owner's Equity Month Ended June 30, 2013 John WIlson, Capital, June 1, 2013 Net Income for June Less Withdrawals for June Increase in Capital John Wilson, Capital, June 30, 2013
150 0 0 0 00 29 4 3 0 00 8 0 0 0 00 21 4 3 0 00 171 4 3 0 00
John Wilson, Landscape Consultant Balance Sheet June 30, 2013 Assets Cash Accounts Receivable Office Equipment Office Furniture Total Assets
111 8 1 0 00 14 5 0 0 00 66 0 0 0 00 20 5 2 0 00 212 8 3 0 00
Liabilities Accounts Payable Owner's Equity John Wilson, Capital Total Liabilities & Owner's Equity
41 4 0 0 00
171 4 3 0 00 212 8 3 0 00
Analyze: The net increase in owner's equity during the month of June was $21,430.
34 Chapter 3
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 3.1B Equipment + 16,000
Cash
2. Angie Carvajal, Drawing + 4,000
Cash
Cash + 3,000
Equipment
1.
3.
4.
5.
- 16,000
- 4,000
- 3,000
Delivery Truck + 12,000
Cash
Accounts Payable - 3,600
Cash
6.
Office Equipment + 5,000
7.
Cash + 20,000
8.
Accounts Payable - 1,500
- 12,000
- 3,600
Accounts Payable + 5,000
Chuck Vinson, Capital + 20,000
Cash - 1,500
Analyze: The transactions that affect the liability accounts are transactions 5, 6 and 8.
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Chapter 3 35
PROBLEM 3.2B 1.
Cash + 20,000
2.
Shop Equipment + 1,800
3.
Store Equipment + 1,200
4.
Truck + 10,000
Joseph Tejan, Capital + 20,000
Cash - 1,800
Accounts Payable + 1,200
Cash - 10,000
5.
Shop Equipment + 3,000
Joseph Tejan, Capital + 3,000
6.
Store Equipment + 2,500
Accounts Payable + 2,500
7.
Accounts Payable - 400
Cash
Joseph Tejan, Drawing + 1,600
Cash
8.
- 400
- 1,600
Analyze: The transactions that affect the cash account are transactions 1, 2, 4, 7, and 8.
PROBLEM 3.3B 1.
Rent Expense + 3,800
36 Chapter 3
Cash - 3,800
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PROBLEM 3.3B (continued) 2.
Cash + 8,000
3.
Salaries Expense + 5,600
4.
Accounts Receivable + 10,800
5.
Telephone Expense + 1,200
Fees Income + 8,000
Cash - 5,600
Fees Income + 10,800
Cash - 1,200
6.
Cash + 4,000
Accounts Receivable - 4,000
7.
Cash - 190
Telephone Expense - 190
8.
Accounts Receivable + 5,200
Fees Income + 5,200
9.
Utilities Expense + 850
Cash
Gasoline Expense + 1,200
Cash
10.
11.
Cash + 4,200
- 850
- 1,200
Accounts Receivable - 4,200
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Chapter 3 37
PROBLEM 3.3B (continued) 12.
Cash + 8,600
Fees Income + 8,600
Analyze: The total cash collected for Accounts Receivable during the month was $8,200.00.
PROBLEM 3.4B Cash (a) + 120,000 (b) (d) + 8,000 (c) (h) + 4,500 (e) (m) + 4,750 (i) (p) + 3,800 (j) (k) (l) (o) (r) Bal. 61,054 (s)
(k) (q) Bal.
(i)
- 6,400 - 36,000 - 1,600 - 3,600 - 1,300 - 9,800 - 13,700 - 796 - 800 - 6,000
Office Equipment + 19,600 + 5,440 25,040
Accounts Payable - 3,600 (g) + 5,600 (k) + 9,800 (q) + 5,440 Bal. 17,240
38 Chapter 3
(f) (n) Bal.
Accounts Receivable + 9,150 (h) - 4,500 + 5,500 (p) - 3,800 6,350
(g)
Office Furniture + 5,600
(c)
Automobile + 36,000
Kathryn Price, Capital (a) + 120,000
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PROBLEM 3.4B (continued)
(s)
Kathryn Price, Drawing + 6,000
(e) (r) Bal.
Auto Expense + 1,600 + 800 2,400
Fees Income (d) + 8,000 (f) + 9,150 (m) + 4,750 (n) + 5,500 Bal. 27,400
(j)
Utilities Expense + 1,300
(b)
Rent Expense + 6,400
Salaries Expense (l) + 13,700
Telephone Expense (o) + 796
Analyze: Credit customers owe the company $6,350 (Accounts Receivable).
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Chapter 3 39
PROBLEM 3.5B Kathryn Price, Counselor and Attorney at Law Trial Balance April 30, 2013 ACCOUNT NAME Cash Accounts Receivable Automobile Office Equipment Office Furniture Accounts Payable Kathryn Price, Capital Kathryn Price, Drawing Fees Income Auto Expense Rent Expense Salaries Expense Utilities Expense Telephone Expense Total
DEBIT 61 0 5 4 00 6 3 5 0 00 36 0 0 0 00 25 0 4 0 00 5 6 0 0 00
CREDIT
17 2 4 0 00 120 0 0 0 00 6 0 0 0 00 27 4 0 0 00 2 4 0 0 00 6 4 0 0 00 13 7 0 0 00 1 3 0 0 00 7 9 6 00 164 6 4 0 00
164 6 4 0 00
Kathryn Price, Counselor and Attorney at Law Income Statement Month Ended April 30, 2013 Revenue Fees Income Expenses Auto Expense Rent Expense Salaries Expense Utilities Expense Telephone Expense Total Expenses Net Income
40 Chapter 3
27 4 0 0 00 2 4 0 0 00 6 4 0 0 00 13 7 0 0 00 1 3 0 0 00 7 9 6 00 24 5 9 6 00 2 8 0 4 00
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PROBLEM 3.5B (continued) Kathryn Price, Counselor and Attorney at Law Statement of Owner's Equity Month Ended April 30, 2013 Kathryn Price, Capital, April 1, 2013 Net Income for April Less Withdrawals for April Decrease in Capital Kathryn Price, Capital, April 30, 2013
120 0 0 0 00 2 8 0 4 00 6 0 0 0 00 (3 1 9 6 00) 116 8 0 4 00
Kathryn Price, Counselor and Attorney at Law Balance Sheet April 30, 2013 Assets Cash Accounts Receivable Automobile Office Equipment Office Furniture Total Assets
Liabilities 61 0 5 4 00 Accounts Payable 6 3 5 0 00 36 0 0 0 00 Owner's Equity 25 0 4 0 00 5 6 0 0 00 Kathryn Price, Capital 134 0 4 4 00 Total Liabilities & Owner's Equity
17 2 4 0 00
116 8 0 4 00 134 0 4 4 00
Analyze: The net decrease in owner's equity during the month of April was $3,196.
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Chapter 3 41
CRITICAL THINKING PROBLEM 3.1 Cash 3,000 600 500
Bal.
1,000 1,800 200 500 100
Accounts Receivable 1,150
Equipment and Tools 1,000
Ted Coe, Capital
Fees Income
500
Truck 1,800
3,000
Bal.
Salary Expense 500
42 Chapter 3
Gasoline Expense 200
600 1,150 500 2,250
Advertsing Expense 100
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CRITICAL THINKING PROBLEM 3.1 (continued) Elegant Lawn Care Income Statement Three Months Ended August 31, 2013 Revenue Fees Income Expenses Salary Expense Gasoline Expense Advertising Expense Total Expenses Net income
2 2 5 0 00 5 0 0 00 2 0 0 00 1 0 0 00 8 0 0 00 1 4 5 0 00
Elegant Lawn Care Statement of Owner's Equity Three Months Ended August 31, 2013 Ted Coe, Capital, June 1, 2013 Net Income for June-August Ted Coe, Capital, August 31, 2013
3 0 0 0 00 1 4 5 0 00 4 4 5 0 00
Elegant Lawn Care Balance Sheet August 31, 2013 Assets Cash Accounts Receivable Equipment/Tool Truck Total Assets
Liabilities 5 0 0 00 1 1 5 0 00 1 0 0 0 00 1 8 0 0 00 4 4 5 0 00
Owner's Equity Ted Coe, Capital Total Liabilities & Owner's Equity
4 4 5 0 00 4 4 5 0 00
Ted is better off than he would have been had he left his money in the savings account. He earned a profit of $1,450 from his Elegant Lawn Care business, compared to approximately $45.00 in interest his money would have earned over the three summer months (assuming a bank interest rate of 6%; $3,000 × 0.06 × 3/12). Ted needs to look beyond his current checking account balance of $500 and realize that this balance will increase to $1,650 when he collects the $1,150 still owed to him. He also owns a truck and power mowers that he could sell for additional cash.
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Chapter 3 43
CRITICAL THINKING PROBLEM 3.2 Cash + 20,000 (b) + 4,050 (c) + 2,160 (e) + 2,800 (g) + 1,200 (h) (k) (l) (n) (q) Bal. 15,600 (r) (a) (d) (i) (m) (p)
(g)
- 2,000 - 3,600 - 210 - 150 - 550 - 4,000 - 540 - 460 - 2,500 - 600
Office Equipment + 475
Linda Carter, Drawing (q) + 2,500
(n)
Utilities Expense + 460.00
(f) (0) Bal.
(l)
Accounts Receivable + 1,560 (i) - 2,160 + 3,200 (p) - 1,200 1,400
(c) (j) Bal.
Accounts Payable - 540 (g) + 325 (j) + 590 Bal. 375
Fees Income (d) (f) (m) (o) Bal.
+ 4,050 + 1,560 + 2,800 + 3,200 11,610
Salaries Expense (k) + 4,000.00
Office Furniture + 3,600 + 590 4,190
Linda Carter, Capital (a) + 20,000
(b)
Advertising Expense + 2,000
(e)
Telephone Expense + 210.00
Miscellaneous Expense (h) + 550.00 (r) + 600.00 Bal. 1,150.00
44 Chapter 3
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CRITICAL THINKING PROBLEM 3.2 (continued) Linda Carter, Architect Trial Balance January 31, 2013 ACCOUNT NAME Cash Accounts Receivable Office Furniture Office Equipment Accounts Payable Linda Carter, Capital Linda Carter, Drawing Fees Income Advertising Expense Utilities Expense Salaries Expense Telephone Expense Miscellaneous Expense Totals
DEBIT 15 6 0 0 00 1 4 0 0 00 4 1 9 0 00 4 7 5 00
CREDIT
3 7 5 00 20 0 0 0 00 2 5 0 0 00 11 6 1 0 00 2 0 0 0 00 4 6 0 00 4 0 0 0 00 2 1 0 00 1 1 5 0 00 31 9 8 5 00
31 9 8 5 00
Linda Carter, Architect Income Statement Month Ended January 31, 2013 Revenue Fees Income Expenses Advertising Expense Utilities Expense Salaries Expense Telephone Expense Miscellaneous Expense Total Expenses Net Income
11 6 1 0 00 2 0 0 0 00 4 6 0 00 4 0 0 0 00 2 1 0 00 1 1 5 0 00
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7 8 2 0 00 3 7 9 0 00
Chapter 3 45
CRITICAL THINKING PROBLEM 3.2 (continued) Linda Carter, Architect Statement of Owner's Equity Month Ended January 31, 2013 Linda Carter, Capital, January 1, 2013 Net Income for January Less Withdrawals for January Increase in Capital Linda Carter, Capital, January 31, 2013
20 0 0 0 00 3 7 9 0 00 2 5 0 0 00 1 2 9 0 00 21 2 9 0 00
Linda Carter, Architect Balance Sheet January 31, 2013 Assets Cash Accounts Receivable Office Furniture Office Equipment Total Assets
15 6 0 0 00 1 4 0 0 00 4 1 9 0 00 4 7 5 00 21 6 6 5 00
Liabilities Accounts Payable Owner's Equity Linda Carter, Capital Total Liabilities & Owner's Equity
3 7 5 00
21 2 9 0 00 21 6 6 5 00
Analyze: Assets ($21,665) = Liabilities ($375) + Owner's Equity ($21,290)
46 Chapter 3
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Provide summaries of: a. Income Statement—revenues and expenses, b. Balance Sheet—assets, liabilities, and owner’s equity. 2. Review of financial records containing cash available, amounts due, and dates due. 3. Reduce expenses; increase sales volume or raise sales prices. 4. Net income (or net loss) for the period. Ethical Dilemma: Do not open the account New Expenses without approval from the controller. You must identify what expenses will be put into that account. If the account is not monitored, the Accounts Payable clerk might enter personal expenses, which would not be appropriate. Financial Statement Analysis: 1. Financial data, operational information, plans for the future. 2. $2,946,000 billion. 3. $1.9 million of cash, cash equivalents, and short-term investments were on hand at December 31, 2009. 4. Financial results are less favorable. GAAP net income was $386.5 million in fiscal year 2009 compared to $871.8 million in fiscal year 2008. 5. Adobe is targeting revenue of $800 million to $850 million for the first quarter of 2010. Teamwork: All companies would have a cash account and accounts payable. A plumbing service would have accounts receivable whereas a clothing store would also have a credit card receivable. Both grocery store and clothing store would have inventory. All would have wages expense except the real estate would have sales commission. All would have office supplies expense. Depending on whether the company owned the building most would have rent expense. Internet Connection: Honeywell is the most profitable. JC Penny has the most cash available. Honeywell has the most assets.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 3 47
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. FALSE 3. TRUE 4. TRUE 5. TRUE 6. FALSE 7. FALSE 8. FALSE 9. FALSE 10. FALSE 11. TRUE 12. TRUE 13. TRUE 14. TRUE 15. TRUE Part B Matching 1. f 2. b 3. d 4. i 5. c 6. h 7. e 8. g 9. a Part C Completion 1. normal balance 2. trial balance 3. transposition 4. slide 5. footing
48 Chapter 3
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CHAPTER 4 THE GENERAL JOURNAL AND THE GENERAL LEDGER Chapter Opener: Thinking Critically The resolution of the dispute with regards to the taxes paid by the vineyard depended upon the vineyard’s recordkeeping and accounting practices. The Alcohol and Tobacco Tax Trade Board uncovered some reporting errors which resulted in the vineyard having to revise statements and pay fines. Fast Facts • Willamette Valley Vineyards produces some 100,000 cases of wine annually that is distributed throughout the United States, Canada, and the Pacific Rim. • Willamette Valley Vineyards is set to become the first winery in the world to use cork stoppers harvested from responsibly managed forestlands certified by the Rainforest Alliance to Forest Stewardship Council (FSC) standards. • •
The vineyard uses biofuel in company tractors and delivery vehicles and has a biofuel policy which offers up to 50 gallons of biofuel a month, at no cost, to each employee. Willamette Valley (NASDAQ: WVVI) produced revenues of $16,563,712 in 2009 versus $16,048,238 in the prior year, an increase of 3.2%.
Managerial Implications: Thinking Critically Answers will vary but may include the following. • Exposing the assets of the business to fraud and theft. • Increasing the risk of producing inaccurate financial statements. • Difficulty in auditing transactions. • Research customer billing. (Customer says no invoice was received.) Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Assets, liabilities, and owner’s equity first, followed by revenue accounts, then expenses. They are in order of the financial statements. 2. Notations of the page number of the journal from which a figure comes; number of account to which the figure was posted; to provide cross-references. 3. Chain of references; prevents fraud and errors. 4. Before entry posted: cross out incorrect item, write correct data above it. After posted: journalize and post a correcting entry. 5. Steps performed to classify, record, and summarize financial data for a business. 6. To record business transactions in chronological order. 7. Record month, day, debited account/amount, credited account/amount, description. 8. Helps establish audit trail. 9. Entry that includes more than a single debit and credit—two or more debits and/or credits. 10. Groups of accounts. 11. Transfer of data from a journal to a ledger.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 4 49
EXERCISE 4.1
1. 2. 3. 4.
Debit Credit Debit 101 5. 202 401 101 6. 101 517 401 7. 101 111 101 131
Credit 101 401 111
8. 9. 10.
Debit 101 121 511
Credit 301 202 101
EXERCISE 4.2 GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
DATE DESCRIPTION 2013 Sept. 1 Cash Mary Vinzant, Capital Beginning investment of owner
PAGE 1 POST. REF.
DEBIT 50 0 0 0 00
101 301
50 0 0 0 00
4 Equipment Accounts Payable Purchased equipment on credit from Inc., Invoice 9823, payable in 30 days
131 202
5 5 0 0 00
16 Automobile Cash Purchased an automobile, Check 1001
141 101
13 5 0 0 00
20 Supplies Cash Purchased supplies, Check 1002
121 101
4 2 0 00
23 Cash Supplies Returned damaged supplies and received cash refund
101 121
1 2 0 00
30 Accounts Payable Cash Paid Zen, Inc., on account for Invoice 9823, Check 1003
202 101
3 2 0 0 00
50 Chapter 4
CREDIT
5 5 0 0 00
13 5 0 0 00
4 2 0 00
1 2 0 00
3 2 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 4.2 (continued) GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
DATE DESCRIPTION 2013 Sept. 30 Mary Vinzant, Drawing Cash Owner withdrew cash for personal use
PAGE 2 POST. REF.
DEBIT
302 101
2 0 0 0 00
30 Prepaid Rent Expense Cash Paid October rent, Check 1004
511 101
1 2 0 0 00
30 Cash
101 401
2 2 5 0 00
517 101
3 8 5 00
Fees Income Performed services for cash 30 Telephone Expense Cash Paid monthly telephone bill, Check 1005
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CREDIT 1 2 2 0 0 0 00 3 4 5 6 1 2 0 0 00 7 8 9 10 2 2 5 0 00 11 12 13 14 3 8 5 00 15 16 17 18
Chapter 4 51
EXERCISE 4.3 GENERAL LEDGER ACCOUNT
Cash
DATE DESCRIPTION 2013 Sept. 1 16 20 23 30 30 30 30 30
ACCOUNT
DESCRIPTION
J1 J1 J1 J1 J1 J2 J2 J2 J2
DEBIT
CREDIT
50 0 0 0 00 13 5 0 0 00 36 5 0 0 00 4 2 0 00 36 0 8 0 00 1 2 0 00 36 2 0 0 00 3 2 0 0 00 33 0 0 0 00 2 0 0 0 00 31 0 0 0 00 1 2 0 0 00 29 8 0 0 00 2 2 5 0 00 32 0 5 0 00 3 8 5 00 31 6 6 5 00
ACCOUNT NO. 111
POST REF.
DEBIT
CREDIT
52 Chapter 4
BALANCE DEBIT CREDIT
ACCOUNT NO. 121 POST REF. J1 J1
DEBIT
CREDIT
4 2 0 00 1 2 0 00
Equipment
DATE DESCRIPTION 2013 Sept. 4
BALANCE DEBIT CREDIT
50 0 0 0 00
Supplies
DATE DESCRIPTION 2013 Sept. 20 23
ACCOUNT
POST REF.
Accounts Receivable
DATE
ACCOUNT
ACCOUNT NO. 101
BALANCE DEBIT CREDIT 4 2 0 00 3 0 0 00
ACCOUNT NO. 131 POST REF.
DEBIT
J1
5 5 0 0 00
CREDIT
BALANCE DEBIT CREDIT 5 5 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 4.3 (continued) ACCOUNT
Automobile
DATE DESCRIPTION 2013 Sept. 16
ACCOUNT DATE 2013 Sept. 4 30
ACCOUNT DATE 2013 Sept. 1
ACCOUNT
POST REF.
DEBIT
J1
13 5 0 0 00
CREDIT
ACCOUNT NO. 202
POST DESCRIPTION REF. J1 J1
DEBIT
CREDIT
POST DESCRIPTION REF.
BALANCE CREDIT DEBIT
5 5 0 0 00
5 5 0 0 00 2 3 0 0 00
3 2 0 0 00
Mary Vinzant, Capital
ACCOUNT NO. 301 DEBIT
J1
CREDIT
BALANCE DEBIT CREDIT
50 0 0 0 00
Mary Vinzant, Drawing
50 0 0 0 00
ACCOUNT NO. 302
POST REF.
DEBIT
J2
2 0 0 0 00
CREDIT
BALANCE DEBIT CREDIT 2 0 0 0 00
Fees Income
DATE DESCRIPTION 2013 Sept. 30
BALANCE DEBIT CREDIT 13 5 0 0 00
Accounts Payable
DATE DESCRIPTION 2013 Sept. 30
ACCOUNT
ACCOUNT NO. 141
ACCOUNT NO. 401 POST REF. J2
DEBIT
CREDIT 2 2 5 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE DEBIT CREDIT 2 2 5 0 00
Chapter 4 53
EXERCISE 4.3 (continued) ACCOUNT
Rent Expense
DATE 2013 Sept. 30
ACCOUNT
DESCRIPTION
POST REF.
DEBIT
J2
1 2 0 0 00
CREDIT
DESCRIPTION
ACCOUNT NO. 514 POST REF.
DEBIT
CREDIT
Telephone Expense
DATE 2013 Sept. 30
54 Chapter 4
DESCRIPTION
BALANCE DEBIT CREDIT 1 2 0 0 00
Salaries Expense
DATE
ACCOUNT
ACCOUNT NO. 511
BALANCE DEBIT CREDIT
ACCOUNT NO. 517 POST REF. J2
DEBIT 3 8 5 00
CREDIT
BALANCE DEBIT CREDIT 3 8 5 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 4.4 GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
DATE DESCRIPTION 2013 Nov. 5 Cash Accounts Receivable Fees Income Performed services for Talent Search receiving part of fees in cash with remainder due in 60 days
PAGE POST. REF.
DEBIT
CREDIT
1 2 3 30 0 0 0 00 4 5 6 7 8 3 7 5 00 9 5 2 5 00 10 9 0 0 00 11 12 13 14 1 6 0 0 00 15 8 0 0 00 16 8 0 0 00 17 18 19 20 21
14 0 0 0 00 16 0 0 0 00
18 Equipment Supplies Cash Purchased graphing calculator and supplies, Check 1008 23 Automobile Expense Cash Accounts Payable Received Invoice 1602 from Automotive Technicians Repair, issued Check 1009 for half the amount, balance due in 30 days
EXERCISE 4.5 GENERAL JOURNAL
1 2 3 4 5 6
DATE DESCRIPTION 2013 July 30 Telephone Expense Utilities Expense To correct July 9 error charging telephone bill to Utilities Expense
PAGE POST. REF.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
DEBIT
CREDIT
9 5 0 00 9 5 0 00
1 2 3 4 5 6
Chapter 4 55
EXERCISE 4.6 GENERAL JOURNAL
1 2 3 4 5 6
DATE DESCRIPTION 2013 Oct. 1 Repair Expense Truck To correct September 16 error charging truck charges to the Truck account
PAGE POST. REF.
DEBIT
CREDIT
7 5 0 00 7 5 0 00
1 2 3 4 5 6
PROBLEM 4.1A GENERAL JOURNAL DATE DESCRIPTION 1 2013 2 Sept. 1 Rent Expense 3 Cash 4 Paid September rent, Check 1169 5 6 5 Cash 7 Fees Income 8 Performed services for cash 9 10 6 Accounts Receivable 11 Fees Income 12 Performed services on credit 13 14 10 Telephone Expense 15 Cash 16 Paid monthly telephone bill, Check 1170 17 18 11 Equipment Repair Expense 19 Cash 20 Paid for repairs, Check 1171 21 22 12 Cash 23 Accounts Receivable 24 Received cash on account
56 Chapter 4
PAGE 1 POST. REF.
DEBIT 1 4 0 0 00
2 5 0 0 00
1 3 5 0 00
6 0 0 00
8 4 0 00
3 2 0 0 00
CREDIT 1 2 1 4 0 0 00 3 4 5 6 2 5 0 0 00 7 8 9 10 1 3 5 0 00 11 12 13 14 6 0 0 00 15 16 17 18 8 4 0 00 19 20 21 22 3 2 0 0 00 23 24
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.1A (continued) PAGE
GENERAL JOURNAL DATE DESCRIPTION 1 2013 2 Sept. 15 Salaries Expense 3 Cash 4 Paid semimonthly salaries, Checks 1172-1177 5 6 18 Supplies 7 Cash 8 Paid for supplies, Check 1178 9 10 19 Equipment 11 Accounts Payable 12 Purchased tennis rackets from The Tennis 13 Supply Shop, Invoice 3108, payable in 30 days 14 15 20 Equipment 16 Cash 17 Purchased nets, Check 1179 18 19 21 Cash 20 Accounts Receivable 21 Received cash on account 22 23 21 Cash 24 Equipment 25 Returned damaged net for cash refund 26 27 22 Cash 28 Fees Income 29 Performed services for cash 30 31 23 Accounts Receivable 32 Fees Income 33 Performed services on account 34 35 26 Supplies 36 Cash 37 Paid for supplies, Check 1180
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
POST. REF.
DEBIT 4 2 0 0 00
2 0 0 0 00
2 2 5 0 00
2 7 6 0 00
9 5 0 00
4 5 0 00
3 2 6 0 00
4 8 5 0 00
4 6 0 00
2
CREDIT 1 2 4 2 0 0 00 3 4 5 6 2 0 0 0 00 7 8 9 10 2 2 5 0 00 11 12 13 14 15 2 7 6 0 00 16 17 18 19 9 5 0 00 20 21 22 23 4 5 0 00 24 25 26 27 3 2 6 0 00 28 29 30 31 4 8 5 0 00 32 33 34 35 4 6 0 00 36 37
Chapter 4 57
PROBLEM 4.1A (continued) PAGE 3
GENERAL JOURNAL DATE DESCRIPTION 1 2013 2 Sept. 28 Utilities Expense 3 Cash 4 Paid monthly electric bill, Check 1181 5 6 30 Salaries Expense 7 Cash Paid semimonthly salaries, Check 1182-1187 8 9 10 30 Patrice Rebello, Drawing 11 Cash Owner withdrew cash for personal use, 12 13 Check 1188
POST. REF.
DEBIT 2 2 5 0 00
4 2 0 0 00
4 2 0 0 00
CREDIT 1 2 2 2 5 0 00 3 4 5 6 4 2 0 0 00 7 8 9 10 4 2 0 0 00 11 12 13
Analyze: Check 1189 would be included in the journal entry description.
PROBLEM 4.2A GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13
DATE DESCRIPTION 2013 Oct. 1 Cash Wilson Adams, Capital Beginning investment of owner
PAGE 1 POST. REF. 101 301
2 Rent Expense Cash Paid October rent, Check 1001
514 101
5 Office Equipment Accounts Payable Purchased equipment from Office Furniture Mart, Inc., Invoice 6704, payable in 60 days
141 202
58 Chapter 4
DEBIT
CREDIT
1 50 0 0 0 00 2 50 0 0 0 00 3 4 5 2 5 0 0 00 6 2 5 0 0 00 7 8 9 14 0 0 0 00 10 14 0 0 0 00 11 12 13
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2A (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2013 6 Art Equipment 2 Oct. Cash 3 Purchased art equipment, Check 1002 4 5 7 Supplies 6 Cash 7 Purchased supplies, Check 1003 8 9 10 Office Cleaning Expense 10 Cash 11 Paid for office cleaning, Check 1004 12 13 12 Cash 14 Accounts Receivable 15 Fees Income 16 Performed services for cash and on credit 17 18 15 Cash 19 Supplies Returned damaged supplies for cash refund 20 21 22 18 Office Equipment 23 Cash 24 Accounts Payable 25 Purchased equip. from Office Furniture Mart, Inc., 26 Invoice 7108; Check 1005; balance due in 30 days 27 28 20 Accounts Payable 29 Cash 30 Paid Office Furniture Mart, Inc., on account, 31 Invoice 6704; Check 1006
PAGE
2
POST. DEBIT CREDIT REF. 151 2 7 0 0 00 101 2 7 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
121 101
1 0 5 0 00
511 101
5 0 0 00
101 111 401
3 6 0 0 00 1 4 0 0 00
101 121
3 0 0 00
141 101 202
2 5 0 0 00
202 101
7 0 0 0 00
1 0 5 0 00
5 0 0 00
5 0 0 0 00
3 0 0 00
1 5 0 0 00 1 0 0 0 00
7 0 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Chapter 4 59
PROBLEM 4.2A (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2013 26 Accounts Receivable 2 Oct. Fees Income 3 Performed services on credit 4 5 27 Telephone Expense 6 Cash 7 Paid monthly telephone bill, Check 1007 8 9 30 Cash 10 Accounts Receivable 11 Received cash on account 12 13 30 Utilities Expense 14 Cash 15 Paid monthly utility bill, Check 1008 16 17 30 Salaries Expense 18 Cash 19 Paid monthly salaries, Checks 1009-1011 20
60 Chapter 4
PAGE
3
POST. REF. DEBIT CREDIT 111 3 9 0 0 00 401 3 9 0 0 00
520 101
2 7 5 00
101 111
3 2 0 0 00
523 101
3 5 0 00
517 101
7 5 0 0 00
1 2 3 4 5 2 7 5 00 6 7 8 9 3 2 0 0 00 10 11 12 13 3 5 0 00 14 15 16 17 7 5 0 0 00 18 19 20
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2A (continued) GENERAL LEDGER ACCOUNT
Cash
DATE 2013 Oct. 1 2 6 7 10 12 15 18 20 27 30 30 30
ACCOUNT
POST DESCRIPTION REF. J1 J1 J1 J1 J1 J1 J1 J2 J2 J2 J2 J2 J2
DEBIT
CREDIT
50 0 0 0 00 2 5 0 0 00 2 7 0 0 00 1 0 5 0 00 5 0 0 00 3 6 0 0 00 3 0 0 00 1 5 0 0 00 7 0 0 0 00 2 7 5 00 3 2 0 0 00 3 5 0 00 7 5 0 0 00
Accounts Receivable
DATE 2013 Oct. 12 26 30
ACCOUNT
ACCOUNT NO. 101
POST DESCRIPTION REF. J1 J2 J2
50 0 0 0 00 47 5 0 0 00 44 8 0 0 00 43 7 5 0 00 43 2 5 0 00 46 8 5 0 00 47 1 5 0 00 45 6 5 0 00 38 6 5 0 00 38 3 7 5 00 41 5 7 5 00 41 2 2 5 00 33 7 2 5 00
ACCOUNT NO. 111 DEBIT
CREDIT
1 4 0 0 00 3 9 0 0 00 3 2 0 0 00
Supplies
DATE 2013 Oct. 7 15
BALANCE DEBIT CREDIT
BALANCE CREDIT DEBIT 1 4 0 0 00 5 3 0 0 00 2 1 0 0 00
ACCOUNT NO. 121
POST DESCRIPTION REF. J1 J1
DEBIT
CREDIT
1 0 5 0 00 3 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE DEBIT CREDIT 1 0 5 0 00 7 5 0 00
Chapter 4 61
PROBLEM 4.2A (continued) GENERAL LEDGER ACCOUNT
Office Equipment
DATE 2013 Oct. 5 18
ACCOUNT
ACCOUNT NO. 141
POST DESCRIPTION REF. J1 J2
14 0 0 0 00 2 5 0 0 00
ACCOUNT NO. 151 DEBIT
CREDIT
2 7 0 0 00
BALANCE DEBIT CREDIT 2 7 0 0 00
ACCOUNT NO. 202
POST DESCRIPTION REF. J1 J2 J2
DEBIT
CREDIT 14 0 0 0 00 1 0 0 0 00
7 0 0 0 00
Wilson Adams, Capital
POST DATE DESCRIPTION REF. 2013 Oct. 1 J1
62 Chapter 4
BALANCE DEBIT CREDIT 14 0 0 0 00 16 5 0 0 00
Accounts Payable
DATE 2013 Oct. 5 18 20
ACCOUNT
CREDIT
Art Equipment
POST DATE DESCRIPTION REF. 2013 Oct. 6 J1
ACCOUNT
DEBIT
BALANCE DEBIT CREDIT 14 0 0 0 00 15 0 0 0 00 8 0 0 0 00
ACCOUNT NO. 301 DEBIT
CREDIT 50 0 0 0 00
BALANCE DEBIT CREDIT 50 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2A (continued) GENERAL LEDGER ACCOUNT
Wilson Adams, Drawing
DATE
POST DESCRIPTION REF.
ACCOUNT
CREDIT
POST DESCRIPTION REF.
DEBIT
J1 J2
POST DESCRIPTION REF.
CREDIT
BALANCE DEBIT CREDIT
5 0 0 0 00 3 9 0 0 00
5 0 0 0 00 8 9 0 0 00
ACCOUNT NO. 511 DEBIT
CREDIT
5 0 0 00
BALANCE DEBIT CREDIT 5 0 0 00
Rent Expense
DATE DESCRIPTION 2013 Oct. 2
BALANCE CREDIT DEBIT
ACCOUNT NO. 401
Office Cleaning Expense
DATE 2013 Oct. 10
ACCOUNT
DEBIT
Fees Income
DATE 2013 Oct. 12 26
ACCOUNT
ACCOUNT NO. 302
ACCOUNT NO. 514 POST REF.
DEBIT
J1
2 5 0 0 00
CREDIT
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE DEBIT CREDIT 2 5 0 0 00
Chapter 4 63
PROBLEM 4.2A (continued) GENERAL LEDGER ACCOUNT
Salaries Expense
DATE 2013 Oct. 30
ACCOUNT
ACCOUNT NO. 517
POST DESCRIPTION REF. J2
CREDIT
7 5 0 0 00
ACCOUNT NO. 520 DEBIT
CREDIT
2 7 5 00
BALANCE CREDIT DEBIT 2 7 5 00
Utilities Expense
DATE 2013 Oct. 30
BALANCE DEBIT CREDIT 7 5 0 0 00
Telephone Expense
POST DATE DESCRIPTION REF. 2013 Oct. 27 J2
ACCOUNT
DEBIT
ACCOUNT NO. 523
POST DESCRIPTION REF. J2
DEBIT
CREDIT
3 5 0 00
BALANCE DEBIT CREDIT 3 5 0 00
Analyze: General ledger account 202 has an $8,000 credit balance. PROBLEM 4.3A April 1: The debit should be to Accounts Receivable, not Accounts Payable. April 2: The debit and credit amounts are reversed. Telephone Expense should be debited and Cash should be credited. April 3: The two debit amounts and the credit amount in the entry are not equal because of a math error. The credit for Cash should be $8,000. Analyze: After correcting the three entries, the assets are increased by $11,800 ($12,400 - $1,000 + $400).
64 Chapter 4
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.4A GENERAL JOURNAL DATE DESCRIPTION 1 2013 2 Nov. 1 Cash 3 Tools 4 Erwin Tobias, Capital 5 Beginning investment of owner 6 7 2 Equipment 8 Office Supplies 9 Cash 10 Accounts Payable 11 Purchased equipment and office supplies from 12 Office Depot, Invoice 501; issued Check 100 13 for a down payment, balance payable in 30 days 14 15 10 Cash 16 Accounts Receivable 17 Fees Income 18 Services for cash and credit 19 20 20 Machinery 21 Cash 22 Accounts Payable 23 Purchased machinery from Cottle Machinery Inc., 24 Invoice 709; issued Check 101 25 for a down payment, balance due in 30 days 26
PAGE POST. REF.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
DEBIT
101 131 301
45 0 0 0 00 1 0 0 0 00
151 121 101 202
1 9 5 0 00 4 5 0 00
101 111 401
5 0 0 00 1 4 0 0 00
141 101 202
3 0 0 0 00
1
CREDIT
46 0 0 0 00
6 0 0 00 1 8 0 0 00
1 9 0 0 00
1 0 0 0 00 2 0 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Chapter 4 65
PROBLEM 4.4A (continued) GENERAL LEDGER ACCOUNT
Cash
DATE 2013 Nov. 1 2 10 20
ACCOUNT
POST DESCRIPTION REF. J1 J1 J1 J1
45 0 0 0 00 5 0 0 00
CREDIT
45 0 0 0 00 6 0 0 00 44 4 0 0 00 44 9 0 0 00 1 0 0 0 00 43 9 0 0 00
J1
DEBIT
CREDIT
1 4 0 0 00
ACCOUNT NO. 121 POST REF. J1
DEBIT
CREDIT
4 5 0 00
BALANCE DEBIT CREDIT 4 5 0 00
Tools
66 Chapter 4
BALANCE CREDIT DEBIT 1 4 0 0 00
Office Supplies
DATE 2013 Nov. 1
BALANCE DEBIT CREDIT
ACCOUNT NO. 111
POST DESCRIPTION REF.
DATE DESCRIPTION 2013 Nov. 2
ACCOUNT
DEBIT
Accounts Receivable
DATE 2013 Nov. 10
ACCOUNT
ACCOUNT NO. 101
ACCOUNT NO. 131
POST DESCRIPTION REF. J1
DEBIT 1 0 0 0 00
CREDIT
BALANCE DEBIT CREDIT 1 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.4A (continued) GENERAL LEDGER ACCOUNT
Machinery
DATE 2013 Nov. 20
ACCOUNT
POST DESCRIPTION REF. J1
CREDIT
3 0 0 0 00
ACCOUNT NO. 151 POST REF.
DEBIT
J1
1 9 5 0 00
CREDIT
BALANCE DEBIT CREDIT 1 9 5 0 00
ACCOUNT NO. 202
POST DESCRIPTION REF.
DEBIT
J1 J1
CREDIT 1 8 0 0 00 2 0 0 0 00
Erwin Tobias, Capital
DATE 2013 Nov. 1
BALANCE CREDIT DEBIT 3 0 0 0 00
Accounts Payable
DATE 2013 Nov. 2 20
ACCOUNT
DEBIT
Equipment
DATE DESCRIPTION 2013 Nov. 2
ACCOUNT
ACCOUNT NO. 141
POST DESCRIPTION REF. J1
BALANCE CREDIT DEBIT 1 8 0 0 00 3 8 0 0 00
ACCOUNT NO. 301 DEBIT
CREDIT 46 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE DEBIT CREDIT 46 0 0 0 00
Chapter 4 67
PROBLEM 4.4A (continued) GENERAL LEDGER ACCOUNT
Fees Income
DATE 2013 Nov. 10
ACCOUNT NO. 401
POST DESCRIPTION REF.
DEBIT
J1
CREDIT
BALANCE DEBIT CREDIT
1 9 0 0 00
1 9 0 0 00
Analyze: The business owes $3,800 as of November 30.
PROBLEM 4.1B GENERAL JOURNAL DATE DESCRIPTION 1 2013 2 Sept. 1 Cash 3 Cathy Cox 4 Beginning investment of owner 5 6 5 Cash 7 Fees Income 8 Performed services for cash 9 10 6 Rent Expense 11 Cash 12 Paid for September, Check 1000 13 14 7 Accounts Receivable 15 Fees Income 16 Performed services on credit 17 18 9 Telephone Expense 19 Cash 20 Paid telephone bill, Check 1001
68 Chapter 4
PAGE 1 POST REF.
DEBIT
CREDIT
25 0 0 0 00 25 0 0 0 00
2 8 0 0 00 2 8 0 0 00
1 8 0 0 00 1 8 0 0 00
3 6 0 0 00 3 6 0 0 00
4 0 0 00 4 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.1B (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2013 2 Sept. 10 Equipment Repair Expense 3 Cash 4 Paid for equipment repairs, Check 1002 5 6 12 Cash 7 Accounts Receivable 8 Received cash on account 9 10 14 Salaries Expense 11 Cash 12 Paid semimonthly salaries to employees, 13 Checks 1003-1004 14 15 18 Cleaning Supplies Expense 16 Cash 17 Paid for cleaning supplies, Check 1005 18 19 19 Office Supplies Expense 20 Cash 21 Paid for office supplies, Check 1006 22 23 20 Equipment 24 Cash 25 Accounts Payable 26 Purchase from Reese Equipment, Inc., 27 Invoice 1012; issued Check 1007 for down 28 payment, balance due in 30 days 29 30 22 Cash 31 Fees Income 32 Performed services for cash 33 34 24 Utilities Expense 35 Cash 36 Paid utility bill, Check 1008
PAGE POST. REF.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
DEBIT 2 5 0 00
4 9 0 0 00
9 5 0 0 00
7 0 0 00
6 0 0 00
5 0 0 0 00
2 9 5 0 00
4 5 0 00
2
CREDIT 1 2 2 5 0 00 3 4 5 6 4 9 0 0 00 7 8 9 10 9 5 0 0 00 11 12 13 14 15 7 0 0 00 16 17 18 19 6 0 0 00 20 21 22 23 2 0 0 0 00 24 3 0 0 0 00 25 26 27 28 29 30 2 9 5 0 00 31 32 33 34 4 5 0 00 35 36
Chapter 4 69