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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
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
Alternate Exercises and Problems 2–9
Problem 2-2
1. Depreciation expense ................................................ 22,000
