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71
Copyright © 2018 Pearson Education, Inc.
Answer: The cash balance is the difference between the debit and credit columns of the Trial Balance.
Cash balance = $197,000 - $109,400 = $87,600
Musical Instruments
Trial Balance
December 31, 2019
Account Title Debit Credit
Cash $87,600
Accounts Receivable 5,000
Prepaid Rent 1,200
Office Supplies 3,400
Land 70,000
Building 16,500
Equipment 2,000
Accounts Payable $15,000
Notes Payable 60,000
Common Stock 50,000
Dividends 1,200
Service Revenue 72,000
Utilities Expense 4,100
Salaries Expense 4,000
Advertising Expense 2,000 _______
Total $197,000 $197,000
Diff: 3
LO: 2-4
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: What is the Trial Balance (H1)
18) At the end of a month, a business shows the following balances in its ledger.
Use this data to prepare a trial balance.
19) Data from a trial balance is used to prepare the income statement, statement of retained earnings, and
the balance sheet.
20) The trial balance is one of the basic financial statements that is issued to external users of the business.
21) Which of the following is a financial statement that presents a business's accounting equation?
A) Chart of Accounts
B) Trial Balance
C) Income Statement
D) Balance Sheet
22) When is a trial balance usually prepared?
A) after each entry is journalized
B) before the financial statements are prepared
C) after the financial statements are prepared
D) at the beginning of an accounting period
23) The following are the current month's balances for selected accounts of Sandlin Marketing Company.
Accounts Payable
$9,000
Revenue
8,000
Cash
7,650
Expenses
1,100
Furniture
11,000
Accounts Receivable
12,000
Common Stock
10,250
Notes Payable
4,500
What is the net income for Sandlin Marketing for the current month?
A) $8,000
B) $6,900
C) $9,100
D) $15,650
24) Randall's Service Company began operations on January 1, 2019. The following Trial Balance was
prepared on December 31, 2019. Capital contributions during the year were $54,000.
Randall's Service Company
Trial Balance
December 31, 2019
Account Title Debit Credit
Cash $25,400
Accounts Receivable 5,000
Prepaid Rent 1,200
Office Supplies 3,400
Land 45,000
Building 16,500
Equipment 23,000
Accounts Payable $15,000
Unearned Revenue 5,000
Notes Payable 25,000
Common Stock 54,000
Dividends 6,300
Service Revenue 83,100
Salaries Expense 34,000
Rent Expense 15,000
Office Expense 6,000
Repair Expense 1,300
Total $182,100 $182,100
What is the December 31, 2019 balance of Retained Earnings?
A) $33,100
B) $19,300
C) $20,500
D) $25,500
25) Donaldson's Delivery Company began operations on January 1, 2019. The following Trial Balance
was prepared on December 31, 2019.
Donaldson's Delivery Service Company
Trial Balance
December 31, 2019
Account Title Debit Credit
Cash $15,500
Accounts Receivable 8,000
Prepaid Rent 2,400
Office Supplies 1,400
Land 25,000
Building 32,000
Equipment 23,000
Accounts Payable $10,400
Unearned Revenue 2,500
Notes Payable 20,000
Common Stock 59,000
Dividends 6,800
Service Revenue 78,400
Salaries Expense 34,000
Rent Expense 15,000
Truck Expense 5,700
Office Expense 1,500 _______
Total $170,300 $170,300
What is the net income for the year ended December 31, 2019?
A) $15,400
B) $22,200
C) $24,700
D) $74,400
26) Provide a definition of each of the follow accounting terms.
Accounting Term
Definition
Chart of accounts
Posting
Normal balance
Accounting Term
Definition
Chart of accounts
A list of all accounts with their account
numbers
Posting
Transferring amounts from the journal
to the ledger
Normal balance
Side of an account where increases are
recorded
27) Provide a definition of each of the follow accounting terms.
Accounting Term
Definition
Ledger
Trial Balance
Debit
Accounting Term
Definition
Ledger
The record holding all the accounts of a
business, the changes in those accounts,
and their account balances
Trial Balance
A list of all accounts with their balances
at a point in time
Debit
Left side of a T-account
28) Provide a definition of each of the follow accounting terms.
Accounting Term
Definition
Compound journal entry
Journal
Account
Accounting Term
Definition
Compound journal entry
A journal entry that is characterized by
having multiple debits and/or multiple
credits
Journal
A record of transactions in date order
Account
A detailed record of all increases and
decreases that have occurred in a
particular asset, liability, or equity
during a period
29) Balancing errors can be detected by computing the difference between total debits and total credits on
the trial balance.
30) If the total debits equal the total credits on the trial balance, the individual account balances will be
error free.
