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CHAPTER 2
SOLUTIONS TO EXERCISES—SET B
EXERCISE 2-1B
1. False. An account is an accounting record of a specific asset, liability,
or owner’s equity item.
2. True.
EXERCISE 2-2B
Account Debited
Account Credited
Transaction
(a)
Basic
Type
(b)
Specific
Account
(c)
Effect
(d)
Normal
Balance
(a)
Basic
Type
(b)
Specific
Account
(c)
Effect
(d)
Normal
Balance
Jan. 2
Asset
Cash
Increase
Debit
Owner’s
Equity
Owner’s
Capital
Increase
Credit
3
Owner’s
Equity
Advertising
Expense
Increase
Debit
Asset
Cash
Decrease
Debit
9
Asset
Equipment
Increase
Debit
Asset
Cash
Decrease
Debit
11
Asset
Accounts
Receivable
Increase
Debit
Owner’s
Equity
Service
Revenue
Increase
Credit
EXERCISE 2-3B
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Jan. 2
Cash ...................................................
20,000
Owner’s Capital .........................
20,000
3
Advertising Expense .........................
500
Cash ...........................................
500
EXERCISE 2-4B
Oct. 1 Debits increase assets: debit Cash $22,000.
Credits increase owner’s equity: credit Owner’s Capital $22,000.
EXERCISE 2-4B (Continued)
Oct. 6 Debits increase assets: debit Accounts Receivable $5,400.
Credits increase revenues: credit Service Revenue $5,400.
27 Debits decrease liabilities: debit Accounts Payable $1,100.
Credits decrease assets: credit Cash $1,100.
EXERCISE 2-5B
General Journal
Date
Account Titles and Explanation
Ref.
Debits
Credit
Oct. 1
Cash ...................................................
22,000
Owner’s Capital ........................
22,000
2
Rent Expense ....................................
700
Cash ..........................................
700
3
Equipment .........................................
2,800
Accounts Payable ....................
2,800
EXERCISE 2-6B
(a) 1. Increase the asset Cash, increase the liability Notes Payable.
2. Increase the asset Equipment, decrease the asset Cash.
3. Increase the expense Rent Expense, decrease the asset Cash.
(b) 1. Cash ................................................................. 15,000
Notes Payable ........................................... 15,000
EXERCISE 2-7B
(a) Assets = Liabilities + Owners’ Equity
1. + +
2. + +
3. + +
4. – –
(b) 1. Cash ................................................................. 6,000
Owner’s Capital ........................................ 6,000
2. Supplies ........................................................... 1,100
Accounts Payable ..................................... 1,100
EXERCISE 2-8B
1. False. The general ledger contains all the asset, liability, and owner’s
equity accounts.
2. False The general ledger is sometimes referred to as the ledger.
EXERCISE 2-9B
(a)
Cash
Aug. 1 6,000
Aug. 12 1,000
10 1,700
31 1,500
Bal. 8,200
Notes Payable
Aug. 12 5,000
Owner’s Capital
Aug. 1 6,000
(b) BRET QUANDT, INVESTMENT BROKER
Trial Balance
August 31, 2017
Debit Credit
Cash ......................................................................... $ 8,200
Accounts Receivable .............................................. 1,000
EXERCISE 2-10B
(a) General Journal
Date
Account Titles and Explanation
Ref.
Debit
Credit
Apr. 1
Cash ....................................................
Owner’s Capital ..............................
(Owner’s investment of
cash in business)
18,000
18,000
12
Cash ....................................................
Service Revenue ............................
(Received cash for
services provided)
1,200
1,200
25
Accounts Payable ...............................
Cash ................................................
(Paid creditors on account)
1,600
1,600
30
Cash ....................................................
Unearned Service Revenue ...........
(Received cash for future
services)
1,400
1,400
EXERCISE 2-10B (Continued)
(b) CARRIE’S GARDENING COMPANY
Trial Balance
April 30, 2017
Debit Credit
Cash .......................................................................... $19,200
Accounts Receivable ............................................... 2,000
Supplies ................................................................... 1,900
EXERCISE 2-11B
(a) Oct. 1 Cash ............................................................. 8,500
10 Cash ............................................................. 800
Service Revenue .................................. 800
(Received cash for services
provided)
20 Cash ............................................................. 450
Accounts Receivable ........................... 450
(Received cash in payment of
account)
EXERCISE 2-11B (Continued)
(b) NOLASKO CO.
Trial Balance
October 31, 2017
Debit Credit
Cash ..................................................................... $ 11,800
Accounts Receivable .......................................... 1,420
Supplies .............................................................. 400
Equipment ........................................................... 2,000
EXERCISE 2-12B
(a)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Sept. 1
Cash ...................................................
Owner’s Capital .........................
101
301
25,000
25,000
5
Equipment .........................................
Cash ...........................................
Accounts Payable .....................
157
101
201
30,000
7,500
22,500
EXERCISE 2-12B (Continued)
(b)
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
Sept. 1
J1
25,000
25,000
Equipment No. 157
Date
Explanation
Ref.
Debit
Credit
Balance
Sept. 5
J1
30,000
30,000
Accounts Payable No. 201
Date
Explanation
Ref.
Debit
Credit
Balance
Sept. 5
J1
22,500
22,500
25
J1
6,500
16,000
EXERCISE 2-13B
Error
(a)
In Balance
(b)
Difference
(c)
Larger Column
1.
No
$500
Debit
2.
Yes
—
—
EXERCISE 2-14B
MORAN DELIVERY SERVICE
Trial Balance
July 31, 2017
Debit Credit
Cash ($54,740 – Debit total without Cash
$40,830) ................................................................... $ 13,910
Accounts Receivable ................................................. 5,220
SOLUTIONS TO PROBLEMS—SET C
PROBLEM 2-1C
J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Mar. 1
Cash.........................................................
50,000
Owner’s Capital ..............................
50,000
(Owner’s investment of cash
in business)
3
Land .........................................................
23,000
5
Advertising Expense ..............................
1,600
Cash ................................................
1,600
(Paid for advertising)
6
Prepaid Insurance ..................................
1,480
10
Equipment ...............................................
2,600
Accounts Payable ..........................
2,600
(Purchased equipment on
account)
18
Cash.........................................................
800
19
Cash.........................................................
1,500
Unearned Service Revenue ...........
1,500
(Received cash for future
services)
