CHAPTER 2 Analyzing Transactions
Ex. 2-23
a. 1. Revenue:
$2,642 million increase ($75,356 – $72,714)
3.6% increase ($2,642 ÷ $72,714)
2. Operating expenses:
$2,756 million increase ($71,246 – $68,490)
4.0% increase ($2,756 ÷ $68,490)
CHAPTER 2 Analyzing Transactions
Ex. 2-24
a. 1. Revenue:
$12,551 million increase ($141,576 – $129,025)
b. During the recent year, revenue increased by 9.7%, while operating expenses
increased by 9.8%. As a result, operating income increased by 9.0% from the
prior year.
c. Because of the size differences between Target and Costco (Costco has more
than 1.8 times the revenue), it is best to compare the two companies on the basis
of percent changes from the prior year. Costco’s revenues increased by 9.7%,
while Target’s revenue increased by 3.6%. The expenses of Costco increased by
CHAPTER 2 Analyzing Transactions
Prob. 2-1A
1. and 2.
(a) 36,000 (b) 2,400 (d) 9,000
(g) 12,200 (c) 7,800
(e) 2,150
(l) 18,300 (a) 36,000
(e) 2,150 (g) 12,200
(l) 18,300
Bal. 30,500
PROBLEMS
Accounts Payable
Professional FeesSupplies
Prepaid Insurance Salary Expense
Cash Equipment
Accounts Receivable Connie Young, Capital
CHAPTER 2 Analyzing Transactions
Prob. 2-1A (Concluded)
3.
Debit Credit
Balances Balances
Cash 14,065
Accounts Receivable 18,300
Supplies 2,150
Prepaid Insurance 4,000
Automobiles 32,800
Equipment 9,000
4. Net income, $16,925 ($30,500 – $6,450 – $2,890 – $2,400 – $1,020 – $815)
Connie Young, Architect
Unadjusted Trial Balance
October 31, 20Y4
CHAPTER 2 Analyzing Transactions
Prob. 2-2A
1. (a) Cash 53,000
Fahad Ali, Capital 53,000
(b) Rent Expense 7,950
Cash 7,950
(e) Cash 24,180
Fees Earned 24,180
(f) Automobile Expense 2,490
Miscellaneous Expense 560
Cash 3,050
CHAPTER 2 Analyzing Transactions
Prob. 2-2A (Continued)
2.
(a) 53,000 (b) 7,950 (e) 24,180
(e) 24,180 (d) 2,320
(c) 4,240 (h) 1,860 (g) 6,630
Bal. 2,380
(i) 2,600 (f) 560
Cash Fees Earned
Supplies Office Salaries Expense
Automobile Expense
Fahad Ali, Drawing Miscellaneous Expense
Accounts Payable
CHAPTER 2 Analyzing Transactions
Prob. 2-2A (Concluded)
3.
Debit Credit
Balances Balances
Cash 54,630
Supplies 2,380
Accounts Payable 1,920
Fahad Ali, Capital 53,000
Fahad Ali, Drawing 2,600
Fees Earned 24,180
79,100 79,100
4. a. $24,180
b. $19,490 ($7,950 + $6,630 + $2,490 + $1,860 + $560)
c. $4,690 ($24,180 – $19,490)
Mountain Top Realty
Unadjusted Trial Balance
January 31, 20Y5
CHAPTER 2 Analyzing Transactions
Prob. 2-3A
1.
Page 1
Post.
Ref. Debit Credit
20Y6
June 1 Cash 11 48,000
Hannah Ellis, Capital 31 48,000
8 Van 18 39,100
Cash 11 6,200
Notes Payable 21 32,900
15 Prepaid Insurance 14 4,940
Cash 11 4,940
23 Accounts Receivable 12 16,320
Fees Earned 41 16,320
24 Van Expense 55 2,060
Accounts Payable 22 2,060
Page 2
Post.
Ref. Debit Credit
Date
Date
JOURNAL
JOURNAL
Description
Description
CHAPTER 2 Analyzing Transactions
Prob. 2-3A (Continued)
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
^
30 Cash 11 10,050
Accounts Receivable 12 10,050
30 Wages Expense 51 6,950
Cash 11 6,950
2.
Account No. 11
Post.
Item Ref. Debit Debit Credit
20Y6
June 1 1 48,000 48,000
1 1 41,490
8 1 35,290
30 2 41,370
30 2 32,010
30 2 29,810
Account No. 12
Post.
Item Ref. Debit Debit Credit
GENERAL LEDGER
Date
6,200
Balance
Account: Cash
Date Credit
2,200
Account: Accounts Receivable
Balance
Credit
6,510
9,360
6,950
CHAPTER 2 Analyzing Transactions
Prob. 2-3A (Continued)
Account No. 13
Post.
Item Ref. Debit Credit Debit Credit
20Y6
June 10 1 3,260 3,260
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
Account No. 16
Post.
Item Ref. Debit Credit Debit Credit
20Y6
June 6 1 19,340 19,340
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
20Y6
June 8 1 32,900 32,900
Account No. 22
Post.
Item Ref. Debit Credit Debit Credit
Balance
Date
Balance
Balance
Balance
Date
Account: Van
Balance
Account: Notes Payable
Account: Accounts Payable
Balance
Date
Account: Supplies
Account: Prepaid Insurance
Account: Equipment
Date
Date
Date
CHAPTER 2 Analyzing Transactions
Prob. 2-3A (Continued)
Account No. 31
Post.
Account No. 32
Post.
Item Ref. Debit Credit Debit Credit
20Y6
June 30 2 2,200 2,200
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
Account No. 51
Post.
Item Ref. Debit Credit Debit Credit
20Y6
June 30 2 6,950 6,950
Account No. 53
Post.
Account No. 54
Post.
Item Ref. Debit Credit Debit Credit
20Y6
June 29 2 4,250 4,250
Balance
Date
Balance
Date
Balance
Date
Account: Wages Expense
Date
Balance
Account: Fees Earned
Account: Utilities Expense
Account: Rent Expense
Account: Hannah Ellis, Capital
Balance
Balance
Account: Hannah Ellis, Drawing
CHAPTER 2 Analyzing Transactions
Prob. 2-3A (Continued)
Account No. 55
Post.
Item Ref. Debit Credit Debit Credit
20Y6
June 24 1 2,060 2,060
Account No. 59
Post.
Item Ref. Debit Credit Debit Credit
Date
Balance
Date
Account: Van Expense
Account: Miscellaneous Expense
Balance
CHAPTER 2 Analyzing Transactions
Prob. 2-3A (Concluded)
3.
Account Debit Credit
No. Balances Balances
Cash 11 29,810
Accounts Receivable 12 6,270
Supplies 13 3,260
Prepaid Insurance 14 4,940
Equipment 16 19,340
Van 18 39,100
Notes Payable 21 32,900
Accounts Payable 22 12,040
4. $11,980 ($33,050 – $6,950 – $6,510 – $4,250 – $2,060 – $1,300)
5. Some supplies may have been used during June, but no supplies expense has
been recorded.
As will be discussed in Chapter 3, adjustments are necessary at the end of the
accounting period to bring the accounts up to date. For example, adjustments
Whitworth Designs
Unadjusted Trial Balance
June 30, 20Y6
CHAPTER 2 Analyzing Transactions
Prob. 2-4A
2. and 3.
Page 18
Post.
Ref. Debit Credit
20Y7
Apr. 1 Rent Expense 52 6,500
Cash 11 6,500
10 Cash 11 52,300
Accounts Receivable 12 52,300
15 Land 16 200,000
Cash 11 30,000
Notes Payable 23 170,000
Page 19
Post.
Ref. Debit Credit
20Y7
Apr. 27 Cash 11 2,500
Salary and Commission Expense 51 2,500
Date
Date
JOURNAL
JOURNAL
Description
Description
CHAPTER 2 Analyzing Transactions
Prob. 2-4A (Continued)
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
^
30 Accounts Receivable 12 57,000
Fees Earned 41 57,000
30 Salary and Commission Expense 51 11,900
Cash 11 11,900
1. and 3.
Account No. 11
Post.
Item Ref. Debit Debit Credit
20Y7
Apr. 1 Balance 26,300
1 18 19,800
5 18 13,800
10 18 52,300 66,100
15 18 36,100
30 19 9,050
30 19 10,000 19,050
Account No. 12
Post.
Item Ref. Debit Debit Credit
20Y7
Apr. 1 Balance 61,500
10 18 9,200
Balance
Account: Accounts Receivable
4,000
Date Credit
52,300
6,500
6,000
30,000
GENERAL LEDGER
Balance
CreditDate
Account: Cash
CHAPTER 2 Analyzing Transactions
Prob. 2-4A (Continued)
Account No. 13
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Apr. 1 Balance 3,000
5 18 6,000 9,000
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
Account No. 16
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Apr. 15 18 200,000 200,000
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
20Y7
20 18 325 9,525
Account No. 22
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Apr. 30 19 10,000 10,000
Account No. 23
Account: Prepaid Insurance
Account: Office Supplies
Account: Land
Date
Date
Date
Account: Accounts Payable
Date
Account: Unearned Rent
Account: Notes Payable
Balance
Balance
Balance
Balance
Date
Balance
CHAPTER 2 Analyzing Transactions
Prob. 2-4A (Continued)
Account No. 31
Apr. 1 Balance 46,000
Account No. 32
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Apr. 1 Balance 2,000
30 19 4,000 6,000
Account No. 41
Account No. 51
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Apr. 1 Balance 148,200
27 19 2,500 145,700
30 19 11,900 157,600
Account No. 52
Account No. 53
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Apr. 1 Balance 17,800
23 18 4,300 22,100
Account: Rent Expense
Balance
Balance
Date
Account: Lester Wagner, Capital
Account: Salary and Commission Expense
Account: Lester Wagner, Drawing
Account: Fees Earned
Date
Balance
Date
Account: Advertising Expense
CHAPTER 2 Analyzing Transactions
Prob. 2-4A (Continued)
Account No. 54
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Apr. 1 Balance 5,500
28 19 1,500 7,000
Account No. 59
4.
Account Debit Credit
No. Balances Balances
Cash 11 19,050
Accounts Receivable 12 66,200
Prepaid Insurance 13 9,000
Office Supplies 14 3,775
Land 16 200,000
Accounts Payable 21 9,525
Unearned Rent 22 10,000
Notes Payable 23 170,000
Account: Automobile Expense
Account: Miscellaneous Expense
Date
Balance
Unadjusted Trial Balance
April 30, 20Y7
Elite Realty
CHAPTER 2 Analyzing Transactions
Prob. 2-4A (Concluded)
5. (a) The unadjusted trial balance in (4) still balances because the debits equaled
the credits in the original journal entry.
(b) The correcting entry for $7,200 ($19,100 – $11,900) would be as follows:
Page 19
Post.
Ref. Debit Credit
Date
JOURNAL
Description
CHAPTER 2 Analyzing Transactions
Prob. 2-5A
1.
Debit Credit
Balances Balances
Cash* 22,400
Accounts Receivable 48,000
Supplies** 8,750
Prepaid Insurance 4,300
Equipment 196,000
Notes Payable 117,600
Accounts Payable 30,800
*$17,300 + $6,000 (a) – $900 (b)
** $7,400 + $1,500 – $150
2. No. The trial balance indicates only that the debits and credits are equal. Any errors
that have the same effect on debits and credits will not affect the balancing of the
trial balance.
The Colby Group
Unadjusted Trial Balance
August 31, 20Y8