Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
149. Indicate whether a debit or credit entry would be made to record the following changes
in each account.
a. To decrease Cash
b. To increase Owner, Capital
c. To decrease Accounts Payable.
d. To increase Salaries Expense.
e. To decrease Supplies.
f. To increase Revenue.
g. To decrease Accounts Receivable.
h. To increase Owner, Withdrawals.
150. The following is a list of accounts and identification letters A through J for Shannon
Management Co.:
A. Shannon, Capital F. Prepaid Rent
B. Interest Payable G. Advertising Expense
C. Land H. Unearned Rent Revenue
D. Shannon, Withdrawals I. Commissions Earned
E. Fees Earned J. Notes Receivable
Use the form below to identify the type of account and its normal balance. The first item is
filled in as an example.
Type of Account Normal Balance
Asset Liability Equity Debit Credit
A X X
B
C
D
E
F
G
H
I
J
151. Dolly Barton began Barton Office Services in October and during that month completed
these transactions:
a. Invested $10,000 cash, and $15,000 of computer equipment.
b. Paid $500 cash for an insurance premium covering the next 12 months.
c. Completed a word processing assignment for a customer and collected $1,000 cash.
d. Paid $200 cash for office supplies.
e. Paid $2,000 for October's rent.
Prepare journal entries to record the above transactions. Explanations are unnecessary.
152. A company sends a $1,500 bill to a customer for delivery services rendered. Set up the
necessary T-accounts below and show how this transaction would be recorded directly in
those accounts.
153. A company paid $2,500 cash to satisfy a previously recorded account payable. Set up the
necessary T-accounts below and show how this transaction would be recorded directly in
those accounts.
154. A business paid $100 cash to Karen Smith (the owner of the business) for her personal
use. Set up the necessary T-accounts below and show how this transaction would be recorded
directly in those accounts.
155. On December 3, the Matador Company paid $5,400 cash in salaries to office personnel.
Prepare the general journal entry to record this transaction.
156. On February 5, Textron Stores purchased a van that cost $35,000. The firm made a
down payment of $5,000 cash and signed a long-term note payable for the balance. Show the
general journal entry to record this transaction.
157. Krenz Car Care, owned and operated by Karl Krenz, began business in September of the
current year. Karl, a master mechanic, had no experience with keeping a set of books. As a
result, Karl entered all of September's transactions directly to the ledger accounts. When he
tried to locate a particular entry he found it confusing and time consuming. He has hired you
to improve his accounting procedures. The accounts in his General Ledger follow:
Cash Equipment
9/01 (a) 4,200 9/4 (b) 550 9/1 (a) 800
9/11 (d) 150 9/4 (b) 2,550
9/15 (e) 190
K.Krenz, Capital Notes Payable
9/1 (a) 5,000 9/4 (b)
2,000
Accounts Receivable Revenue
9/9 ( c) 275 9/15 (e) 190 9/9 ( c) 275
9/11 (d) 150
Prepare the general journal entries, in chronological order (a) through (e), from the T-account
entries shown. Include a brief description of the probable nature of each transaction.
158. Flora Accounting Services completed these transactions in February:
a. Purchased office supplies on account, $300.
b. Completed work for a client on credit, $500.
c. Paid cash for the office supplies purchased in (a).
d. Completed work for a client and received $800 cash.
e. Received $500 cash for the work described in (b).
f. Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary.
159. Leonard Matson completed these transactions during December of the current year:
Dec. 1 Began a financial services practice by investing $15,000 cash
and office equipment having a $5,000 value.
2 Purchased $1,200 of office equipment on credit.
3 Purchased $300 of office supplies on credit.
4 Completed work for a client and immediately received a payment
of $900 cash.
8 Completed work for Acme Loan Co. on credit, $1,700.
10 Paid for the supplies purchased on credit on December 3.
14 Paid for the annual $960 premium on an insurance policy.
18 Received payment in full from Acme Loan Co. for the work
completed on December 8.
27 Leonard withdrew $650 cash from the practice to pay personal
expenses.
30 Paid $175 cash for the December utility bills.
30 Received $2,000 from a client for financial services to be rendered next year.
Prepare general journal entries to record these transactions.
2-70
160. Maria Sanchez began business as Sanchez Law Firm on November 1. Record the
following November transactions by making entries directly to the T-accounts provided.
Then, prepare a trial balance, as of November 30.
a) Sanchez invested $15,000 cash and a law library valued at $6,000.
b) Purchased $7,500 of office equipment from Johnson Bros. on credit.
c) Completed legal work for a client and received $1,500 cash in full payment.
d) Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed.
e) Completed $4,000 of legal work for a client on credit.
f) Sanchez withdrew $2,000 cash for personal use.
g) Received $2,500 cash as partial payment for the legal work completed for the client in (e).
h) Paid $2,500 cash for the legal secretary's salary.
Cash Office Equipment M. Sanchez,
Withdrawals
Accounts Receivable Accounts Payable Legal Fees Earned
Law Library M. Sanchez, Capital Salaries Expense
161. Josephine's Bakery had the following assets and liabilities at the beginning and end of
the current year:
Assets Liabilities
Beginning of the year ..................................... $114,000 $68,000
End of the year ............................................. 135,000 73,000
If Josephine made no investments in the business and withdrew no assets during the year,
what was the amount of net income earned by Josephine's Bakery?
2-73
162. Josephine's Bakery had the following assets and liabilities at the beginning and end of
the current year:
Assets Liabilities
Beginning of the year ..................................... $114,000 $68,000
End of the year ............................................. 135,000 73,000
If Josephine invested an additional $12,000 in the business during the year, but withdrew no
assets during the year, what was the amount of net income earned by Josephine's Bakery?
163. Josephine's Bakery had the following assets and liabilities at the beginning and end of
the current year:
Assets Liabilities
Beginning of the year ..................................... $114,000 $68,000
End of the year ............................................. 135,000 73,000
If Josephine made no investments in the business but withdrew $5,000 during the year, what
was the amount of net income earned by Josephine's Bakery?
164. Josephine's Bakery had the following assets and liabilities at the beginning and end of
the current year:
Assets Liabilities
Beginning of the year ..................................... $114,000 $68,000
End of the year ............................................. 135,000 73,000
If Josephine invested an additional $12,000 in the business and withdrew $5,000 during the
year, what was the amount of net income earned by Josephine's Bakery?
165. A company had total assets of $350,000 and total liabilities of $101,500 and total equity
of $248,500. Calculate its debt ratio.
166. Montgomery Marketing Co. had assets of $475,000; liabilities of $275,500; and equity
of $199,500. Calculate its debt ratio.
167. List the steps in recording transactions.
Answer:
168. For each of the following errors, indicate on the table below the amount by which the
trial balance will be out of balance and which trial balance column (debit or credit) will have
the larger total as a result of the error.
a. $100 debit to Cash was debited to the Cash account twice.
b. $1,900 credit to Sales was posted as a $190 credit.
c. $5,000 debit to Office Equipment was debited to Office Supplies.
d. $625 debit to Prepaid Insurance was posted as a $62.50 debit.
e. $520 credit to Accounts Payable was not posted.
Error Amount Out
of Balance Column Having Larger Total
a.
b.
c.
d.
e.
169. After preparing an (unadjusted) trial balance at year-end, G. Chu of Chu Design
Company discovered the following errors:
1. Cash payment of the $225 telephone bill for December was recorded twice.
2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes
Payable for $1,000.
3. A $900 cash withdrawal by the owner was recorded to the correct accounts as $90.
4. An additional investment of $5,000 cash by the owner was recorded as a debit to G. Chu,
Capital and a credit to Cash.
5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office
Equipment account with no offsetting credit entry.
Using the form below, indicate whether the error would cause the trial balance to be out of
balance by placing an X in either the yes or no column. Would the error cause the trial
balance to be out of balance?
Error Yes No
1.
2.
3.
4.
5.
Would the error cause the trial balance to be out of balance?
170. The balances for the accounts of Mike's Maintenance Co. for the year ended December
31 are shown below. Each account shown had a normal balance.
Accounts payable….. $ 6,500 Wages expense……… 36,000
Accounts receivable... 7,000 Rent expense………... 6,000
Cash………………… ?
Maintenance supplies. 1,200
Building……………. 125,000
Supplies expense…… 21,500 Land…………………. 50,000
Mike Capital……….. 118,700 Unearned maintenance
fees………………… 4,000
Maintenance revenue. 175,000 Mike, Withdrawals…..
48,000
Calculate the correct balance for Cash and prepare a trial balance.
2-79
171. At year-end, Harris Cleaning Service noted the following errors in its trial balance:
1. It understated the total debits to the Cash account by $500 when computing the account
balance.
2. A credit sale for $311 was recorded as a credit to the revenue account, but the offsetting
debit was not posted.
3. A cash payment to a creditor for $2,600 was never recorded.
4. The $680 balance of the Prepaid Insurance account was listed in the credit column of the
trial balance.
5. A $24,900 truck purchase was recorded as a $24,090 debit to Vehicles and a $24,090 credit
to Notes Payable.
6. A purchase of office supplies for $150 was recorded as a debit to Office Equipment. The
offsetting credit entry was correct.
7. An additional investment of $4,000 by Del Harris was recorded as a debit to Del Harris,
Capital and as a credit to Cash.
8. The cash payment of the $510 utility bill for December was recorded (but not paid) twice.
9. The revenue account balance of $79,817 was listed on the trial balance as $97,817.
10. A $1,000 cash withdrawal was recorded as a $100 debit to Del Harris, Withdrawal and
$100 credit to cash.
Using the form below, indicate whether each error would cause the trial balance to be out of
balance, the amount of any imbalance, and whether a correcting journal entry is required.
Would the error
cause the trial
balance to be out
of balance? Amount of
Imbalance Correcting
Journal Entry
Required
Error Yes No Yes No
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
