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172. The following trial balance is prepared from the general ledger of Hal’s Auto Repair.
HAL’S AUTO REPAIR
Trial Balance
October 31
Debit Credit
Cash $ 975
Accounts receivable 3,800
Supplies 500
Repair equipment 13,000
Office equipment 6,600
Accounts payable $ 4,510
Hal Frederick, Capital 23,000
Hal Frederick, Withdrawals 4,200
Repair fees earned 10,875
Supplies expense 8,600
Totals $37,675 $38,385
Because the trial balance did not balance, you decided to examine the accounting records.
You found that the following errors had been made:
1. A purchase of supplies on account for $245 was posted as a debit to Supplies and as a debit
to Accounts Payable.
2. An investment of $500 cash by the owner was debited to Hal Frederick, Capital and
credited to Cash.
3. In computing the balance of the Accounts Receivable account, a debit of $600 was omitted
from the computation.
4. One debit of $300 to the Hal Frederick, Withdrawals account was posted as a credit.
5. Office equipment purchased for $800 was posted to the Repair Equipment account.
6. One entire entry was not posted to the general ledger. The transaction involved the receipt
of $125 cash for repair services performed for cash.
Prepare a corrected trial balance for the Hal’s Auto Repair as of October 31.
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173. The following are all of the accounts of Flaherty Company that have a balance at the end
of August. All accounts have normal balances:
Accounts receivable…… $36,000 Cash……………………. $27,000
Equipment…………….. 59,000 Advertising expense…… 5,000
Service revenues earned. 75,000 Accounts payable………. 31,000
Rent expense…………... 3,600 J. Flaherty, Withdrawals.. 24,000
Office supplies………… 1,500 Salaries expense……….. 30,000
Notes payable…………. 22,000 J. Flaherty, Capital…….. 58,100
a. Calculate net income.
b. Determine the amount of owner’s equity to be shown on the August 31 balance sheet.
174. Based on the following trial balance for Sal’s Beauty Shop, prepare an income statement,
statement of owner’s equity, and a balance sheet. Sal made no additional investments in the
company during the year.
Sal’s Beauty Shop
Trial Balance
December 31
Cash $ 6,500
Accounts receivable 475
Beauty supplies 2,500
Beauty shop equipment 17,000
Accounts payable $ 745
Sal Style, Capital 21,155
Sal Style, Withdrawals 36,000
Revenue earned 72,000
Beauty supplies expense 3,425
Rent expense 6,000
Wages expense 22,000
Totals $93,900
$93,900
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175. James Haley owned a sailboat and was tired of his current job. He decided to open a
business that provides day sails to tourists in his hometown. Prepare journal entries to record
the following transactions.
May 1 Haley invested $20,000 cash and his sailboat valued at $90,000 in the business.
May 2 Haley paid $3,000 cash for office equipment to help him keep track of business
activities.
May 3 Haley bought sailing supplies costing $2,500 on credit.
May 4 Haley negotiated with the harbor master and paid $500 cash for the first month’s
dock rental.
May 5 Haley paid $1,800 cash for a six-month insurance policy.
May 10 Haley received $2,000 cash from clients for his first tour.
May 12 Haley provided a $3,500 tour on credit, the customer has agreed to pay within
10 days
May 19 Haley paid for the sailing supplies originally purchased on May 3.
May 22 Haley receives payment on the account from the client entry on May 12.
May 25 Haley received $2,750 cash for additional tours.
May 31 Haley paid his deck hand a salary of $1,000.
May 31 Haley withdrew $2,000 for personal use.
176. Based on the following trial balance for Smyth’s Repair Shop, prepare an income
statement, statement of owner’s equity, and a balance sheet. Smyth made no additional
investments in the company during the year.
Smyth’s Repair Shop
Trial Balance
December 31
Cash $ 12,500
Accounts receivable 1,500
Supplies 500
Repair shop equipment 27,000
Service truck 33,000
Accounts payable $
2,600
Smyth, Capital 39,525
Smyth, Withdrawals 36,000
Service Revenue 125,000
Supplies expense 3,425
Rent expense 18,000
Utilities expense 6,000
Gas expense 7,200
Wages expense 22,000
Totals $167,125
167,125
177. For each of the following (1) identify the type of account as an asset, liability, equity,
revenue, or expense, and (2) identify the normal balance of the account.
Account Type Normal Balance
a. Wages expense
b. Accounts Receivable
c. Commissions earned
d. Salaries payable
e. Owner, Capital
f. Unearned Advertising Revenue
g. Salaries expense
h. Season ticket sales
i. Owner, Withdrawal
j. Prepaid Insurance
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178. Identify whether a debit or credit yields the indicated change for each of the following
accounts.
a. To increase Fees Earned
b. To decrease Cash
c. To decrease Unearned Revenue
d. To increase Accounts Receivable
e. To increase Owner, Capital
f. To decrease Notes Payable
g. To increase Prepaid Rent
h. To increase Salaries Expense
i. To increase Accounts Payable
j. To decrease Prepaid Insurance
179. Indicate the financial statement on which each of the following items appears. Use I for
income statement, E for statement of owner’s equity, and B for balance sheet.
a. Fees Earned
b. Cash
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c. Unearned Revenue
d. Rent expense
e. Owner, Capital
f. Notes Payable
g. Prepaid Rent
h. Salaries Expense
i. Notes Payable
j. Owner, Withdrawal
180. Tom Pines decided to open a bed and breakfast in his hometown. Prepare journal entries
to record the following transactions.
June 1 Pines invested $400,000 into the business
June 2 Pines purchased a log chalet for the bed and breakfast costing $900,000. The
purchase appraisal allocated $200,000 for land and $700,000 to the chalet. Pines paid
$250,000 and financed the remainder with a mortgage note payable.
June 3 Paid $6,000 for a six month insurance policy on the chalet.
June 5 Purchased linens and other supplies costing $4,000 on account.
June 10 Received advance payments of $12,000 from customers that will be staying at
the B&B in July. Payments will be refunded if the customer cancels within 7 days of their
scheduled arrival time.
June 14 Received cash payments of $13,000 from current customers staying at the B&B
in June.
June 15 Paid the staff $2,000 for the first semi-monthly payroll.
June 16 Paid $500 for general maintenance and repairs expense.
June 17 Received $10,000 payment for wedding party fees for the weekend. The B&B
also provides a venue for weddings.
June 18 Paid the caterer $2,500 for providing catering services for the wedding party.
June 18 Paid Party Rentals $1,000 for table and chair rental.
June 19 Paid the florist $2,000 for flowers for the wedding.
June 24 Paid for the linens and supplies purchased on June 5.
June 25 Received an additional $5,000 from current customers for June.
June 30 Paid the staff $2,000 for the second semi-monthly payroll.
June 30 The owner withdrew $4,000 for personal use.
181. For each of the following (1) identify the type of account as an asset, liability, equity,
revenue, or expense, and (2) identify the normal balance of the account.
Account Title Account Type Normal Balance
a. Prepaid Rent
b. Accounts Payable
c. Owner, Capital
d. Repairs expense
e. Land
f. Services revenue
g. Notes Receivable
h. Advertising expense
i. Unearned Rental Revenue
j. Rental Revenue
Fill in the Blank Questions
182. _____________ and ______________ are the starting points for the analyzing and
recording process.
183. The second step in the analyzing and recording process is to record the transactions and
events in the______________.
184. The third step in the analyzing and recording process is to post the information to
___________________.
185. _________________ identify and describe transactions and events and provide objective
evidence and amounts for recording.
186. Revenues and expenses are two categories of ____________________ accounts.
187. The _______________________ is a record containing all accounts used by a company.
188. The three general categories of accounts in a general ledger are ____________,
_________, and _____________.
189. ___________________ are promises of payment from customers to sellers.
190. Unearned revenue is classified as a(an) _______________ that is satisfied by delivering
products or services in the future.
191. The four categories of equity accounts are ________________, __________________,
______________________, and ______________________.
192. A _______________ is a list of all the accounts used by a company and their
identification codes.
193. A ___________________ is a record containing all accounts for a company along with
their balances.
194. _____________________________ requires that each transaction affect, and be
recorded in, at least two accounts. It also means that total amounts debited must equal total
amounts credited for each transaction.
195. The difference between total debits and total credits for an account, including any
beginning balance is the ________________________.
196. Increases in assets are _______________ to asset accounts, increases in liabilities are
_______________ to liability accounts.
197. FastForward purchased $25,000 of equipment for cash. The Equipment asset account is
_______________ for $25,000 and the cash account is _______________ for $25,000.
198. Stride Along had total liabilities of $130 million and total assets of $375 million. Its debt
ratio was _______________.
199. _______________ is the process of transferring journal entry information to the ledger.
200. A ____________ gives a complete record of each transaction in one place, and shows
debits and credits for each transaction.
201. An account format that is similar to a T-account in that it has columns for debits and
credits, but that is different in that it has columns for transaction date, explanation, and the
account balance is the _____________________.
202. The posting process is the link between the _______________ and the _____________.