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81
207) For each of the following accounts, indicate whether a debit or credit is used to increase (+)
or decrease (-) the balance of the account.
Account
Debit
Credit
(a) Common Stock
(b) Liability
(c) Asset
(d) Revenue
(e) Dividend
(f) Retained Earnings
(g) Expense
208) For each of the following accounts, indicate whether we use a debit or a credit to increase
the balance of the account.
(a) Accounts Receivable
(b) Accounts Payable
(c) Salaries Expense
(d) Service Revenue
(e) Supplies
(f) Common Stock
(g) Advertising Expense
(h) Dividends
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209) For each of the following accounts, indicate whether we use a debit or a credit to decrease
the balance of the account.
(a) Accounts Receivable
(b) Accounts Payable
(c) Salaries Expense
(d) Service Revenue
(e) Supplies
(f) Common Stock
(g) Advertising Expense
(h) Dividends
210) A company issues common stock for $20,000 cash. Record the transaction.
211) A company purchases a building for $100,000, signing a note payable. Record the
transaction.
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212) A company purchases equipment for $15,000 cash. Record the transaction.
213) A company purchases office supplies on account for $7,500. Record the transaction.
214) A company provides services to customers on account, $3,500. Record the transaction.
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215) A company provides services to customers for $2,400 cash. Record the transaction.
216) A company pays employees' salaries of $4,200 for the current period. Record the
transaction.
217) A company pays $2,000 dividends to its stockholders. Record the transaction.
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218) A company collects $4,000 cash from customers for services previously provided on
account. Record the transaction.
219) A company receives $6,500 cash in advance from customers for services to be provided
next year. Record the transaction.
220) A company pays $5,400 for maintenance in the current period. Record the transaction.
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221) A company pays $12,000 to purchase a one-year insurance policy. Record the transaction.
222) Record the following transactions for Acme Builders:
(a) Purchase office supplies on account, $1,200.
(b) Provide services to customers for cash, $2,500.
(c) Pay $1,100 in salaries for the current month.
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223) Record the following transactions for the Stroud Music Store:
(a) Provide music lessons to students for $12,000 on account.
(b) Purchase music supplies on account, $1,500.
(c) Pay rent for the current month, $2,000.
(d) Receive $10,000 cash from students in (a) above.
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224) Rite Shoes was involved in the transactions described below. Record each transaction. If an
entry is not required, state "No Entry."
(a) Purchased $8,200 of supplies on account.
(b) Paid weekly salaries, $920.
(c) Provided services to customers on account, $5,300.
(d) Paid for supplies purchased in (a) above.
(e) Placed an order for $6,200 of supplies.
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225) Record the following transactions. If an entry is not required, state "No Entry."
(a) Started business by issuing 10,000 shares of common stock for $20,000.
(b) Hired Rebecca as an administrative assistant, promising to pay her $2,000 every two weeks.
(c) Rented a building for three years at $500 per month and paid six months' rent in advance.
(d) Purchased equipment for $5,400 cash.
(e) Purchased $1,800 of supplies on account.
(f) Provided services to customers for $7,800 cash.
(g) Paid employees' salaries, $5,200.
(h) Paid for supplies purchased in item (e).
(i) Paid $800 for current advertising in a local newspaper.
(j) Paid utility bill of $1,300 for the current month.
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226) Consider the following T-account for Accounts Payable.
Accounts Payable
10,200
8,800
4,500
1. Compute the balance of the Accounts Payable account.
2. Give an example of a transaction that would have resulted in the $8,800 posting to the
account.
3. Give an example of a transaction that would have resulted in the $4,500 posting to the
account.
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227) Consider the following transactions for Mittel Corporation:
a. Issue common stock for $10,000.
b. Purchase equipment for $11,500 cash.
c. Pay employees' salaries of $3,700.
e. Provide services to customers for $6,200 cash.
1. Post these transactions to the Cash T-account. Assume the balance of Cash before these
transactions is $4,200.
2. Calculate the ending balance of the Cash account.
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228) Use the following information to prepare a trial balance.
Cash
$6,200
Deferred revenue
1,200
Prepaid insurance
1,200
Accounts payable
1,900
Retained earnings
1,600
Utilities expense
3,000
Dividends
1,200
Salaries expense
2,200
Accounts receivable
3,400
Common stock
6,200
Service revenue
7,100
Maintenance expense
800
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229) Below is a list of activities.
Transaction
Assets
=
Liabilities
+
Stockholders'
Equity
1. Obtain a loan at the bank
Increase
=
Increase
+
No Effect
2. Issue common stock to
stockholders for cash.
3. Purchase equipment for cash.
4. Pay cash for insurance in advance.
5. Pay cash for employees' salaries in
the current period.
6. Pay accounts payable.
7. Purchase office supplies on
account.
8. Provide services to customers for
cash.
9. Provide services to customers on
account.
10. Pay cash dividends to
stockholders.
11. Pay cash for utilities in the current
period.
Required:
For each activity, indicate whether the transaction increases, decreases, or has no effect on assets,
liabilities, and/or stockholders' equity.
94
95
230) Below is a list of activities.
Transaction
Assets
=
Liabilities
+
Stockholders'
Equity
1. Issue common stock in
exchange for cash, $15,000
+$15,000
=
$0
+
+$15,000
2. Purchase equipment for cash,
$20,000.
3. Pay cash for insurance in
advance, $2,400.
4. Pay cash for employees'
salaries in the current period,
$17,200.
5. Pay accounts payable, $1,000.
6. Purchase office supplies on
account, $3,750.
7. Provide services to customers
for cash, $6,800.
8. Provide services to customers
on account, $12,300.
9. Pay cash dividends to
stockholders, $2,500.
10. Pay cash for utilities in the
current period, $1,200.
Totals
Required:
For each activity, indicate the impact on the accounting equation. After doing all the
transactions, ensure that the accounting equation remains in balance.
96
97
231) Reed owns a consulting services company, while Sophie operates an auto maintenance
shop. For the month of June, the following transactions occurred.
June 2
Sophie decides that she would like consulting services at the end of the
month and pays Reed $300 in advance.
June 5
Sophie provides maintenance services to Reed on account, $175.
June 7
Reed borrows $500 from Sophie by signing a note to repay her.
June 14
Sophie purchases maintenance supplies from Tap Corporation, paying
cash of $250.
June 19
Reed pays $175 to Sophie for maintenance services provided on June 5.
June 25
Reed pays the utility bill for the month of June, $200.
June 28
Sophie receives consulting services from Reed, equaling the amount paid
on June 2.
June 30
Reed pays $500 to Sophie for money borrowed on June 7.
Required:
Record each transaction for Reed. Keep in mind that Reed may not need to record all
transactions.
