SOLUTIONS TO EXERCISES—SET B - North Seattle …facweb.northseattle.edu/lpsomostithis/ACC210_Folder/acct201...EXERCISE 2-1B 1. False. An account ... 420 Service Revenue..... 6,360

© 2008 For Instructor Use Only 2-1

SOLUTIONS TO EXERCISES—SET B

EXERCISE 2-1B

1. False. An account is an accounting record of a specific asset, liability,or stockholders’ equity item.

2. True.

3. False. Each asset, liability, and stockholders’ equity item has aseparate account.

4. True.

5. False. A simple form of an account consisting of just the accounttitle, the left side, and the right side, is called a t-account.

EXERCISE 2-2B


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EXERCISE 2-3B

General Journal J1Date Account Titles and Explanation Ref. Debit Credit

Jan. 2 Cash............................................................. 20,000Common Stock................................ 20,000

3 Advertising Expense.............................. 500Cash.................................................... 500

9 Equipment.................................................. 7,000Cash.................................................... 7,000

11 Accounts Receivable ............................. 2,300Service Revenue............................. 2,300

16 Supplies...................................................... 700Accounts Payable .......................... 700

20 Cash............................................................. 1,100Accounts Receivable .................... 1,100

23 Accounts Payable ................................... 400Cash.................................................... 400

28 Dividends ................................................... 1,200Cash.................................................... 1,200

EXERCISE 2-4B

Oct. 1 Debits increase assets: debit Cash $22,000.Credits increase stockholders’ equity: credit Common Stock $22,000.

2 Debits increase expenses: debit Rent Expense, $700.Credits decrease assets: credit Cash $700.

3 Debits increase assets: debit Office Furniture $2,800.Credits increase liabilities: credit Accounts Payable $2,800.


EXERCISE 2-4B (Continued)

Oct. 6 Debits increase assets: debit Accounts Receivable $4,400.Credits increase revenues: credit Service Revenue $4,400.

27 Debits decrease liabilities: debit Accounts Payable $1,100.Credits decrease assets: credit Cash $1,100.

30 Debits increase expenses: debit Utilities Expense $120.Credits increase liabilities: credit Accounts Payable $120.

EXERCISE 2-5B

General Journal

Date Account Titles and Explanation Ref. Debits CreditOct. 1 Cash ............................................................ 22,000

Common Stock.............................. 22,000

2 Rent Expense........................................... 700Cash.................................................. 700

3 Office Furniture ....................................... 2,800Accounts Payable ........................ 2,800

6 Accounts Receivable............................. 4,400Service Revenue........................... 4,400

27 Accounts Payable...................................Cash..................................................

1,1001,100

30 Utilities Expense ..................................... 120Accounts Payable ........................ 120


EXERCISE 2-6B

(a) 1. Increase the asset Cash, increase the liability Notes Payable.2. Increase the asset Computer, decrease the asset Cash.3. Increase the expense Rent Expense, decrease the asset Cash.

(b) 1. Cash ............................................................................. 10,000Notes Payable ................................................... 10,000

2. Computer.................................................................... 3,100Cash ..................................................................... 3,100

3. Rent Expense ............................................................ 800Cash ..................................................................... 800

EXERCISE 2-7B

(a) Assets = Liabilities + Stockholders’ Equity1. + + (Investment)2. + +3. + + (Revenue)4. – – (Dividends)

(b) 1. Cash ............................................................................. 6,000Common Stock ................................................. 6,000

2. Supplies ...................................................................... 1,100Accounts Payable............................................ 1,100

3. Accounts Receivable.............................................. 4,500Consulting Revenue........................................ 4,500

4. Dividends.................................................................... 1,200Cash ..................................................................... 1,200

EXERCISE 2-8B

1. False. The general ledger contains all the asset, liability, andstockholders’ equity accounts.

2. False The general ledger is sometimes referred to as the ledger.3. False. The accounts in the general ledger are arranged in financial

statement order: first the assets, then the liabilities, stockholders’equity accounts, revenues, and expenses.

4. True.5. True.


EXERCISE 2-9B

(a)

CashAug. 1 6,000 Aug. 12 1,000

10 1,700 31 1,500

Bal. 8,200

Accounts ReceivableAug. 25 2,500 Aug. 31 1,500Bal. 1,000

Office EquipmentAug. 12 4,000

Notes PayableAug. 12 3,000

Common StockAug. 1 6,000

Service RevenueAug. 10 1,700

25 2,500Bal. 4,200

(b) MARIETTA HERNANDEZ, INVESTMENT BROKERTrial Balance

August 31, 2008

Debit Credit Cash...................................................................................... $ 8,200Accounts Receivable ...................................................... 1,000Office Equipment.............................................................. 4,000Notes Payable.................................................................... $ 3,000Common Stock ................................................................. 6,000Service Revenue............................................................... 4,200

$13,200 $13,200


EXERCISE 2-10B

(a) General Journal

Date Account Titles and Explanation Ref. Debit CreditApr. 1 Cash .............................................................

Common Stock....................................(Investment of cash for stock)

10,00010,000

4 Supplies ......................................................Accounts Payable...............................

(Purchased supplies on account)

1,9001,900

7 Accounts Receivable..............................Service Revenue ................................. (Recorded revenue for services provided)

2,9002,900

12 Cash .............................................................Service Revenue .................................

(Received cash for services provided)

1,2001,200

15 Salaries Expense .....................................Cash ........................................................

(Paid salaries to date)

700700

25 Accounts Payable....................................Cash ........................................................

(Paid creditors on account)

1,6001,600

29 Cash .............................................................Accounts Receivable.........................

(Received cash in payment of account)

900900

30 Cash .............................................................Unearned Revenue.............................

(Received cash for future services)

1,4001,400



(b) RACHEL’S LANDSCAPING COMPANYTrial BalanceApril 30, 2008

Debit Credit

Cash....................................................................................... $11,200Accounts Receivable ....................................................... 2,000Supplies................................................................................ 1,900Accounts Payable ............................................................. $ 300Unearned Revenue ........................................................... 1,400Common Stock .................................................................. 10,000Service Revenue................................................................ 4,100Salaries Expense............................................................... 700

$15,800 $15,800

EXERCISE 2-11B

(a) Oct. 1 Cash ....................................................................... 6,500Common Stock ........................................... 6,500 (Investment of cash for stock)

10 Cash ....................................................................... 800Service Revenue ........................................ 800 (Received cash for services provided)

10 Cash ....................................................................... 3,000Notes Payable ............................................. 3,000 (Obtained loan from bank)

20 Cash ....................................................................... 450Accounts Receivable................................ 450 (Received cash in payment of account)

20 Accounts Receivable........................................ 1,070Service Revenue ........................................ 1,070

(Billed clients for servicesprovided)



(b) HURLEY CO.Trial Balance

October 31, 2008

Debit Credit Cash ............................................................................... $ 9,800Accounts Receivable................................................ 1,420Supplies ........................................................................ 400Furniture ....................................................................... 2,000Notes Payable ............................................................. $ 3,000Accounts Payable...................................................... 500Common Stock........................................................... 8,500Dividends...................................................................... 300Service Revenue ........................................................ 2,670Store Wages Expense .............................................. 500Rent Expense.............................................................. 250

$14,670 $14,670

EXERCISE 2-12B

(a)General Journal J1

Date Account Titles and Explanation Ref. Debit CreditSept. 1 Cash ...........................................................

Common Stock ..............................101311

18,00018,000

5 Equipment ................................................Cash ..................................................Accounts Payable.........................

157101201

20,0007,500

12,500

25 Accounts Payable..................................Cash ..................................................

201101

9,0009,000

30 Dividends..................................................Cash ..................................................

332101

1,0001,000



(b)

Cash No. 101Date Explanation Ref. Debit Credit BalanceSept. 1 J1 18,000 18,000

5 J1 7,500 10,50025 J1 9,000 1,50030 J1 1,000 500

Equipment No. 157Date Explanation Ref. Debit Credit BalanceSept. 5 J1 20,000 20,000

Accounts Payable No. 201Date Explanation Ref. Debit Credit Balance

Sept. 5 J1 12,500 12,500 25 J1 9,000 3,500

Common Stock No. 311Date Explanation Ref. Debit Credit BalanceSept. 1 J1 18,000 18,000

Dividends No. 332Date Explanation Ref. Debit Credit BalanceSept. 30 J1 1,000 1,000


EXERCISE 2-13B

Error(a)

In Balance(b)

Difference(c)

Larger Column1. No $500 Debit2. Yes — —3. No 400 Debit4. No 400 Debit5. Yes — —6. No 45 Credit

EXERCISE 2-14B

SAGET DELIVERY SERVICETrial BalanceJuly 31, 2008

Debit Credit

Cash ($49,740 – Debit total without Cash $39,830) .............................................................................. $9,910Accounts Receivable.......................................................... 4,220Prepaid Insurance ............................................................... 1,190Delivery Equipment............................................................. 30,000Notes Payable....................................................................... $11,000Accounts Payable................................................................ 5,110Salaries Payable................................................................... 490Common Stock..................................................................... 20,000Retained Earnings............................................................... 6,780Dividends................................................................................ 420Service Revenue .................................................................. 6,360Salaries Expense ................................................................. 2,660Repair Expense .................................................................... 580Gas and Oil Expense .......................................................... 450Insurance Expense.............................................................. 310

$49,740 $49,740


SOLUTIONS TO PROBLEMS

PROBLEM 2-1C

J1Date Account Titles and Explanation Ref. Debit CreditMar. 1 Cash .................................................................. 20,000

Common Stock .................................... 20,000 (Investment of cash in

business in exchange for stock)

3 Land .................................................................. 12,000Buildings ......................................................... 2,000Equipment....................................................... 1,000

Cash ........................................................ 15,000 (Purchased Heeren’s Golf Land)

5 Advertising Expense ................................... 700Cash ........................................................ 700 (Paid for advertising)

6 Prepaid Insurance ........................................ 600Cash ........................................................ 600 (Paid for one-year insurance policy)

10 Equipment....................................................... 1,050Accounts Payable............................... 1,050 (Purchased equipment on account)

18 Cash .................................................................. 340Golf Revenue........................................ 340 (Received cash for services provided)

19 Cash .................................................................. 1,000Unearned Revenue ............................. 1,000 (Received cash for coupon books sold)


PROBLEM 2-1C (Continued)

Date Account Titles and Explanation Ref. Debit CreditMar. 25 Dividends....................................................

Cash .................................................... (Payment of cash dividends)

800 800

30 Salaries Expense......................................Cash .................................................... (Paid salaries)

250 250

30 Accounts Payable....................................Cash .................................................... (Paid creditor on account)

1,050 1,050

31 Cash .............................................................Golf Revenue.................................... (Received cash for services provided)

200 200


PROBLEM 2-2C

(a)J1

Date Account Titles and Explanation Ref. Debit Credit

Apr. 1 Cash .................................................................. 101 40,000Common Stock .................................... 311 40,000 (Investment of cash in business in exchange for

stock)

1 No entry—not a transaction.

2 Rent Expense................................................. 729 1,000Cash ........................................................ 101 1,000 (Paid monthly office rent)

3 Supplies ........................................................... 126 4,000Accounts Payable............................... 201 4,000 (Purchased supplies on account from Smile Company)

10 Accounts Receivable................................... 112 5,100Service Revenue ................................. 400 5,100 (Billed clients for services provided)

11 Cash .................................................................. 101 1,000Unearned Revenue ............................. 205 1,000 (Received cash for future service)

20 Cash .................................................................. 101 2,100Service Revenue ................................. 400 2,100 (Received cash for services provided)

30 Salaries Expense .......................................... 726 2,400Cash ........................................................ 101 2,400 (Paid monthly salary)



Date Account Titles and Explanation Ref. Debits Credit

Apr. 30 Accounts Payable .................................... 201 1,600Cash .................................................... 101 1,600 (Paid Smile Company on account)

(b)

Cash No. 101Date Explanation Ref. Debit Credit Balance

Apr. 1 J1 40,000 40,0002 J1 1,000 39,000

11 J1 1,000 40,00020 J1 2,100 42,10030 J1 2,400 39,70030 J1 1,600 38,100

Accounts Receivable No. 112Date Explanation Ref. Debit Credit BalanceApr. 10 J1 5,100 5,100

Supplies No. 126Date Explanation Ref. Debit Credit BalanceApr. 3 J1 4,000 4,000

Accounts Payable No. 201Date Explanation Ref. Debit Credit BalanceApr. 3 J1 4,000 4,000

30 J1 1,600 2,400

Unearned Revenue No. 205Date Explanation Ref. Debit Credit BalanceApr. 11 J1 1,000 1,000



Common Stock No. 311Date Explanation Ref. Debit Credit BalanceApr. 1 J1 40,000 40,000

Service Revenue No. 400Date Explanation Ref. Debit Credit BalanceApr. 10 J1 5,100 5,100

20 J1 2,100 7,200

Salaries Expense No. 726Date Explanation Ref. Debit Credit BalanceApr. 30 J1 2,400 2,400

Rent Expense No. 729Date Explanation Ref. Debit Credit BalanceApr. 2 J1 1,000 1,000

(c) MARIA JUAREZ, DENTISTTrial BalanceApril 30, 2008

Debit Credit

Cash................................................................................. $38,100Accounts Receivable ................................................. 5,100Supplies.......................................................................... 4,000Accounts Payable ....................................................... $ 2,400Unearned Revenue ..................................................... 1,000Common Stock ............................................................ 40,000Service Revenue.......................................................... 7,200Salaries Expense......................................................... 2,400Rent Expense ............................................................... 1,000

$50,600 $50,600


PROBLEM 2-3C

(a)

Trans. Account Titles and Explanation Debit Credit1. Cash ........................................................... 50,000

Common Stock ............................ 50,000

2. No entry—Not a transaction.

3. Prepaid Rent............................................ 24,000Cash................................................. 24,000

4. Furniture & Equipment ........................ 30,000Cash................................................. 10,000Accounts Payable....................... 20,000

5. Prepaid Insurance ................................. 1,800Cash................................................. 1,800

6. Office Supplies ....................................... 500Cash................................................. 500

7. Office Supplies ....................................... 1,500Accounts Payable....................... 1,500

8. Cash ........................................................... 8,000Accounts Receivable............................ 12,000

Service Revenue.......................... 20,000

9. Accounts Payable.................................. 400Cash................................................. 400

10. Cash ........................................................... 3,000Accounts Receivable ................. 3,000

11. Utility Expense........................................ 200Accounts Payable....................... 200



Trans. Account Titles and Explanation Debit Credit12. Salaries Expense.................................. 5,600

Cash................................................. 5,600

(b)Cash

(1) 50,000 (3) 24,000 (4) 10,000 (5) 1,800 (6) 500

(8) 8,000 (9) 400

(10) 3,000 (12) 5,600

18,700

Accounts Receivable(8) 12,000

(10) 3,000 9,000

Office Supplies(6) 500 (7) 1,500

2,000

Prepaid Insurance(5) 1,800

1,800

Prepaid Rent(3) 24,000

24,000

Furniture & Equipment(4) 30,000

30,000

Accounts Payable(4) 20,000(7) 1,500

(9) 400 (11) 200

21,300

Common Stock(1) 50,000

50,000

Service Revenue(8) 20,000

20,000

Salaries Expense(12) 5,600

5,600

Utility Expense(11) 200

200



(c) SLOWHAND SERVICESTrial BalanceMay 31, 2008

Debit Credit

Cash ............................................................................ $18,700Accounts Receivable............................................. 9,000Office Supplies ........................................................ 2,000Prepaid Insurance .................................................. 1,800Prepaid Rent............................................................. 24,000Furniture & Equipment.......................................... 30,000Accounts Payable................................................... $21,300Common Stock........................................................ 50,000Service Revenue ..................................................... 20,000Salaries Expense .................................................... 5,600Utility Expense......................................................... 200

$91,300 $91,300


PROBLEM 2-4C

SYED MOIZ CO.Trial BalanceJune 30, 2008

Debit Credit

Cash ($3,340 + $360) ........................................................... $ 3,700Accounts Receivable ($2,731 – $360)............................ 2,371Supplies ($1,200 – $620) .................................................... 580Equipment ($2,600 + $620)................................................ 3,220Accounts Payable ($3,666 – $306 – $360).................... $ 3,000Unearned Revenue .............................................................. 1,100Common Stock ..................................................................... 8,000Dividends ($800 + $600)..................................................... 1,400Service Revenue ($2,480 + $801) .................................... 3,281Salaries Expense ($3,200 + $700 – $600) ..................... 3,300Office Expense...................................................................... 810

$15,381 $15,381


PROBLEM 2-5C

(a) & (c)

Cash No. 101Date Explanation Ref. Debit Credit Balance

Mar. 1 Balance �� 9,000 2 J1 1,500 7,500 9 J1 4,000 11,500 10 J1 4,100 7,400 12 J1 450 6,950 20 J1 5,000 11,950 20 J1 2,000 9,950 31 J1 2,500 7,450 31 J1 450 7,900 31 J1 9,000 16,900

Accounts Receivable No. 112Date Explanation Ref. Debit Credit BalanceMar. 31 J1 450 450

Land No. 140Date Explanation Ref. Debit Credit BalanceMar. 1 Balance �� 24,000

Buildings No. 145Date Explanation Ref. Debit Credit BalanceMar. 1 Balance �� 10,000

Equipment No. 157Date Explanation Ref. Debit Credit BalanceMar. 1 Balance �� 10,000



Accounts Payable No. 201Date Explanation Ref. Debit Credit BalanceMar. 1 Balance �� 7,000

2 J1 2,000 9,00010 J1 4,100 4,900

Common Stock No. 311Date Explanation Ref. Debit Credit BalanceMar. 1 Balance �� 46,000

Admission Revenue No. 405Date Explanation Ref. Debit Credit BalanceMar. 9 J1 4,000 4,000

20 J1 5,000 9,00031 J1 9,000 18,000

Concession Revenue No. 406Date Explanation Ref. Debit Credit BalanceMar.31 J1 900 900

Advertising Expense No. 610Date Explanation Ref. Debit Credit BalanceMar.12 J1 450 450

Film Rental Expense No. 632Date Explanation Ref. Debit Credit BalanceMar. 2 J1 3,500 3,500

20 J1 2,000 5,500



Salaries Expense No. 726Date Explanation Ref. Debit Credit BalanceMar. 31 J1 2,500 2,500

(b)J1


Mar. 2 Film Rental Expense.................................. 632 3,500Accounts Payable ............................ 201 2,000Cash...................................................... 101 1,500 (Rented films for cash and on account)

3 No entry.

9 Cash ................................................................ 101 4,000Admission Revenue ........................ 405 4,000 (Received cash for services provided)

10 Accounts Payable ($2,000 + $2,100)......... 201 4,100Cash...................................................... 101 4,100 (Paid creditors on account)

11 No entry.

12 Advertising Expense.................................. 610 450Cash...................................................... 101 450 (Paid advertising expense)

20 Cash ................................................................ 101 5,000Admission Revenue ........................ 405 5,000 (Received cash for services provided)

20 Film Rental Expense.................................. 632 2,000Cash...................................................... 101 2,000 (Paid film rental)




Mar.31 Salaries Expense ......................................... 726 2,500Cash ...................................................... 101 2,500 (Paid salaries expense)

31 Cash ................................................................. 101 450Accounts Receivable.................................. 112 450

Concession Revenue....................... 406 900 (15% X $6,000) (Received cash and balance on account for concession revenue)

31 Cash ................................................................. 101 9,000Admission Revenue......................... 405 9,000 (Received cash for services provided)

(d) JOSIE THEATERTrial Balance

March 31, 2008

Debit CreditCash ............................................................................. $16,900Accounts Receivable.............................................. 450Land.............................................................................. 24,000Buildings..................................................................... 10,000Equipment .................................................................. 10,000Accounts Payable.................................................... $ 4,900Common Stock ......................................................... 46,000Admission Revenue................................................ 18,000Concession Revenue.............................................. 900Advertising Expense............................................... 450Film Rental Expense............................................... 5,500Salaries Expense .................................................... 2,500

$69,800 $69,800

Documents

SOLUTIONS TO EXERCISES—SET B - North Seattle …facweb.northseattle.edu/lpsomostithis/ACC210_Folder/acct201...EXERCISE 2-1B 1. False. An account ... 420 Service Revenue..... 6,360