978-1259722660 Chapter 2 Solution Manual Part 2

Brief Exercise 2–12

Sales revenue………………………………………………………… 850,000

……………………………………………………Income summary

……………………………………………………………………….850,000

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Brief Exercise 2–13

Revenues $428,000*

Expenses:

Salaries (240,000)

*$420,000 cash received plus $8,000 increase ($60,000 – 52,000) in amount due

from customers:

** $35,000 cash paid less $2,000 decrease in amount owed to utility company:

Exercise 2–1

Assets = Liabilities + Paid-in Capital + Retained

Earnings

1. + 300,000

(cash) + 300,000 (common stock)

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EXERCISES

4. + 120,000

(accounts receivable) + 120,000

(revenue)

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Exercise 2–2

1. Cash……………………………………………………………….. 300,000

Common stock…………………………………………….. 300,000

9. Depreciation expense……………………………………….. 1,000

Accumulated depreciation……………………………… 1,000

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Exercise 2–3 BALANCE SHEET ACCOUNTS

Cash Accounts receivable

_____________________________ _____________________________

3/1 Bal. 0 3/1 Bal. 0

1. 300,000

10,000

Inventory Prepaid insurance

_____________________________ _____________________________

3/1 Bal. 0 3/1 Bal. 0

3. 90,000

70,000

Equipment Accumulated depreciation

_____________________________ _____________________________

3/1 Bal. 0 0 3/1 Bal.

2. 40,000

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Accounts payable Note payable

_____________________________ _____________________________

0 3/1 Bal. 0 3/1 Bal.

7. 70,000

90,000

Common stock

_____________________________

0 3/1 Bal.

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Exercise 2–3 (concluded)

INCOME STATEMENT ACCOUNTS

Sales revenue Cost of goods sold

_____________________________ _____________________________

0 3/1 Bal.3/1 Bal. 0

Rent expense Depreciation expense

_____________________________ _____________________________

3/1 Bal. 0 3/1 Bal. 0

Account Title Debits Credits

Cash 264,000

Accounts receivable 65,000

Inventory 20,000

Solutions Manual, Vol.1, Chapter 2

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Solutions Manual, Vol.1, Chapter 2

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Exercise 2–4

1. Cash……………………………………………………………. 500,000

Common stock…………………………………………… 500,000

2. Furniture and fixtures……………………………………. 100,000

Cash…………………………………………………………. 40,000

Note payable …………………………………………….. 60,000

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Exercise 2–5

List A List B

k 1. Source documents a. Record of the dual effect of a transaction

in

debit/credit form.

e 2. Transaction analysis b. Internal events recorded at the end of a

reporting period.

a 3. Journal c. Primary means of disseminating

information

to external decision makers.

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Exercise 2–6

Increase (I) or

Decrease (D) Account

1. I Inventory

2. I Depreciation expense

3. D Accounts payable

4. I Prepaid rent

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Exercise 2–7

Account(s) Account(s)

Debited Credited

Example: Purchased inventory for cash 3 5

1. Paid a cash dividend. 10 5

2. Paid rent for the next three months. 8 5

3. Sold goods to customers on account. 4, 16 9, 3

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