Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Problem 2-5A (90 minutes)
Part 1
NETTLE DISTRIBUTION
Balance Sheet
December 31, 2014
Assets Liabilities
Cash............................... $ 64,300 Accounts payable................$ 3,500
Accounts receivable.... 26,240
NETTLE DISTRIBUTION
Balance Sheet
December 31, 2015
Assets Liabilities
Cash............................... $ 15,640 Accounts payable................. $ 33,500
Accounts receivable.... 19,390 Note payable.......................... 40,000
Office supplies.............. 1,960 Total liabilities....................... 73,500
Part 2
Computation of 2015 net income:
Equity, December 31, 2014............................................................ $282,200
Equity, December 31, 2015............................................................ (304,490 )
Increase in equity during 2015...................................................... $ 22,290
Part 3
Debt Ratio = $73,500 / $377,990 = 19.4%
Problem 2-6A (35 minutes)
Part 1
MIN ENGINEERING
Trial Balance
May 31
Debit Credit
Cash............................................................. $37,641
Office supplies............................................ 890
Prepaid insurance...................................... 4,600
Office equipment........................................ 12,900
Accounts payable....................................... $12,900
Part 2: Likely transactions (following order of trial balance).
1. Purchased $890 of office supplies for cash.
2. Paid $4,600 insurance premium in advance.
3. Purchased $12,900 of office equipment on credit (with account payable).
Part 3
Report of Cash Received and Paid
Cash received
Owner investment .................................... $18,000
Engineering fees ....................................... 36,000
Total cash received .................................. $54,000
Cash paid
Office supplies .......................................... 890
Insurance premium .................................. 4,600
PROBLEM SET B
Problem 2-1B (90 minutes)
Part 1
Sept.1 Cash..........................................................101 38,000
Office Equipment.....................................163 15,000
Common Stock.................................307 53,000
Owner invested in the business for stock.
2 Prepaid Rent.............................................131 9,000
Cash...................................................101 9,000
Prepaid twelve months’ rent.
19 Prepaid Insurance....................................128 1,900
Cash...................................................101 1,900
Paid premium for insurance.
22 Cash..........................................................101 7,700
Accounts Receivable.......................106 7,700
Collected part of amount owed by client.
24 Accounts Receivable..............................106 2,100
Services Revenue.............................401 2,100
Billed client for completed work.
Problem 2-1B (Continued)
Part 2
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
Sept. 1 G1 38,000 38,000
2 G1 9,000 29,000
8 G1 3,280 32,280
13 G1 10,400 21,880
19 G1 1,900 19,980
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
Sept. 12 G1 15,400 15,400
22 G1 7,700 7,700
24 G1 2,100 9,800
Office Supplies Acct. No. 124
Date Explanation PR Debit Credit Balance
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
Sept. 19 G1 1,900 1,900
Prepaid Rent Acct. No. 131
Date Explanation PR Debit Credit Balance
Sept. 2 G1 9,000 9,000
Office Equipment Acct. No. 163
Date Explanation PR Debit Credit Balance
Problem 2-1B (Continued)
Accounts Payable Acct. No. 201
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
Sept. 1 G1 53,000 53,000
Dividends Acct. No. 319
Date Explanation PR Debit Credit Balance
Sept. 28 G1 5,300 5,300
Services Revenue Acct. No. 401
Date Explanation PR Debit Credit Balance
Utilities Expense Acct. No. 690
Date Explanation PR Debit Credit Balance
Sept. 30 G1 860 860
Problem 2-1B (Concluded)
Part 3
HUMBLE MANAGEMENT SERVICES
Trial Balance
September 30
Debit Credit
Cash.................................................................. $21,520
Accounts receivable....................................... 9,800
Office supplies................................................. 2,950
Prepaid insurance........................................... 1,900
Prepaid rent..................................................... 9,000
Office equipment............................................. 23,000
Problem 2-2B (90 minutes)
Part 1
a. Cash............................................................101 65,000
Office Equipment.......................................163 5,750
Computer Equipment.................................164 30,000
Common Stock...................................307 100,750
Owner invested cash and equipment for stock.
e. Cash............................................................101 4,600
Fees Earned........................................402 4,600
Collected cash for completed work.
f. Computer Equipment.................................164 4,500
Cash....................................................101 800
Notes Payable.....................................250 3,700
Purchased equipment with cash and note
payable.
Problem 2-2B (Part 1 Continued)
i. Accounts Receivable.................................106 10,200
Fees Earned........................................402 10,200
Billed client for completed work.
j. Computer Rental Expense........................602 580
Accounts Payable..............................201 580
Incurred computer rental expense.
m. Accounts Payable......................................201 950
Cash....................................................101 950
Paid amount due on account.
n. Repairs Expense........................................604 608
Cash....................................................101 608
Paid for repair of equipment.
q. Advertising Expense..................................603 750
Cash....................................................101 750
Paid for advertising expense.
Problem 2-2B (Continued)
Part 2
Cash No. 101 Accounts Payable No. 201
Date PR Debit Credit Balance Date PR Debit Credit Balance
(a) 65,000 65,000 (h) 950 950
(b) 5,000 60,000 (j) 580 1,530
(c) 34,500 25,500 (m) 950 580
(d) 5,000 20,500
(e) 4,600 25,100 Notes Payable No. 250
(m) 950 26,650
(n) 608 26,042
(o) 6,230 19,812 Common Stock No. 307
Accounts Receivable No. 106 Dividends No. 319
Date PR Debit Credit Balance Date PR Debit Credit Balance
(g) 4,250 4,250 (o) 6,230 6,230
(i) 10,200 14,450
(k) 5,100 9,350 Fees Earned No. 402
Date PR Debit Credit Balance
Prepaid Insurance No. 108 (e) 4,600 4,600
Office Equipment No. 163 Wages Expense No. 601
Computer Equipment No. 164 Computer Rental Expense No. 602
Date PR Debit Credit Balance Date PR Debit Credit Balance
(a) 30,000 30,000 (j) 580 580
(f) 4,500 34,500
Building No. 170 Advertising Expense No. 603
Date PR Debit Credit Balance Date PR Debit Credit Balance
(c) 34,500 34,500 (q) 750 750
Land No. 172 Repairs Expense No. 604
Date PR Debit Credit Balance Date PR Debit Credit Balance
(b) 22,000 22,000 (n) 608 608
