68) For each transaction, identify which account is debited and which account is credited. Use proper
account titles.
Transaction
Debit
Credit
Received a bill for utilities to be
paid next month
Performed services on account
Paid cash for a 12-month
insurance policy, coverage
starting next month
Paid rent for the current month
Borrowed cash from the bank for
business use; a note was signed
paid next month
Utilities Expense
Accounts Payable
Performed services on account
Account Receivable
Service Revenue
starting next month
Prepaid Insurance
Cash
Paid rent for the current month
Rent Expense
Cash
52
69) Mason‘s Restaurant and Catering had the following transactions during the month of May.
May 1
Mason contributed $45,000 cash in exchange for common stock.
5
Paid monthly rent on the restaurant equipment, $1,650.
12
Purchased office supplies on account, $1,500.
15
Borrowed $25,000 from the bank for business use.
26
Paid $30,000 cash for a delivery van.
28
Paid $1,500 on account.
29
The business received $1,600 for catering services for a wedding on June 11.
31
Revenues earned during the month included $20,500 cash and $14,500 on account.
31
Received the May utility bill for $1,000. The amount is due on June 10 and will be paid
on that date.
31
Paid employees‘ salaries $5,500; restaurant rent $3,000 and advertising for May $800.
Record a compound entry.
31
Received the bill for catering food and supplies used in May, $8,500.
The bill is due on June 15 and will be paid on that date.
31
Paid cash dividends of $6,000.
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Delivery Van;
Accounts Payable; Utilities Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends;
Service Revenue; Salaries Expense; Equipment Rent Expense; Restaurant Rent Expense; Utilities Expense;
Catering Expense; and Advertising Expense.
Required: Journalize each transaction. Explanations are not needed.
53
Copyright © 2018 Pearson Education, Inc.
Answer:
Date
Accounts and Explanation
Credit
May
1
Cash
Common Stock
45,000
5
Equipment Rent Expense
Cash
1,650
12
Office Supplies
Accounts Payable
1,500
15
Cash
Notes Payable
25,000
26
Delivery Van
Cash
30,000
28
Accounts Payable
Cash
1,500
29
Cash
Unearned Revenue
1,600
31
Cash
Accounts Receivable
Service Revenue
35,000
31
Utilities Expense
Utilities Payable
1,000
31
Salaries Expense
Restaurant Rent Expense
Advertising Expense
Cash
9,300
31
Catering Expense
Accounts Payable
8,500
31
Dividends
Cash
6,000
Diff: 3
LO: 2-3
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: Journalizing and Posting Transactions
70) After posting the journal entries from the journal to the ledger, the accounting equation should be in
balance.
71) A business purchases $3,500 of office supplies for cash. Which of the following sets of ledger accounts
reflects the posting of this transaction?
A)
B)
C)
D)
72) The following transactions for the month of March have been journalized and posted to the proper
accounts.
Mar. 1 The business received $7,000 cash and issued common stock to stockholders.
Mar. 2 Paid the first month’s rent of $700.
Mar. 3 Purchased equipment by paying $3,000 cash and executing a note payable for $8,000.
Mar. 4 Purchased office supplies for $700 cash.
Mar. 5 Billed a client for $10,000 of design services completed.
Mar. 6 Received $7,800 on account for the services previously recorded.
What is the balance in Cash on March 6?
A) $11,100
B) $10,400
C) $13,400
D) $11,800
73) Watson Foods, Inc. reported the following transactions for September 2019.
a) The business received $22,000 cash and issued common stock. It was credited to Common Stock.
b) The business purchased office equipment for $9,000 for which $3,500 cash was paid and the balance
was put on a note payable.
c) Paid insurance expense of $1,800 cash.
d) Paid the September utility bill for $900 cash.
e) Paid $2,000 cash for September rent.
f) The business had sales of $10,000 in September. Of these sales, 60% were cash sales, and the balance
was credit sales.
g) The business paid $7,000 cash for office furniture.
What are the total liabilities at the end of September, 2019?
A) $10,000
B) $1,800
C) $5,500
D) $9,000
74) The following transactions for the month of March have been journalized and posted to the proper
accounts.
Mar. 1 The business received $8,000 cash and issued common stock to stockholders.
Mar. 2 Paid the first month‘s rent of $600.
Mar. 3 Purchased equipment by paying $2,000 cash and executing a note payable for $6,000.
Mar. 4 Purchased office supplies for $750 cash.
Mar. 5 Billed a client for $14,000 of design services completed.
Mar. 6 Received $5,000 on account for the services previously recorded.
What is the balance in Accounts Receivable?
A) $5,000
B) $9,000
C) $6,000
D) $14,000
75) The following transactions have been journalized and posted to the proper accounts. March is the
first month of business operations.
Mar. 1 The business received $10,000 cash and issued common stock to stockholders.
Mar. 2 Paid the first month‘s rent of $800.
Mar. 3 Purchased equipment by paying $4,000 cash and executing a note payable for $5,000.
Mar. 4 Purchased office supplies for $700 cash.
Mar. 5 Billed a client for $14,000 of design services completed.
Mar. 6 Received $6,000 on account for the services previously recorded.
What is the ending balance in the Service Revenue account?
A) $16,000
B) $10,000
C) $14,000
D) $6,000
76) A business has the following transactions:
The business receives $16,000 cash and issues common stock to stockholders.
The business purchases $500 of office supplies on account.
The business purchases $1,000 of furniture on account.
The business performs services for various clients totaling $14,000 on account.
The business pays $3,000 for salaries expense and $5,000 for rent expense.
The business pays $500 to a supplier for the office supplies purchased earlier.
The business collects $3,000 from one of its clients for services rendered earlier in the month.
At the end of the month, all journal entries are posted to the ledger. Accounts Receivable will appear as
which of the following?
A) Accounts Receivable
3,000
14,000
11,000
Bal.
B) Accounts Receivable
14,000
Bal.
14,000
C) Accounts Receivable
14,000
3,000
Bal.
11,000
D) Accounts Receivable
14,000
3,000
11,000
Bal.
77) A business has the following transactions:
The business received $16,000 cash and issued common stock to stockholders.
The business purchases $700 of office supplies on account.
The business purchases $2,000 of furniture on account.
The business performs services to various clients totaling $13,000 on account.
The business pays out $3,000 for salaries expense and $3,500 for rent expense.
The business pays $700 to a supplier for the office supplies purchased earlier.
The business collects $1,000 from one of its clients for services rendered earlier in the month.
At the end of the month, all journal entries are posted to the ledger. Accounts Payable will appear as
which of the following?
A) Accounts Payable
700
700
2,000
2,000
Bal.
B) Accounts Payable
700
2,000
2,700
Bal.
C) Accounts Payable
700
2,000
700
Bal.
2,000
D) Accounts Payable
700
2,000
700
3,400
Bal.
78) When using a four-column account, the posting reference column allows the user of the financial data
to trace the amounts in the journal back to the ledger.
79) In a computerized environment, the posting process is completed automatically when the user enters
the journal entry.
80) A posting reference column is used ________.
A) while preparing the trial balance using the ledger
B) when the information is transferred from the journal to the ledger
C) when the information is transferred from the ledger to the post–closing trial balance
D) while preparing the balance sheet using the trial balance
81) The four-column account ________.
A) is an alternative to using the ledger
B) includes the Post. Ref. column which allows a user of the financial data to trace the amount in the
journal back to the ledger
C) is not frequently used in practice because it provides less information than T-accounts
D) adds two additional columns that are used to determine a running balance