Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
3
Beginning the
Accounting Cycle
ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL
THINKING/ETHICAL CASE
2. Disagree; it is based on the income statement.
4. Interim statements are financial statements prepared for parts of the fiscal period.
6. The debit(s) and credit(s) parts of recording a transaction are located on the same page of the journal. In the
ledger, they would be on separate pages.
8. A compound journal entry is a journal entry that requires three or more accounts.
10. False. The side that increases the account is the normal balance.
12. Cross-referencing updates the PR column in the journal after the ledger account has been updated.
14. The question in this case is whether Pete should be allowed to copy another company's software. I believe that
there is something wrong with Pete asking his friend if he can copy his software. Software is protected under
SOLUTIONS TO CONCEPT CHECKS
1.
a.
201X
f.
Initial Investment by Owner
b.
Mar.
g.
$19,400
c.
2
h.
$19,400
d.
Cash and
i.
Page 1
Equipment
e.
B. Munro, Capital
2.
A.
Owner investment of cash and equipment
B.
Performed services for cash and on account
C.
Salary expense incurred but not paid
3.
Cash
111
Balance
Date
PR
Dr.
Cr.
Dr.
Cr.
201X
Mar. 6
GJ1
29
29
10
GJ1
90
119
15
GJ2
7
112
18
GJ3
75
187
PR column of cash tells us from which page of journal information came from. The
Acct. #111 will be used to cross reference back to the PR column of the Journal to tell
it was posted to Acct. #111 in the General Ledger.
4.
KENNEDY COMPANY
TRIAL BALANCE
JULY 31, 201X
Dr.
Cr.
Cash
13
Equipment
112
Accounts Payable
43
D. Kennedy, Capital
88
D. Kennedy, Withdrawals
5
Taxi Fees
18
Rent Expense
12
Advertising Expense
7
___
Totals
149
149
5.
Date Account Titles Dr. Cr.
201X
June
10
Telephone Expense
250
Repair Expense
250
A correcting entry may not be needed if the mistake is detected prior to posting.
SOLUTIONS TO SET A EXERCISES
3A-1.
Date
Account Titles and Description
PR
Dr.
Cr.
201X
Apr
1
Cash
110
0
0
0
00
Equipment
12
0
0
0
00
J. Moore, Capital
122
0
0
0
00
Owner investment
3
Building
70
0
0
0
00
Accounts Payable
70
0
0
0
00
Purchase of building on account
12
Truck
12
0
0
0
00
Cash
12
0
0
0
00
Purchase truck for cash
18
Supplies
7
0
0
00
Accounts Payable
7
0
0
00
Purchase of supplies on account
EXERCISES (CONTINUED)
3A-2.
Date
Account Titles and Description
PR
Dr.
Cr.
201X
May
1
Cash
150
0
0
0
00
R. Tarsia, Capital
150
0
0
0
00
Owner investment
5
Equipment
6
0
0
0
00
Cash
6
0
0
0
00
Purchase of equipment for cash
8
Equipment
4
0
0
0
00
Accounts Payable
4
0
0
0
00
Purchase of equipment on account
14
Cash
1
7
0
0
00
Service Revenue
1
7
0
0
00
Collected cash revenue
18
Accounts Receivable
1
5
0
0
00
Service Revenue
1
5
0
0
00
Earned revenue on account
20
R. Tarsia, Withdrawals
1
0
0
00
Cash
1
0
0
00
Owner withdrawal
EXERCISES (CONTINUED)
3A-3.
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Feb.
6
Cash
111
12
0
0
0
00
A. Kramer, Capital
311
12
0
0
0
00
Cash investment
14
Equipment
121
8
0
0
0
00
Cash
111
5
0
0
0
00
Accounts Payable
211
3
0
0
0
00
Purchase of equipment
CASH
ACCOUNT NO. 111
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Feb.
6
GJ4
12
0
0
0
00
12
0
0
0
00
14
GJ4
5
0
0
0
00
7
0
0
0
00
EQUIPMENT
ACCOUNT NO. 121
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Feb.
14
GJ4
8
0
0
0
00
8
0
0
0
00
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Feb.
14
GJ4
3
0
0
0
00
3
0
0
0
00
A. KRAMER, CAPITAL
ACCOUNT NO. 311
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Feb.
6
GJ4
12
0
0
0
00
12
0
0
0
00
EXERCISES (CONTINUED)
3A-4
(a) PAGE 1
Date
201X
Account Titles and Description
PR
Dr.
Cr.
May
1
Cash
111
8
0
0
0
00
J. Lucas, Capital
311
8
0
0
0
00
Owner investment
4
Equipment
121
1
3
0
0
00
Account Payable
211
1
3
0
0
00
Purchase of equipment on account
15
Accounts Receivable
112
2
0
0
0
00
Fees Earned
411
2
0
0
0
00
Services performed on account
18
Cash
111
7
0
0
0
00
Fees Earned
411
7
0
0
0
00
Services performed for cash
24
Salaries Expense
511
1
0
0
0
00
Cash
111
1
0
0
0
00
Salaries paid
28
J. Lucas, Withdrawals
312
2
0
0
00
Cash
111
2
0
0
00
Owner withdrawal
(b)
CASH
ACCOUNT NO. 111
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
May
1
GJ1
8
0
0
0
00
8
0
0
0
00
18
GJ1
7
0
0
0
00
15
0
0
0
00
24
GJ1
1
0
0
0
00
14
0
0
0
00
28
GJ1
2
0
0
00
13
8
0
0
00
EXERCISES (CONTINUED)
ACCOUNTS RECEIVABLE
ACCOUNT NO. 112
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
May
15
GJ1
2
0
0
0
00
2
0
0
0
00
EQUIPMENT
ACCOUNT NO. 121
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
May
4
GJ1
1
3
0
0
00
1
3
0
0
00
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
May
4
GJ1
1
3
0
0
00
1
3
0
0
00
J. LUCAS, CAPITAL
ACCOUNT NO. 311
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
May
1
GJ1
8
0
0
0
00
8
0
0
0
00
J. LUCAS, WITHDRAWALS
ACCOUNT NO. 312
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
May
28
GJ1
2
0
0
00
2
0
0
00
FEES EARNED
ACCOUNT NO. 411
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
May
15
GJ1
2
0
0
0
00
2
0
0
0
00
18
GJ1
7
0
0
0
00
9
0
0
0
00
EXERCISES (CONTINUED)
SALARIES EXPENSE
ACCOUNT NO. 511
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
May
24
GJ1
1
0
0
0
00
1
0
0
0
00
(c)
LUCAS COMPANY
TRIAL BALANCE
MAY 31, 201X
Dr.
Cr.
Cash
13
8
0
0
00
Accounts Receivable
2
0
0
0
00
Equipment
1
3
0
0
00
Accounts Payable
1
3
0
0
00
J. Lucas, Capital
8
0
0
0
00
J. Lucas, Withdrawals
2
0
0
00
Fees Earned
9
0
0
0
00
Salaries Expense
1
0
0
0
00
Totals
18
3
0
0
00
18
3
0
0
00
3A-5
SALT LAKE CO.
TRIAL BALANCE
OCTOBER 31, 201X
Dr.
Cr.
Cash
20
0
0
0
00
Accounts Receivable
1
2
0
0
00
Accounts Payable
3
9
0
0
00
A. Salt Lake, Capital
12
2
5
0
00
A. Salt Lake, Withdrawals
9
5
0
00
Services Earned
8
0
0
0
00
Concessions Earned
2
5
0
0
00
Rent Expense
4
0
0
00
Salaries Expense
2
2
0
0
00
Miscellaneous Expense
1
9
0
0
00
Totals
26
6
5
0
00
26
6
5
0
00
EXERCISES (CONTINUED)
