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2. The terms debit and credit may signify either an increase or a decrease, depending upon the nature of
3. a. Assuming no errors have occurred, the credit balance in the cash account resulted from drawing
5. No. Errors may have been made that had the same erroneous effect on both debits and credits, such
p
7. a. No. Because the same error occurred on both the debit side and the credit side of the trial
b. On the income statement, total operating expenses (salary expense) would be overstated by
b. On the income statement, revenues (fees earned) would be overstated by $300,000, and net
CHAPTER 2
ANALYZING TRANSACTIONS
DISCUSSION QUESTIONS
2-1
CHAPTER 2 Analyzing Transactions
PE 2–1A
1. Debit and credit entries, normal debit balance
PE 2–1B
1. Debit and credit entries, normal credit balance
PE 2–2A
PE 2–2B
PRACTICE EXERCISES
2-2
CHAPTER 2 Analyzing Transactions
PE 2–3A
PE 2–3B
PE 2–4A
PE 2–4B
PE 2–5A
Using the following T account, solve for the amount of cash receipts (indicated
by ? below).
Feb. 1 Bal. 14,750 93,400 Cash payments
Cash receipts ?
PE 2–5B
Using the following T account, solve for the amount of supplies expense
(indicated by ? below).
Aug. 1 Bal. 1,025 ? Supplies expense
Cash
Supplies
2-3
CHAPTER 2 Analyzing Transactions
PE 2–6A
PE 2–6B
a. The totals are equal since both the debit and credit entries were journalized
PE 2–7A
a. Utilities Expense 7,300
2-4
CHAPTER 2 Analyzing Transactions
PE 2–7B
a. Cash 8,400
b. Supplies 2,500
PE 2–8A
2014 2013 Amount Percent
Fees earned $680,000 $850,000 $(170,000) –20.0%
PE 2–8B
2014 2013 Amount Percent
Increase/(Decrease)
Paragon Company
Income Statements
For Years Ended December 31
Fuller Company
Income Statements
For Years Ended December 31
Increase/(Decrease)
2-5
CHAPTER 2 Analyzing Transactions
Ex. 2–1
Flight Equipment Cargo and Mail Revenue
Landing Fees (Expense)d
None
aAdvance payments (deposits) on aircraft to be delivered in the future
Ex. 2–2
Account
Number
Accounts Payable 21
Accounts Receivable 12
Stockholders’ Equity
Account
EXERCISES
Assets Revenue
Balance Sheet Accounts Income Statement Accounts
2-6
CHAPTER 2 Analyzing Transactions
Ex. 2–3
11 Cash 41 Fees Earned
59 Miscellaneous Expense
31 Capital Stock
Ex. 2–4
a. debit g. credit
Ex. 2–5
2. Liabilities
3. Stockholders’ Equity
1. Assets 4. Revenue
Balance Sheet Accounts Income Statement Accounts
2-7
CHAPTER 2 Analyzing Transactions
Ex. 2–6
a. Liability—credit f. Revenue—credit
Ex. 2–7
2014
July 1 Rent Expense 3,200
10 Cash 11,400
Accounts Receivable 11,400
2-8
CHAPTER 2 Analyzing Transactions
Ex. 2–8
a.
Page 19
Post.
Ref. Debit Credit
2014
Account No. 15
Post.
Ref. Debit Debit Credit
2014
Account No. 21
Post.
Ref. Debit Debit Credit
2014
Ex. 2–9
a. (1) Accounts Receivable 48,600
Fees Earned 48,600
Balance
JOURNAL
Account:
Account: Supplies
Accounts Payable
Date
Date
Adjusting Entries
Balance
Credit
Credit
Description
Date Item
Item
2-9
CHAPTER 2 Analyzing Transactions
Ex. 2–9 (Concluded)
b.
(3) 31,400 (4) 1,350 (4) 1,350 (2) 1,975
Ex. 2–10
a. The increase of $140,000 ($515,000 – $375,000) in the cash account does not
Cash Accounts Payable
Supplies Fees Earned
2-10
CHAPTER 2 Analyzing Transactions
Ex. 2–11
a.
Mar. 1 X
b.
July 1 49,000 525,000
c.
Sept. 1 28,440 X
Ex. 2–12
Cash
Accounts Payable
Accounts Receivable
2-11
CHAPTER 2 Analyzing Transactions
Ex. 2–13
a. and b.
Effect Type Effect
asset + stockholders’ equity +
Ex. 2–14
(1) Cash 75,000
(5) Accounts Receivable 19,500
Account Debited Account Credited
Type
(1)
Transaction
2-12
CHAPTER 2 Analyzing Transactions
Ex. 2–15
a.
Debit Credit
Balances Balances
Cash 62,300
GRAND CANYON TOURS CO.
Unadjusted Trial Balance
April 30, 2014
2-13
CHAPTER 2 Analyzing Transactions
Ex. 2–16
Debit Credit
Balances Balances
Cash 13,500
Accounts Receivable 38,100
Dividends 16,000
Fees Earned 538,000
Wages Expense 476,800
Ex. 2–17
Inequality of trial balance totals would be caused by errors described in (c) and
LEAF CO.
Unadjusted Trial Balance
December 31, 2014
*
2-14
CHAPTER 2 Analyzing Transactions
Ex. 2–18
Debit Credit
Balances Balances
Cash 15,500
Accounts Receivable 46,750
Ex. 2–19
(a) (b)
Error Out of Balance Difference
1. yes $6,000
(c)
Larger Total
RANGER CO.
Unadjusted Trial Balance
August 31, 2014
debit
2-15
CHAPTER 2 Analyzing Transactions
Ex. 2–20
1. The Debit column total is added incorrectly. The sum is $890,700 rather than
A corrected trial balance would be as follows:
Debit Credit
Balances Balances
Cash 36,000
Accounts Receivable 112,600
Ex. 2–21
a. Prepaid Rent 13,550
MASCOT CO.
Unadjusted Trial Balance
July 31, 2014
2-16
CHAPTER 2 Analyzing Transactions
Ex. 2–22
a. Cash 17,600
Ex. 2–23
a. 1. Revenue:
2. Operating expenses:
3. Operating income:
2-17
CHAPTER 2 Analyzing Transactions
Ex. 2–24
a. 1. Revenue:
2. Operating expenses:
3. Operating expenses:
b. During the recent year, revenue increased by 3.4%, while operating expenses
2-18
CHAPTER 2 Analyzing Transactions
Prob. 2–1A
1. and 2.
(a) 25,000 (b) 2,750 (d) 9,000
(g) 11,150 (c) 4,000
PROBLEMS
Prepaid Insurance Rent Expense
Cash Equipment
Accounts Receivable Capital Stock
2-19
CHAPTER 2 Analyzing Transactions
Prob. 2–1A (Concluded)
3.
Debit Credit
Balances Balances
Cash 18,035
Accounts Receivable 17,300
CANTWELL ARCHITECTS
Unadjusted Trial Balance
July 31, 2014
2-20
