Chapter 2 – The Accounting Cycle: During the Period
Problem 2-8A (LO 2-4, 2-5, 2-6)
Requirement 1
Entries are numbered for posting.
(1)
Sep. 1
Debit
Credit
Cash
4,700
Service Revenue
4,700
(Provide services for cash)
(2)
Sep. 2
Land
6,400
Notes Payable
6,400
(Purchase land with note payable)
(3)
Sep. 4
Advertising Expense
Accounts Payable
(Receive invoice for current advertising)
(4)
Sep. 8
Accounts Receivable
6,000
Service Revenue
6,000
(Provide services on account)
(5)
Sep. 10
Supplies
1,100
Accounts Payable
1,100
(Purchase supplies on account)
(6)
Sep. 13
Notes Payable
4,000
Cash
4,000
(Pay note payable)
(7)
Sep. 18
Cash
5,000
Accounts Receivable
5,000
(Receive cash on account)
(8)
Sep. 20
Rent Expense
Cash
(Pay rent for current month)
(9)
Sep. 30
Utilities Expense
2,000
Cash
2,000
(Pay utilities for current month)
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-8A (continued)
(10)
Sep. 30
Salaries Expense
4,000
Cash
4,000
(Pay salaries for current month)
(11)
Sep. 30
Dividends
Cash
(Pay dividends)
Problem 2-8A (continued)
Requirements 2 and 3
Cash
Accounts Receivable
Supplies
Bal. 6,500
(1) 4,700
(7) 5,000
4,000 (6)
900 (8)
2,000 (9)
4,000 (10)
1,100 (11)
Bal. 2,500
(4) 6,000
5,000 (7)
Bal. 7,600
(5) 1,100
4,200
3,500
8,700
500 (3)
5,400
9,000
Service Revenue
Salaries Expense
Rent Expense
4,700 (1)
6,000 (4)
(10) 4,000
(8) 900
10,700
4,000
900
Advertising Expense
Utilities Expense
(9) 2,000
2,000
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-8A (continued)
Requirement 4
Pirates Incorporated
Trial Balance
September 30
Accounts
Debit
Credit
Cash
$ 4,200
Accounts Receivable
3,500
Supplies
8,700
Land
17,600
Accounts Payable
$ 9,100
Notes Payable
5,400
Common Stock
9,000
Retained Earnings
8,300
Dividends
Service Revenue
Salaries Expense
4,000
Rent Expense
Advertising Expense
Totals
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-9A (LO 2-4, 2-5, 2-6)
Requirement 1
Entries are numbered for posting.
(1)
December 1
Debit
Credit
Rent Expense
900
Cash
900
(Pay rent for December)
(2)
December 5
Cash
Service Revenue
2,800
(3)
December 8
Cash
Notes Payable
(Borrow by signing note payable)
(4)
December 12
Cash
Accounts Receivable
3,500
(Receive cash from customers on account)
(5)
December 13
Cash
20,000
Common Stock
20,000
(Issue shares of common stock)
(6)
December 15
Salaries Expense
1,200
Cash
1,200
(Pay salaries for December)
(7)
December 17
Advertising Expense
Cash
(Purchase advertising for December)
(8)
December 22
Accounts Receivable
3,200
Service Revenue
3,200
(Provide services on account)
December 23
No journal entry required
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-9A (continued)
(9)
December 26
Equipment
28,500
Cash
28,500
(Purchase equipment)
(10)
December 28
Accounts Payable
Cash
(Pay cash on account)
(11)
December 31
Cash
(Pay dividends)
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-9A (continued)
Requirements 2 and 3
Cash
Accounts Receivable
Prepaid Insurance
10,400
Bal. 9,200
900 (1)
Bal. 4,500
3,500 (4)
Bal. 400
Equipment
Land
Accounts Payable
Bal. 24,100
(9) 28,500
Bal. 170,000
(10) 1,500
3,300 Bal.
52,600
170,000
1,800
Notes Payable
Common Stock
Retained Earnings
60,000
140,000
14,100
Dividends
Service Revenue
Advertising Expense
7,000
81,000
Salaries Expense
Rent Expense
29,500
Bal. 5,000
75,000 Bal.
Bal. 11,000
Chapter 2 – The Accounting Cycle: During the Period
2-48 Financial Accounting, 5e
Problem 2-9A (continued)
Requirement 4
RiverHawk Expeditions
Trial Balance
December 31, 2021
Accounts
Debit
Credit
Cash
$ 10,400
Accounts Receivable
4,200
Prepaid Insurance
400
Equipment
52,600
Land
Accounts Payable
$ 1,800
Notes Payable
60,000
Common Stock
Retained Earnings
Dividends
7,000
Service Revenue
Advertising Expense
Salaries Expense
Chapter 2 – The Accounting Cycle: During the Period
PROBLEMS: SET B
Problem 2-1B (LO 2-2)
Transaction
Assets
=
Liabilities
+
Stockholders’
Equity
1. Obtain a loan at the
bank
Increase
=
Increase
+
No effect
3. Provide services to
Increase
=
No effect
+
4. Pay employee salaries
for the current month.
Decrease
=
No effect
+
Decrease
5. Repay loan from the
bank in (1) above.
Decrease
=
Decrease
+
No effect
6. Customers pay cash in
advance of services.
Increase
=
Increase
+
No effect
in the current month.
8. Pay for advertising in the
Decrease
=
No effect
+
Decrease
9. Purchase office supplies
on account.
Increase
=
Increase
+
No effect
=
No effect
+
Decrease
=
No effect
+
Decrease
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-2B (LO 2-2)
Transaction
Assets
=
Liabilities
+
Stockholders’
Equity
1. Issue common stock in
exchange for cash, $15,000.
+$15,000
=
$0
+
+$15,000
2. Obtain a loan from the bank
for $9,000.
+$1,200
=
+
4. Purchase supplies on account,
+$2,400
=
+
5. Pay one year of rent in
advance, $12,000.
+$12,000
−$12,000
=
$0
+
$0
6. Provide services to customers
on account, $3,000.
+$3,000
=
$0
+
+$3,000
7. Repay $4,000 of the loan in
9. Provide services to customers
in (3) above.
=
+
+$1,200
=
$0
+
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-3B (LO 2-3)
Accounts
Type of Account
Normal Balance
(Debit or Credit)
1. Supplies
Asset
Debit
2. Advertising Expense
Expense
Debit
3. Prepaid Insurance
Asset
Debit
4. Supplies Expense
Expense
Debit
6. Equipment
Asset
Debit
7. Dividends
Dividends
Debit
8. Accounts Receivable
Asset
Debit
9. Retained Earnings
Stockholders’ equity
Credit
Credit
Credit
Chapter 2 – The Accounting Cycle: During the Period
2-52 Financial Accounting, 5e
Problem 2-4B (LO 2-4)
Transactions for Eli’s Insurance Services
May 2
Debit
Credit
Cash
300
Deferred Revenue
300
(Receive cash in advance from customer)
May 5
Accounts Payable
(Receive maintenance services on account)
May 7
500
Notes Payable
500
(Receive cash and sign note payable)
May 14
No entry for Eli.
May 19
Accounts Payable
425
Cash
425
(Pay cash on account)
May 25
Utilities Expense
Cash
May 28
Deferred Revenue
Service Revenue
May 31
Notes Payable
Cash
500
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-5B (LO 2-2, 2-4)
Transactions for Olivia’s Maintenance Services
May 2
Debit
Credit
Prepaid Insurance
300
Cash
300
(Pay for insurance services in advance)
May 5
Accounts Receivable
Service Revenue
425
(Provide services on account)
May 7
Notes Receivable
500
Cash
500
(Loan cash and issue note receivable)
May 14
Supplies
200
Cash
200
(Purchase maintenance supplies with cash)
May 19
Cash
425
Accounts Receivable
425
(Receive cash on account)
May 25
No entry for Olivia.
May 28
Prepaid Insurance
300
May 31
Notes Receivable
500
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-5B (concluded)
Eli’s Insurance Services
Olivia’s Maintenance Services
Assets
=
Liabilities
+
Stockholders’
Equity
Assets
=
Liabilities
+
Stockholders’
Equity
May 2
+$300
=
+$300
+
$0
+$300
−$300
=
$0
+
$0
+
=
+
+
=
+
+
=
+
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-6B (LO 2-6)
Ducks Company
Trial Balance
September 30
Accounts
Debit
Credit
Cash
$ 25,000
Accounts Receivable
14,000
Supplies
7,000
Equipment
28,000
Accounts Payable
$ 7,000
Salaries Payable
Utilities Payable
Deferred Revenue
Common Stock
29,000
Retained Earnings
13,000
Dividends
4,000
Service Revenue
55,100
Salaries Expense
9,000
Insurance Expense
Advertising Expense
Supplies Expense
10,000
Entertainment Expense
6,000
Utilities Expense
Chapter 2 – The Accounting Cycle: During the Period
2-56 Financial Accounting, 5e
Problem 2-7B (LO 2-4, 2-5, 2-6)
Requirement 1
Entries are numbered for posting.
(1)
June 1
Debit
Credit
Cash
70,000
Notes Payable
70,000
(Obtain loan from bank)
(2)
June 2
Cash
40,000
Common Stock
40,000
(Issue common stock)
(3)
June 7
Equipment
75,000
Cash
75,000
(Purchase equipment)
(4)
June 10
Supplies
8,000
Accounts Payable
8,000
(Purchase cleaning supplies on account)
(5)
June 12
Cash
5,000
Service Revenue
5,000
(Provide car washes for cash)
(6)
June 16
Salaries Expense
Cash
(Pay salaries to employees)
(7)
June 19
Advertising Expense
Cash
(Pay for current advertising)
(8)
June 23
Accounts Receivable
6,000
Service Revenue
6,000
(Provide car washes on account)
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-7B (continued)
(9)
June 29
Salaries Expense
950
Cash
950
(10)
June 30
Utilities Expense
(11)
June 30
600
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-7B (continued)
Requirements 2 and 3
Cash
Accounts Receivable
Supplies
(1) 70,000
75,000 (3)
(8) 6,000
(4) 8,000
(2) 40,000
(5) 5,000
75,000
8,000
Notes Payable
Common Stock
Dividends
70,000 (1)
40,000 (2)
(11) 600
70,000
40,000
600
Utilities Expense
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-7B (concluded)
Requirement 4
Salukis Car Cleaning
Trial Balance
June 30
Accounts
Debit
Credit
Cash
$ 35,650
Accounts Receivable
6,000
Supplies
8,000
Equipment
Notes Payable
Common Stock
Dividends
Service Revenue
Advertising Expense
Utilities Expense