Chapter Opener: Thinking Critically
Fast Facts
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Managerial Implications: Thinking Critically
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Discussion Questions
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10.
The leading U.S. provider of local and long distance voice services.
Order in which they appear on financial statements. Balance sheet accounts listed first, followed by
income statement accounts.
Permanent account balances are carried forward to start a new accounting period. Temporary
The business loses customers because payments on account are not recorded properly.
Cash is overstated and checks bounce.
The credit rating of the business is affected.
Answers will vary but could include the following:
CHAPTER 3
ANALYZING BUSINESS TRANSACTIONS USING T ACCOUNTS
Answers will vary, but students should recognize that a sale would have been recorded as revenue from
goods or services sold on a T account. The sale would be entered on the left (increase) side of an asset
account.
One of the world’s most advanced global backbone networks, carrying 18.7 petabytes of data traffic
on an average business day to nearly every continent and country, with up to 99.999 percent
reliability.
The nation’s fastest mobile broadband network serving 85.1 million customers offering voice
coverage in more than 220 countries, data roaming in more than 195 and 3G in more than 125
countries.
The nation’s largest directory publisher, delivering print directories to 173 million customers.
Payment of rent in advance affords the right to occupy the facility the number of months covered by
the payment.
Debit: entry on the left side of an account. Credit: entry on the right side of an account.
Note to instructor: These questions are designed to check students’ understanding of new terms,
concepts, and procedures presented in the chapter.
a. debit b. credit c. credit d. credit e. debit
Adding the figures on both sides of the account and subtracting the smaller total from the larger
total.
EXERCISE 3.1
EXERCISE 3.2
(1) 80,000 (2) 20,000 (2) 20,000
EXERCISE 3.3
1. Credit 5. Debit
EXERCISE 3.4
1.
Credit, Credit, Debit
Cash Equipment
Cash Equipment
EXERCISE 3.5
David Thomas, Capital $180,000 Cr.
EXERCISE 3.6
151 4 0 0 00
600000
36 0 0 0 00
Cash, $151,400 Dr.
Apartment Locators
Cash
Trial Balance
December 31, 2013
DEBIT CREDITACCOUNT NAME
Accounts Receivable
Supplies
EXERCISE 3.7
18000000
1740000
400000
Apartment Locators
Statement of Owner’s Equity
Month Ended December 31, 2013
David Thomas, Capital, Dec. 1, 2013
Less Withdrawals for December
Net Income for December
EXERCISE 3.8
Account Number Account Name Account Number Account Name
100-199 ASSETS 300-399 OWNER’S EQUITY
101 Cash 301 Sue Zant, Capital
111 Accounts Receivable 302 Sue Zant, Drawing
Zant Moving Company
Chart of Accounts
PROBLEM 3.1A
1.
+ 16,000 + 16,000
Cash James Walker, Capital
PROBLEM 3.2A
1.
+ 60,000 + 60,000
Cash Greta Davis, Capital
PROBLEM 3.3A
1.
+ 2,000 – 2,000
Office Supplies Cash
PROBLEM 3.3A (continued)
12.
PROBLEM 3.4A
(a) + 150,000 (b) – 5,000 (f) + 13,000 (h) – 6,500
(d) + 7,200 (c) – 15,720 (n) + 15,000 (o) – 7,000
(h) + 6,500 (e) – 1,150 Bal. 14,500
(m) + 13,500 (g) – 12,000
(o) + 7,000 (i) – 3,000
(k) – 15,000
(l) – 8,400
(p) – 2,400
(q) – 600
(r) – 1,120
Bal. 111,810 (s) – 8,000
Cash
Fees Income
Cash Accounts Receivable
PROBLEM 3.4A (continued)
(s) + 8,000 (d) + 7,200 (b) + 5,000
(f) + 13,000
(i) + 3,000
(q) + 600
Analyze: The company owes $41,400 (accounts payable).
Fees Income Rent Expense
John Wilson, Drawing
PROBLEM 3.5A
11181000
1450000
6600000
2052000
4140000
John Wilson, Landscape Consultant
Trial Balance
June 30, 2013
ACCOUNT NAME
Accounts Payable
CREDIT
Office Equipment
DEBIT
Office Furniture
Cash
Accounts Receivable
PROBLEM 3.5A (Continued)
John WIlson, Capital, June 1, 2013 15000000
Net Income for June 2943000
Cash 11181000 Accounts Payable 4140000
Accounts Receivable 1450000
Month Ended June 30, 2013
Assets Liabilities
John Wilson, Landscape Consultant
John Wilson, Landscape Consultant
Balance Sheet
June 30, 2013
Statement of Owner’s Equity
PROBLEM 3.1B
1.
+ 16,000 – 16,000
2.
8.
– 1,500 – 1,500
Analyze: The transactions that affect the liability accounts are transactions 5, 6 and 8.
Accounts Payable Cash
Equipment Cash
Angie Carvajal, Drawing Cash