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Exercise 2–24
Transaction Journal
1. Purchased merchandise on account. PJ
2. Collected an account receivable. CR
6. Sold merchandise for cash.
(the sale only, not the cost of the merchandise) CR
10. Sold equipment for cash. CR
11. Sold equipment on credit. GJ
Exercise 2–25
Transaction Journal
1. Paid interest on a loan. CD
2. Recorded depreciation expense. GJ
6. Sold merchandise for cash. CR
(the sale only, not the cost of the merchandise)
7. Paid rent. CD
8. Recorded accrued interest payable. GJ
CPA REVIEW QUESTIONS
1. d. The event is recorded as an increase to accounts receivable and an increase
2. b. The amount accrued as commissions for each salesperson will be any
commissions due over and above the fixed salary as follows:
Fixed salary
Commissions
Excess
3. b. A net decrease in accounts receivable means that cash collections exceeded
accrual revenue. Therefore, cash basis income would be higher when
4. a. Cash basis income: Cash collected in May $3,200,000
Accrual basis income:
5. d. Expense recognized $437,500
2–44 Intermediate Accounting, 8/e
Problem 2–1
Requirement 1
2016
Debit
Credit
Jan. 1
Cash .....................................................
100,000
Common stock .................................
100,000
Jan. 20
Salaries and wages expense .................
6,000
Cash .................................................
6,000
Jan. 22
Cash .....................................................
10,000
Sales revenue ...................................
10,000
Jan. 22
Cost of goods sold ...............................
6,000
PROBLEMS
Problem 2–1 (continued)
Requirement 2 BALANCE SHEET ACCOUNTS
Cash Accounts receivable
___________________________ ___________________________
1/1 Bal. 0 1/1 Bal. 0
1/1 100,000 2,400 1/4 1/10 12,000 6,000 1/26
Inventory Prepaid insurance
___________________________ ___________________________
1/1 Bal. 0 1/1 Bal. 0
1/2 35,000 7,000 1/10 1/4 2,400
6,000 1/22
_______________ ______________
1/31 Bal. 22,000 1/31 Bal. 2,400
Prepaid rent Accounts payable
___________________________ ___________________________
Problem 2–1 (continued)
INCOME STATEMENT ACCOUNTS
Sales revenue Cost of goods sold
___________________________ ___________________________
0 1/1 Bal. 1/1 Bal. 0
12,000 1/10 1/10 7,000
Utilities expense
___________________________
1/1 Bal. 0
1/28 1,000
_______________
1/31 Bal. 1,000
Problem 2–1 (concluded)
Requirement 3
Account Title
Debits
Credits
Cash
117,600
2–48 Intermediate Accounting, 8/e
Problem 2–2
Requirement 2
2016
Debit
Credit
Jan. 1
Cash ......................................................
3,500
Sales revenue ....................................
3,500
Jan. 1
Cost of goods sold ................................
2,000
Inventory ..........................................
2,000
Jan. 8
Cost of goods sold ................................
2,800
Inventory ..........................................
2,800
Jan. 10
Inventory ..............................................
9,500
Accounts payable .............................
9,500
Jan. 13
Equipment ............................................
800
Cash ..................................................
800
Problem 2–2 (continued)
Requirements 1 and 3 BALANCE SHEET ACCOUNTS
Cash Accounts receivable
___________________________ ___________________________
1/1 Bal. 5,000 1/1 Bal. 2,000
1/1 3,500 800 1/13 1/8 5,000 4,000 1/18
1/31 Bal. 1,400 1/31 Bal. 3,000
Inventory Equipment
___________________________ ___________________________
1/1 Bal. 5,000 1/1 Bal. 11,000
1/10 9,500 2,000 1/1 1/2 5,500
2,800 1/8 1/13 800
Common stock Retained earnings
___________________________ ___________________________
10,000 1/1 Bal. 6,500 1/1 Bal.
1/31 1,000
_______________ ______________
10,000 1/31 Bal. 5,500 1/31 Bal.
Problem 2–2 (continued)
INCOME STATEMENT ACCOUNTS
Sales revenue Cost of goods sold
___________________________ ___________________________
0 1/1 Bal. 1/1 Bal. 0
Rent expense Salaries and wages expense
___________________________ ___________________________
1/1 Bal. 0 1/1 Bal. 0
1/20 800 1/30 3,000
_______________ ______________
Problem 2–2 (concluded)
Requirement 4
Account Title
Debits
Credits
Cash
1,400
Accounts receivable
3,000
Inventory
9,700
Equipment
17,300
Problem 2–3
1. Depreciation expense ................................................. 10,000
Accumulated depreciation ..................................... 10,000
2. Salaries and wages expense ....................................... 1,500
Salaries and wages payable .................................... 1,500
Problem 2–4
Requirements 1 and 2
BALANCE SHEET ACCOUNTS
Cash Accounts receivable
___________________________ ___________________________
Bal. 30,000 Bal. 40,000
_______________ ______________
12/31 Bal. 30,000 12/31 Bal. 40,000
Prepaid rent
Prepaid insurance Supplies
___________________________ ___________________________
Bal. 0 Bal. 1,500
5. 3,750 700 6.
_______________ ______________
12/31 Bal. 3,750 12/31 Bal. 800
Inventory Note receivable
2–54 Intermediate Accounting, 8/e
Problem 2–4 (continued)
Accumulated depreciation Accounts payable
___________________________ ___________________________
30,000 Bal. 31,000 Bal.
10,000 1.
Interest payable Deferred revenue
___________________________ ___________________________
0 Bal. 0 Bal.
1,500 3. 2,000 7.
_______________ ______________
1,500 12/31 Bal. 2,000 12/31 Bal.
Common stock Retained earnings
Problem 2–4 (continued)
INCOME STATEMENT ACCOUNTS
Sales revenue Interest revenue
___________________________ ___________________________
148,000 Bal. 0 Bal.
7. 2,000 1,333 4.
_______________ ______________
_______________ ______________
12/31 Bal. 70,000 12/31 Bal. 20,400
Rent expense Depreciation expense
___________________________ ___________________________
Bal. 11,000 Bal. 0
8. 1,000 1. 10,000
_______________ ______________
Insurance expense Advertising expense
___________________________ ___________________________
Bal. 6,000 Bal. 3,000
3,750 5.
_______________ ______________
12/31 Bal. 2,250 12/31 Bal. 3,000
Problem 2–4 (continued)
Requirement 3
Account Title
Debits
Credits
Cash
30,000
Accounts receivable
40,000
Salaries and wages payable
1,500
Note payable
50,000
Interest payable
1,500
Deferred revenue
2,000
Common stock
60,000
Problem 2–4 (continued)
Requirement 4
PASTINA COMPANY
Income Statement
For the Year Ended December 31, 2016
Sales revenue .............................................
$146,000
Cost of goods sold .....................................
70,000
Gross profit ................................................
76,000
Operating expenses:
Operating income
26,550
Other income (expense):
Interest revenue .....................................
1,333
2–58 Intermediate Accounting, 8/e
Problem 2–4 (continued)
PASTINA COMPANY
Statement of Shareholders' Equity
For the Year Ended December 31, 2016
Total
Common Retained Shareholders’
Stock Earnings Equity
Balance at January 1, 2016 $60,000 $28,500 $ 88,500
Problem 2–4 (continued)
PASTINA COMPANY
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash ............................................................
$ 30,000
Accounts receivable ...................................
40,000
Office equipment ..........................................
$80,000
Less: Accumulated depreciation ................
(40,000)
40,000
Total assets ...........................................
$196,883
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable ........................................
$ 31,000
Salaries and wages payable .........................
1,500
Problem 2–4 (continued)
Requirement 5
December 31, 2016
Sales revenue ................................................................... 146,000
Interest revenue ............................................................... 1,333
Income summary ......................................................... 147,333
Income summary ............................................................. 120,950
Cost of goods sold ....................................................... 70,000
