Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Exercises
E2-10 Using accounting vocabulary
Learning Objectives 1, 2, 3, 4
Match the accounting terms with the corresponding definitions.
1. Posting
2. Account
3. Debit
4. Journal
5. Chart of accounts
6. rial balance
7. Normal balance
8. Ledger
9. Credit
10. Compound journal entry
a. A detailed record of all increases and decreases that have occurred in
a particular asset, liability, or equity during a period
b. The record holding all the accounts of a business, the changes in those
accounts, and their balances
c. A journal entry that is characterized by having multiple debits and/or
multiple credits
d. A record of transactions in date order
e. Left side of a T-account
f. Side of an account where increases are recorded
g. Transferring amounts from the journal to the ledger
h. Right side of a T-account
i. A list of all accounts with their balances at a point in time
j. A list of all accounts with their account numbers
SOLUTION
E2-11 Creating a chart of accounts
Learning Objective 1
Raymond Autobody Shop has the following accounts:
Accounts Payable Service Revenue
Cash Equipment
Utilities Expense Common Stock
Automotive Supplies Advertising Expense
Dividends Unearned Revenue
Retained Earnings
Create a chart of accounts for Raymond Autobody Shop using the standard numbering system. Each
account is separated by a factor of 10. For example, the first asset account will be 100 and the next asset
account will 110.
SOLUTION
E2-12 Identifying accounts, increases in accounts, and normal balances
Learning Objectives 1, 2
a. Interest Revenue
b. Accounts Payable
c. Common Stock
d. Office Supplies
e. Advertising Expense
f. Unearned Revenue
g. Prepaid Rent
h. Utilities Expense
i. Dividends
j. Service Revenue
Requirements
1. Identify each account as asset (A), liability (L), or equity (E).
2. Identify whether the account is increased with a debit (DR) or credit (CR).
3. Identify whether the normal balance is a debit (DR) or credit (CR).
SOLUTION
E2-13 Identifying increases and decreases in accounts and normal balances
Learning Objective 2
Insert the missing information into the accounting equation. Signify increases as Incr. and decreases as Decr.
SOLUTION
E2-14 Identifying source documents
Learning Objective 3
For each transaction, identify a possible source document.
a. The business received $20,000 cash and issued common stock to stockholders.
b. Purchased office supplies on account, $500.
c. Recorded $1,000 revenue for services rendered to customers.
E2-15 Analyzing and journalizing transactions
Learning Objective 3
As the manager of Margarita Mexican Restaurant, you must deal with a variety of business
transactions. Provide an explanation for the following transactions:
a. Debit Equipment and credit Cash.
b. Debit Dividends and credit Cash.
c. Debit Wages Payable and credit Cash.
d. Debit Equipment and credit Common Stock.
e. Debit Cash and credit Unearned Revenue.
f. Debit Advertising Expense and credit Cash.
g. Debit Cash and credit Service Revenue.
SOLUTION
Use the following information to answer Exercises E2-16 and E2-17.
The following transactions occurred for Lawrence Engineering:
Jul. 2 Received $14,000 contribution from Brett Lawrence in exchange for common
stock.
4 Paid utilities expense of $370.
5 Purchased equipment on account, $1,600.
10 Performed services for a client on account, $2,900.
12 Borrowed $7,100 cash, signing a notes payable.
19 Cash dividends of $200 were paid to stockholders.
21 Purchased office supplies for $840 and paid cash.
27 Paid the liability from July 5.
E2-16 Analyzing and journalizing transactions
Learning Objective 3
Journalize the transactions of Lawrence Engineering. Include an explanation with each journal
entry. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Equipment;
Accounts Payable; Notes Payable; Common Stock; Dividends; Service Revenue; and Utilities
Expense.
SOLUTION
E2-17 Posting journal entries to T-accounts
Learning Objective 3
3. Cash Balance $18,090
Requirements
1. Open the following T-accounts for Lawrence Engineering: Cash; Accounts Receivable;
Office Supplies; Equipment; Accounts Payable; Notes Payable; Common Stock; Dividends;
Service Revenue; and Utilities Expense.
2. Post the journal entries to the T-accounts. Also transfer the dates to the T-accounts.
3. Compute the July 31 balance for each account.
SOLUTION
Use the following information to answer Exercises E2-18 and E2-19.
The following transactions occurred for Wilke Technology Solutions:
May
1
The business received cash of $105,000 and issued common stock to Zoe Wilke.
2 Purchased office supplies on account, $550.
4 Paid $57,000 cash for building and land. The building had a fair market value of $45,000.
6 Performed services for customers and received cash, $3,600.
9 Paid $350 on accounts payable.
17 Performed services for customers on account, $3,500.
19 Paid rent expense for the month, $1,200.
20 Received $1,500 from customers for services to be performed next month.
21 Paid $900 for advertising in next month’s IT Technology magazine.
23 Received $3,100 cash on account from a customer.
31 Incurred and paid salaries, $1,700.
