121
211)
Mary Sunny began business as Sunny 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) Mary invested $15,000 cash and a law library valued at $6,000.
b) Purchased $7,500 of office equipment from John Bronx on credit.
c) Completed legal work for a client and received $1,500 cash in full payment.
d) Paid John Bronx. $3,500 cash in partial settlement of the amount owed.
e) Completed $4,000 of legal work for a client on credit.
f) Mary 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.
122
212)
Jerry’s Butcher Shop had the following assets and liabilities at the beginning and end of the current
year:
Beginning of the year $114,000 $68,000
End of the year 135,000 73,000
Assets Liabilities
If Jerry made no investments in the business and withdrew no assets during the year, what was the
amount of net income earned by Jerry’s Butcher Shop?
123
213)
Jerry’s Butcher Shop had the following assets and liabilities at the beginning and end of the current
year:
Beginning of the year $114,000 $68,000
End of the year 135,000 73,000
Assets Liabilities
If Jerry 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 Jerry’s Butcher Shop?
214)
Jerry’s Butcher Shop had the following assets and liabilities at the beginning and end of the current
year:
Beginning of the year $114,000 $68,000
End of the year 135,000 73,000
Assets Liabilities
If Jerry made no investments in the business but withdrew $5,000 during the year, what was the
amount of net income earned by Jerry’s Butcher Shop?
124
215)
Jerry’s Butcher Shop had the following assets and liabilities at the beginning and end of the current
year:
Beginning of the year $114,000 $68,000
End of the year 135,000 73,000
Assets Liabilities
If Jerry invested an additional $12,000 in the business and withdrew $5,000 during the year, what
was the amount of net income earned by Jerry’s Butcher Shop?
216)
A company had total assets of $350,000, total liabilities of $101,500 and total equity of
$248,500. Calculate the company’s debt ratio.
217)
Jackson Advertising Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500.
Calculate its debt ratio.
218)
List the four steps in recording transactions.
219)
Given 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.
________
________
________
________
________
________
____________
220)
After preparing an (unadjusted) trial balance at year-end, R. Chang of Chang Window 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 R, Chang,
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 errors cause the trial balance to be out of
balance?
Error
Yes
No
1.
________
________
2.
________
________
3.
________
________
4.
________
________
5.
________
________
Would the errors cause the trial balance to be out of balance?
X_______
________
________
221)
The balances for the accounts of Milo’s Management 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…………………
?
Office Supplies.
1,200
127
Office Supplies.
1,200
Building…………….
125,000
Supplies Expense……
21,500
Land………………….
50,000
D. Milo, Capital………..
118,700
Unearned Management Fees
4,000
Management Revenue.
175,000
D. Milo, Withdrawals
48,000
Calculate the correct balance for Cash and prepare a trial balance.
Cash**
Accounts Receivable
Office Supplies
Land
Building
Accounts Payable
$6,500
Unearned Management Fees
Management Revenue
Wages Expense
Rent Expense
Supplies Expense
Totals
**Total credits
Total debits (excluding cash)
Cash
222)
At year-end, Henry Laundry 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
128
Would the error
Correcting
1.
2.
4.
5.
balance.
5. A $24,900 van purchase was recorded as a $24,090 debit to Equipment 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 Henry was recorded as a debit to Del Henry, 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 Henry, 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.
130
X
0
X
X
18,000
X
223)
The following trial balance is prepared from the general ledger of HG’s Auto Maintenance.
HG’S AUTO MAINTENANCE
Trial Balance
October 31
Debit
Credit
Cash
$1,975
Accounts receivable
2,800
Supplies
500
Shop equipment
13,000
Office equipment
6,600
Accounts payable
$ 4,510
Hal Griffin, Capital
22,000
Hal Griffin, Withdrawals
4,200
Repair fees earned
11,875
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 Griffin, 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 Griffin, Withdrawals account was posted as a credit.
5. Office equipment purchased for $800 was posted to the Shop 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 HG’s Auto Maintenance as of October 31.
131
224)
Figgaro Company’s accounts and their balances, as of the end of August, are included below. 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. Figgaro, Withdrawals..
24,000
Office supplies………
1,500
Salaries expense………..
30,000
Notes payable…………
22,000
J. Figgaro, Capital……..
58,100
a. Calculate net income.
b. Determine the amount of owner’s equity to be shown on the August 31 balance sheet.
225)
Based on the following trial balance for Sally’s Salon, prepare an income statement, statement of
owner’s equity, and a balance sheet. Sally Crawford made no additional investments in the company
during the year.
Sally’s Salon
Trial Balance
December 31
Cash
$ 6,500
Accounts receivable
475
Beauty supplies
2,500
Beauty shop equipment
17,000
Accounts payable
$ 745
S. Crawford, Capital
21,155
S. Crawford, Withdrawals
36,000
Revenue earned
72,000
Beauty supplies expense
3,425 132
133
Beauty supplies expense
3,425
Rent expense
6,000
Wages expense
22,000
Totals
$93,900
$93,900
Revenue earned………………
Expenses:
6,000
Plus: Net income…………………………………………..
40,575
Less: Withdrawals by owner……………………………..
$25,730
Accounts payable
Accounts receivable……..
Beauty supplies………….
2,500
Equity
Beauty shop equipment….
17,000
$25,730
Total assets………………
Total liabilities and equity
226)
George Butler owned a tugboat and was tired of his current job. He decided to open a business that
provides day tugboat tours to tourists along the Mississippi River near his hometown. Prepare
journal entries to record the following transactions.
May 1 Butler invested $20,000 cash and his tugboat valued at $90,000 in the business.
May 2 Butler paid $3,000 cash for office equipment to help him keep track of business
activities.
May 3 Butler bought boating supplies costing $2,500 on credit.
May 4 Butler paid the river master $500 cash for the first month’s dock rental.
May 5 Butler paid $1,800 cash for a six-month insurance policy.
May 10 Butler received $2,000 cash from clients for his first tour.
May 12 Butler provided a $3,500 tour on credit, the customer has agreed to pay within
10 days
May 19 Butler paid for the boating supplies originally purchased on May 3.
May 22 Butler receives payment on the account from the client entry on May 12.
May 25 Butler received $2,750 cash for additional tours that he completed that day.
May 31 Butler paid his crew member a salary of $1,000.
May 31 Butler withdrew $2,000 for personal use.
134
227)
Based on the following trial balance for Barry’s Automotive Shop, prepare an income statement,
statement of owner’s equity, and a balance sheet. Barry made no additional investments in the
company during the year.
Barry’s Automotive 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
Barry, Capital 135
38,525