FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-20A
(10-15 min.)
Requirement
Solution:
ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT
July 6 Cash 148,000
Common Stock 148,000
Issued stock to owner.
9Land 66,000
DATE
Journal
1. Record the transactions in the journal of Dr. Kristine Cohen, P.C. List the
transactions by date and give an explanation for each transaction.
Chapter 2: Transaction Analysis Page 21 of 90
Cash 66,000
Purchased land.
Accounts Payable 2,000
Purchased supplies on account.
Accounts Receivable 4,600
Service Revenue 9,200
Performed service for cash and on account.
Rent Expense 1,500
Utilities Expense 700
Paid expenses.
Sold supplies.
Note Payable 36,000
Borrowed money.
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-21A
(20-30 min.)
Requirements
Solution:
July 6 148,000 July 9 66,000 July 15-31 4,600
15-31 4,600 15-31 5,100 Bal. 4,600
July 12 2,000 July 31 600 July 9 66,000
Bal. 1,400 Bal. 66,000
July 31 1,500 July 12 2,000 July 31 36,000
July 6 148,000 July 15-31 9,200
Utilities Expense
Accounts Payable
1. After journalizing the transactions of Exercise 2-19A, post the entries to the ledger,
using T-accounts. Key transactions by date.
2. Prepare the trial balance of Dr. Kristine Cohen, P.C., at July 31, 2016.
3. From the trial balance, determine total assets, total liabilities, and total stockholders’
equity on July 31.
Cash
Medical Supplies
Chapter 2: Transaction Analysis Page 22 of 90
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
DEBIT CREDIT
Cash 116,600$
Accounts receivable 4,600
Medical supplies 1,400
Dr. Kristine Cohen, P.C.
Trial Balance
July 31, 2016
ACCOUNT
Chapter 2: Transaction Analysis Page 23 of 90
Accounts payable 500$
Note payable 36,000
Common stock 148,000
Service revenue 9,200
Salary expense 2,900
Rent expense 1,500
Utilities expense 700
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-22A
(10-15 min.)
Requirements
Solution:
Req. 1
ACCOUNT TITLES AND EXPLANATION
DEBIT CREDIT
1. Cash 8,900
Common Stock
8,900
Issued common stock.
Prepare the journal entries that served as the sources for the seven
transactions. Include an explanation for each entry. As Fournier moves into
the next period, how much cash does the business have? How much does
Fournier owe in total liabilities?
Journal
Chapter 2: Transaction Analysis Page 24 of 90
1,000
Purchased land by paying cash and signing
Paid cash on account.
Paid cash for equipment.
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
Cash balance = $2,975 ($8,900 + $10,000 − $12,000 + $75 − $300 −
Chapter 2: Transaction Analysis Page 25 of 90
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-23A
(10-20 min.)
Requirements
Solution:
Req 1.
DEBIT CREDIT
$18,700
5,100
30,400
Req 2.
Service revenue 21,100$
Salary expense $8,800
Utilities expense 2,200
Income Statement
Custom Patio Service, Inc.
Trial Balance
Equipment
April 30, 2016
For the Month Ended April 30, 2016
1. Prepare the company’s trial balance at April 30, 2016, listing accounts in proper
sequence, as illustrated in the chapter. For example, Accounts Receivable comes
before Equipment. List the expense with the largest balance first, the expense with
the next largest balance second, and so on.
2. Prepare the financial statement for the month ended April 30, 2016, which will
tell the company the results of operations for the month.
ACCOUNT
Cash
Accounts receivable
Custom Patio Service, Inc.
Chapter 2: Transaction Analysis Page 26 of 90
3,400
8,800
2,200
Note payable
Retained earnings
Dividends
Accounts payable
Common stock
Service revenue
Salary expense
Utilities expense
Delivery expense
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-24A
(15-25 min.)
Requirement
Solution:
DEBIT CREDIT
15,000$
12,100
16,800
Harper, Inc.
Trial Balance
Computations:
Cash: $14,500 + $500 = $15,000
1. Prepare the correct trial balance at September 30, 2016, complete with a
heading. Journal entries are not required.
September 30, 2016
ACCOUNT
Cash
Accounts receivable
Inventory
Chapter 2: Transaction Analysis Page 27 of 90
50,000
Sales revenue
Insurance expense
Salary expense
Supplies
Accounts payable
Common stock
Utilities expense
Rent expense
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-25A
(10-15 min.)
Solution:
(a) 22,500 (b) 1,600 (f) 10,100
(d) 3,300 Bal. 10,100
(c) 1,400 (a) 9,000
Salary Expense
Common Stock
Record the following transactions directly in the T-accounts without using a
journal. Use the letters to identify the transactions.
Cash
Accounts Receivable
Office Supplies
Office Furniture
Chapter 2: Transaction Analysis Page 28 of 90
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-26A
(15-20 min.)
Solution:
Req. 1
DEBIT CREDIT
Cash $14,450
Accounts receivable 10,100
Office supplies 1,400
Req. 2
1. After recording the transactions in Exercise 2-25A, and assuming they all
occurred in the month of January 2016, prepare the trial balance of Leigh Hampton,
Attorney, at January 31, 2016. Use the T-accounts that have been prepared for the
business.
2. How well did the business perform during its first month? Compute net income
(or net loss) for the month.
Leigh Hampton
Trial Balance
January 31, 2016
ACCOUNT
The business performed well during January. The result of operations
was net income of $5,200, as shown by the income statement accounts:
Chapter 2: Transaction Analysis Page 29 of 90
Office furniture 9,000
Accounts payable $550
Common stock 31,500
Service revenue 10,100
Salary expense 3,300
Rent expense 1,600
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-27A
(15-20 min.)
Solution:
Req. 1
Req. 2
DEBIT CREDIT
Cash $4
Other assets 21
1. Solve for Cash.
2. Prepare the trial balance of New Towne at September 30, 2016. List the
accounts in their proper order. How much was New Towne Company’s net income
or net loss?
New Towne Company
Trial Balance
September 30, 2016
ACCOUNT
(amounts in millions)
Chapter 2: Transaction Analysis Page 30 of 90
Accounts payable $7
Other liabilities 6
Stockholders’ Equity 5
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
$60,300 279,000$
5,700
E2-28B
(10-15 min.)
Write a memo to report on purchases. Prepare a balance sheet. Prepare a T-account
to compute the balance for Cash.
Solution:
TO: Home Office
FROM: Gary Breen, Store Manager
During the first week, I used the store’s beginning cash to purchase
Summertime Fashions
Orlando Store
Balance Sheet
–Date–
ASSETS
LIABILITIES
Cash
Note payable*
Supplies
Chapter 2: Transaction Analysis Page 31 of 90
*($79,000 + $200,000) = $279,000
Building
Equipment
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-29B
(10-15 min.)
Solution:
a.
b.
c.
State whether each event (1) increased, (2) decreased, or (3) had no effect on the
total assets of the business. Identify any specific asset affected.
No effect on total assets. Increase in notes receivable offsets the decrease in lan
Increased assets. (Cash)
No effect on total assets. Increase in equipment offsets the decrease in cash.
Chapter 2: Transaction Analysis Page 32 of 90
e.
h.
Increased assets. (Cash)
Increased assets. (Land)
Increased assets. (Accounts receivable)
Increased assets. (Cash)
Increased assets. (Supplies)
No Effect. (A personal transaction)
Decreased assets (cash)
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-30B
(10-20 min.)
Requirements
Solution:
Req. 1
Medical
Supplies
+
Common
Stock
+
1. Analyze the effects of these events on the accounting equation of the medical practice of
Dr. Sue Smith, P.C.
2. After completing the analysis, answer these questions about the business.
a. How much are total assets?
b. How much does the business expect to collect from patients?
c. How much does the business owe in total?
d. How much of the business’s assets does Smith really own?
e. How much net income or net loss did the business experience during its first month of
operations?
Analysis of Transactions
ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY
Date
Cash
+
Retained
Earnings
Type of
Stockholders’
Equity Transaction
Land
=
Accounts
payable
+
Accounts
Receivable
+
Note
Payable
+
Chapter 2: Transaction Analysis Page 33 of 90
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
Req. 2
a.
b.
183,900$
4,500$
Chapter 2: Transaction Analysis Page 34 of 90
d.
e.
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-31B
(10-15 min.)
Requirement
Solution:
ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT
May 6 Cash 148,000
Common Stock 148,000
Issued stock to owner.
9Land 59,000
1. Record the transactions in the journal of Dr. Sue Smith, P.C. List the transactions
by date and give an explanation for each transaction.
Journal
DATE
Chapter 2: Transaction Analysis Page 35 of 90
Cash 59,000
Purchased land.
Accounts Payable 1,700
Purchased supplies on account.
Accounts Receivable 4,500
Service Revenue 9,000
Performed service for cash and on account.
Rent Expense 1,100
Utilities Expense 1,200
Paid expenses.
Sold supplies.
Note Payable 32,000
Borrowed money.
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-32B
(20-30 min.)
Requirements
Solution:
May 6 148,000
May 9
59,000 May 15-31 4,500
15-31 4,500 15-31 5,500 Bal. 4,500
1. After journalizing the transactions of Exercise 2-30B, post the entries to the ledger,
using T-accounts. Key transactions by date.
2. Prepare the trial balance of Dr. Sue Smith, P.C., at May 31, 2016.
3. From the trial balance, determine total assets, total liabilities, and total stockholders’
equity on May 31.
Cash
Chapter 2: Transaction Analysis Page 36 of 90
Bal. 119,000
May 12 1,700
May 31 1,300
May 6
Accounts Payable
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
DEBIT CREDIT
Cash 119,000$
Accounts receivable 4,500
Req. 3
183,900$
151,500$
Dr. Sue Smith, P.C.
Trial Balance
May 31, 2016
ACCOUNT
Total assets ($119,000 + $4,500 + $1,400 + $59,000)
Chapter 2: Transaction Analysis Page 37 of 90
Medical supplies 1,400
Accounts payable 400$
Note payable 32,000
Common stock 148,000
Service revenue 9,000
Salary expense 3,200
Rent expense 1,200
Utilities expense 1,100
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-33B
(10-15 min.)
Requirements
Solution:
Req. 1
ACCOUNT TITLES AND EXPLANATION
DEBIT CREDIT
1. Cash 8,600
Common Stock
8,600
Issued common stock.
Prepare the journal entries that served as the sources for the seven
transactions. Include an explanation for each entry. As Big Horn moves into
the next period, how much cash does the business have? How much does
Big Horn owe in total liabilities?
Journal
Chapter 2: Transaction Analysis Page 38 of 90
Purchased land by paying cash and signing
Paid cash on account.
Paid cash for equipment.
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
Chapter 2: Transaction Analysis Page 39 of 90
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E2-34B
(10-20 min.)
Requirements
Solution:
Req 1.
DEBIT CREDIT
$18,500
5,800
30,000
Req 2.
Service revenue 21,200$
Salary expense $8,500
Utilities expense 1,400
1. Prepare the company’s trial balance at April 30, 2016, listing accounts in proper
sequence, as illustrated in the chapter. For example, Accounts Receivable comes
before Equipment. List the expense with the largest balance first, the expense with
the next largest balance second, and so on.
2. Prepare the financial statement for the month ended April 30, 2016, which will
tell the company the results of operations for the month.
Deluxe Deck Service, Inc.
Trial Balance
April 30, 2016
ACCOUNT
Cash
Accounts receivable
Equipment
Deluxe Deck Service, Inc.
Income Statement
For the Month Ended April 30, 2016
Chapter 2: Transaction Analysis Page 40 of 90
3,900
8,500
1,400
Accounts payable
Note payable
Common stock
Retained earnings
Dividends
Service revenue
Salary expense
Utilities expense
Delivery expense