Alternate Exercises and Problems 2–1
Chapter 2 Review of the Accounting Process
EXERCISES
Exercise 2-1
Assets = Liabilities + Paid-in Capital + Retained Earnings
1. + 800,000 (cash) + 800,000 (common stock)
Exercise 2-2
1. Cash ……………………………………………………………….. 800,000
Common stock …………………………………………….. 800,000
2. Equipment ………………………………………………………. 60,000
Alternate Exercises and Problems 2–3
Exercise 2-3
Increase (I) or
Decrease (D) Account
1. D Accounts receivable
Exercise 2-4
Account(s) Account(s)
Debited Credited
Example: Purchased equipment for cash 2 5
1. Paid a cash dividend. 10 5
2–4 Intermediate Accounting, 8/e
Exercise 2-5
1. Insurance expense ($12,000 x 5/24) …………………………. 2,500
Prepaid insurance ………………………………………….. 2,500
Exercise 2-6
Requirement 1
Supplies
11/30 Balance 4,000
Expense ?
Requirement 2
Prepaid rent
11/30 Balance 10,000
Alternate Exercises and Problems 2–5
Exercise 2-6 (concluded)
Requirement 3
Interest payable
7,000 11/30 Balance
Requirement 4
Deferred rent revenue
4,500 11/30 Balance
Recognized for Dec. 1,500
2–6 Intermediate Accounting, 8/e
PROBLEMS
Problem 2-1
Requirement 1
2016
Debit
Credit
July 1
Cash
1,000,000
Common stock
1,000,000
July 2
Inventory
80,000
Accounts payable
80,000
July 4
Prepaid rent
Accounts receivable
Sales revenue
Inventory
Cash
50,000
Note payable
50,000
Salaries and wages expense
Cash
50,000
Cash
Accounts receivable
Utilities expense
1,500
Cash
1,500
8,000
Cash
8,000
Alternate Exercises and Problems 2–7
Problem 2-1 (continued)
Requirement 2
Cash Accounts receivable
___________________________ ___________________________
7/1 Bal. 0 7/1 Bal. 0
7/1 1,000,000 10,000 7/4 7/10 120,000 60,000 7/26
Inventory Prepaid insurance
___________________________ ___________________________
7/1 Bal. 0 7/1 Bal. 0
Prepaid rent Accounts payable
___________________________ ___________________________
Note payable Common stock
___________________________ ___________________________
0 7/1 Bal. 0 7/1 Bal.
2–8 Intermediate Accounting, 8/e
Problem 2-1 (concluded)
INCOME STATEMENT ACCOUNTS
Sales revenue Cost of goods sold
___________________________ ___________________________
0 7/1 Bal. 7/1 Bal. 0
Utilities expense Salaries and wages expense
___________________________ ___________________________
7/1 Bal. 0 7/1 Bal. 0
Requirement 3
Account Title
Debits
Credits
Cash
1,025,500
Accounts receivable
Inventory
Prepaid rent
Prepaid insurance
Accounts payable
Common stock
Sales revenue
Cost of goods sold
Salaries and wages expense
15,000
Utilities expense
Alternate Exercises and Problems 2–9
Problem 2-2
1. Depreciation expense ………………………………………… 22,000