208. The following two situations are independent of each other.
209. On January 1, 2010, Cary Parsons established a catering service. Listed below are accounts she would like
to open in the general ledger. List the accounts in the order in which they should appear in the ledger and
propose a two digit account numbering scheme that is consistent with the rules of a proper chart of accounts.
1.
Cash
2.
Supplies
3.
Equipment
4.
Accounts Payable
5.
Cary Parsons, Capital
6.
Wages Expense
7.
Rent Expense
8.
Truck
9.
Utilities Expense
10.
Cary Parsons, Drawing
11.
Truck Expense
12.
Prepaid Insurance
13.
Fees Earned
14.
Miscellaneous Expense
15.
Insurance Expense
16.
Notes Payable
17.
Accounts Receivable
210. Several transactions are listed below, with the accounting equation stated to the right side of each. Use the
following identification codes to indicate the effects of each transaction on the accounting equation. Write your
answers in the space provided under the accounting equation. You need an identification code for each element
of the accounting equation. An example is given before the first transaction.
I-Increase
D-Decrease
NE-No Effect
Assets
=
Liabilities
+
Owner’s Equity
John Smith invests in his new business by giving
it his personal drill press valued at $3,500.
I__
___NE__
___ I____
Cash sales are made.
Equipment is purchased on credit.
Payment is made for the equipment purchased on
credit in (B).
_____
The company sold excess supplies to another
company on credit.
________
_______
________
Cash is collected from customers for accounts
receivable balances.
________
_______
________
Assets
=
Liabilities
+
Owner’s Equity
A)
Cash sales are made.
I
NE
I
B)
Equipment is purchased on credit.
D
NE___
D)
The company sold excess supplies to another
company on credit.
E)
Cash is collected from customers for accounts
___NE___
___NE__
___NE___
211. Journalize the five transactions for Mirmax Rentals described below.
August
1
Mirmax purchases two new saws on credit at
$425 each. The saws are added to Mirmax’s
rental inventory. Payment is due in 30 days.
8
Mirmax accepts advance deposits for tool rentals
of $125 that will be applied to the cash rental
when the tools are returned.
15
Mirmax receives a bill from Macon Utility
Company for $180. Payment is due in 30 days.
20
Customers are charged $1,250 by Mirmax for
tool rentals. Payment is due from the customers
in 30 days.
31
Mirmax receives $600 in payments from the
customers that were billed for rentals on August
20.
Aug. 1
Equipment
Accounts Payable
8
Cash
Unearned Revenue
15
Utilities Expense
20
Accounts Receivable
1,250
Rental Revenue
1,250
31
Cash
Accounts Receivable
212. Journalize the following five transactions for Nexium & Associates, Inc. Omit explanations.
March
1
Bills are sent to clients for services provided
in February in the amount of $800.
9
Corner Office, Inc. delivers office furniture
($1,060) and office supplies ($160) to
Nexium leaving an invoice for $1,220.
15
Payment is made to Corner Office, Inc. for
the furniture and office supplies delivered on
March 9.
23
A bill for $430 for electricity for the month
of March is received and will be paid on its
due date in April.
31
Salaries of $850 are paid to employees.
March 1
Accounts Receivable
800
Service Revenue
800
9
Office Furniture
1,060
Office Supplies
160
Accounts Payable
1,220
Accounts Payable
1,220
Cash
1,220
Electricity Expense
430
Accounts Payable
430
Salaries Expense
850
Cash
850
213. McMann Company has a condensed income statement as shown::
2011
2010
Sales
$178,400
$162,500
Wage expenses
100,000
92,500
Rent expenses
33,000
30,000
Utilities expenses
30,000
25,000
Total operating expenses
163,000
147,500
Net income
15,400
15,000
REQUIRED:
Prepare a horizontal analysis of McMann Company’s income statements. Comment on the trends, both favorable and unfavorable.
Sales
$178,400
$162,500
15,900
9.8
Wage expenses
100,000
92,500
7,500
8.1
Rent expenses
33,000
30,000
3,000
10.0
Utilities expenses
30,000
25,000
5,000
20.0
Total operating expenses
163,000
147,500
15,500
10.5
Net income
15,400
15,000
2.7
214. Georgia Company has a condensed income statement as shown::
2011
2010
Sales
$158,400
$162,500
Wage expenses
80,000
92,500
Rent expenses
28,000
30,000
Utilities expenses
30,000
25,000
Total operating expenses
138,000
147,500
Net income
20,400
15,000
REQUIRED:
Prepare a horizontal analysis of Georgia Company’s income statements. Comment on the trends, both favorable and unfavorable.
215. On January 31, the cash account balance was $96,750. During January, cash receipts totaled $305,000 and
cash payments totaled was $375,880. Determine the cash balance on January 1.
??? + $305,000 – $375,880 = $96,750
Sales
$158,400
$162,500
(4,100)
(2.5)
Wage expenses
80,000
92,500
(12,500)
(13.5)
Rent expenses
28,000
30,000
(2,000)
(6.7)
Utilities expenses
30,000
25,000
5,000
20.0
Total operating expenses
138,000
147,500
(9,500)
(6.4)
Net income
20,400
15,000
5,400
36.0
216. Organize the following accounts into the usual sequence of a chart of accounts.
Miscellaneous Expense
Accounts Payable
Accounts Receivable
Cash
Alecia Morris, Capital
Fees Earned
Prepaid Rent
Salaries Expense
Unearned Revenue
Alecia Morris, Drawing
217. Selected accounts from the ledger of Garrison Company appear below. For each account, indicate the
following:
(a)
In the first column at the right, indicate the nature of each
account, using the following abbreviations:
Asset – A
Revenue – R
Liability – L
Expense – E
None of the above – N
(b)
In the second column, indicate the increase side of each account
by inserting Dr. or Cr.
Account
Type of Account
Increase Side
(1)
Supplies
_______
________
(2)
Notes Receivable
_______
________
(3)
Fees Earned
_______
________
(4)
Garrison, Drawing
_______
________
(5)
Accounts Payable
_______
________
(6)
Salaries Expense
_______
________
(7)
Garrison, Capital
_______
________
(8)
Accounts Receivable
_______
________
(9)
Equipment
_______
________
(10)
Notes Payable
_______
________
Type of Account
Increase Side
(1)
A
Dr.
(2)
A
Dr.
(3)
R
(4)
N
Dr.
(5)
L
(6)
E
Dr.
(7)
N
(8)
A
Dr.
(9)
A
Dr.
(10)
L
218. Calculate the following:
(a)
Determine the cash receipts for April based on the following data:
Cash payments during April
$63,000
Cash account balance, April 1
25,500
Cash account balance, April 30
31,750
(b)
Determine the cash received from customers on account during April based on the following data:
Accounts receivable account balance, April 1
$22,500
Accounts receivable account balance, April 30
15,250
Fees billed to customers during April
45,000
219. Increases and decreases in various types of accounts are listed below. In each case, indicate by “Dr.” or
“Cr.” (a) whether the change in the account would be recorded as a debit or a credit and (b) whether the normal
balance of the account is a debit or a credit.
(a)
(b)
Recorded
As
Normal
Balance
(1)
Increase in Denice Dickenson, Capital
________
_______
(2)
Increase in Denice Dickenson, Drawing
________
_______
(3)
Decrease in Accounts Receivable
________
_______
(4)
Increase in Note Payable
________
_______
(5)
Increase in Accounts Payable
________
_______
(6)
Decrease in Supplies
________
_______
(7)
Decrease in Salaries Expense
________
_______
(8)
Increase in Accounts Receivable
________
_______
(9)
Increase in Cash
________
_______
(10)
Decrease in Land
________
_______
(a)
(b)
(1)
(2)
Dr.
Dr.
(3)
Dr.
(4)
(5)
(6)
Dr.
(7)
Dr.
(a)
$69,250 ($31,750 + $63,000 – $25,500)
(b)
$52,250 ($22,500 + $45,000 – $15,250)
220. Record the following selected transactions for April in a two-column journal, identifying each entry by
letter:
(a)
Received $18,000 from Katie Long, owner.
(b)
Purchased equipment for $27,000, paying $10,000 in cash and giving a note payable for the remainder.
(c)
Paid $2,300 for rent for April.
(d)
Purchased $1,500 of supplies on account.
(e)
Recorded $9,800 of fees earned on account.
(f)
Received $7,500 in cash for fees earned.
(g)
Paid $1,200 to creditors on account.
(h)
Paid wages of $3,425.
(i)
Received $7,900 from customers on account.
(j)
Recorded owner’s withdrawal of $1,875.
(a)
Cash
18,000
Katie Long, Capital
18,000
(b)
Equipment
27,000
Cash
10,000
Notes Payable
17,000
(c)
Rent Expense
2,300
Cash
2,300
(d)
Supplies
1,500
Accounts Payable
1,500
(e)
Accounts Receivable
9,800
Fees Earned
9,800
(f)
Cash
7,500
Fees Earned
7,500
(g)
Accounts Payable
1,200
Cash
1,200
(h)
Wages Expense
3,425
Cash
3,425
(i)
Cash
7,900
Accounts Receivable
7,900
(j)
Katie Long, Drawing
1,875
Cash
1,875