2-139
217.
For each of the accounts in the following table (1) identify the type of account as an asset,
liability, equity, revenue, or expense, and (2) identify the normal balance of the account.
Normal
Balance
a. Wages Expense
b. Accounts Receivable
c. Commissions Earned
d. Salaries Payable
e. Common Stock
f. Unearned Advertising
Revenue
g. Salaries Expense
h. Magazine
Subscription Revenue
i. Dividends
j. Prepaid Insurance
a. Wages Expense
b. Accounts Receivable
c. Commissions Earned
d. Salaries Payable
e. Common Stock
f. Unearned Advertising
g. Salaries Expense
h. Magazine
Subscription Revenue
j. Prepaid Insurance
2-140
218.
For each of the following accounts, identify whether a debit or credit yields the indicated
change.
a. To increase Fees Earned
b. To decrease Cash
c. To decrease Unearned Revenue
d. To increase Accounts
Receivable
e. To increase Common Stock
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
219.
Indicate on which of the financial statements the following items appears. Use I for income
statement, E for statement of retained earnings, and B for balance sheet. More than one
statement may be appropriate for some items.
a. Fees Earned
b. Cash
c. Unearned Revenue
d. Rent expense
a. To increase Fees Earned
b. To decrease Cash
c. To decrease Unearned Revenue
d. To increase Accounts Receivable
e. To increase Common Stock
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
2-141
e. Retained Earnings
f. Notes Payable
g. Prepaid Rent
h. Salaries Expense
i. Notes Payable
j. Dividends
220.
Jason Hope decided to open a hotel, set up as a corporation, in his hometown. Prepare journal
entries to record the following transactions. Hope uses the accounts Room Rental Revenue
and Event Revenue. All expenses for special events are recorded as Event Expense.
June 1
Hope invested $400,000 into the business.
June 2
Hope purchased an existing building and
land for the hotel costing $900,000. The
purchase appraisal allocated $100,000 for
land and $800,000 to the building. Hope
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 hotel.
June 5
Purchased linens and other supplies
costing $4,000 on account.
a. Fees Earned
b. Cash
c. Unearned Revenue
d. Rent expense
e. Retained Earnings
f. Notes Payable
g. Prepaid Rent
h. Salaries Expense
i. Notes Payable
j. Dividends
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June
10
Received advance payments of $12,000
from customers that will be staying at the
hotel 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 hotel 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 a wedding
reception during the weekend.
June
18
Paid the caterer $2,500 for providing
catering services for the wedding
reception.
June
18
Paid Fixture Rentals $1,000 for table and
chair rental.
June
19
Paid the florist $2,000 for flowers for the
event.
June
24
Paid for the linens and supplies purchased
on June 5.
June
25
Recorded an additional $5,000 from
current hotel customers for June.
June
30
Paid the staff $2,000 for the second semi-
monthly payroll.
June
30
The company paid $4,000 cash in
dividends to the owner. (sole shareholder)
June 1
Cash
Common Stock
June 2
Land
Building
221.
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
(Debit or Credit)
a. Prepaid
Insurance
b. Accounts
Payable
c. Common Stock
d. Utilities
expense
e. Land
f. Services
revenue
g. Notes
Receivable
h. Advertising
expense
i. Unearned
Revenue
j. Service Revenue
Account Title
a. Prepaid Insurance
c. Common Stock
d. Utilities expense
e. Land
f. Services revenue
g. Notes Receivable
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222.
The steps in the accounting process focus on analyzing and recording financial transactions
and events within a company. Those steps are shown below. Using the number system of 1 as
the first step and 4 as the last step in the process, number the steps in the correct order in
which they would occur (1 thru 4).
_____ Record relevant transactions and events in a journal
_____ Post journal information to the ledger accounts
_____ Prepare and analyze the trial balance
_____ Analyzing each transaction
Fill in the Blank Questions
223.
Identifying _____________ and ______________ is the starting point of financial statements.
224.
The second step in the analyzing and recording process is to record the transactions and
events in the book of original entry, called the ______________.
225.
The third step in the analyzing and recording process is to post the information to the
___________________.
226.
_________________ documents identify and describe transactions and events and provide
objective evidence and amounts for recording.
227.
Revenues and expenses are two categories of ____________________ accounts.
228.
The _______________________ is a record containing all accounts used by a company as well
as the transactions and ending balances of each of the accounts.
229.
___________________ are promises of payment from customers to sellers.
230.
Unearned revenue is classified as a(an) _______________ on a business’s balance sheet.
231.
The four categories of equity accounts are ________________, __________________,
______________________, and ______________________.
232.
A _______________ is a
list
of all the accounts used by a company and their identification
codes but does not contain the balances.
233.
A record containing all the separate accounts for a company as well as all of their balances is
called the ___________________.
234.
_____________________________ 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.
235.
The _____________________ is found by determining the difference between total debits and
total credits for an account, including any beginning balance.
236.
To increase an asset account we would _______________ it and to increase a liability account,
we would ______________ it.
237.
Funky Music purchased $25,000 of equipment for cash. The Equipment asset account is
_______________ for $25,000 and the cash account is _______________ for $25,000.
238.
Jackson Brown Footwear had total liabilities of $130 million and total assets of $375 million.
Its debt ratio was _______________.
239.
_______________ is the process of transferring journal entry information from the journal to the
ledger.
240.
A ____________ gives a complete record of each transaction in one place, and shows debits
and credits for each transaction.
241.
A more structured 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 _____________________.
242.
The posting process is the link between the _______________ and the _____________.
243.
You increase the
Service
Revenue
account on the ___________ side of its account.
244.
You decrease the
Accounts
Payable
account on the ___________ side of its account.