1. An account is a form designed to record changes in a particular asset, liability, owner’s equity,
2. The terms debit and credit may signify either an increase or a decrease, depending upon the nature of
3. a. Assuming no errors have occurred, the credit balance in the cash account resulted from drawing
4. a. The revenue was earned in October.
5. No. Errors may have been made that had the same erroneous effect on both debits and credits, such
p
7. a. No. Because the same error occurred on both the debit side and the credit side of the trial
b
8. a. The equality of the trial balance would not be affected.
b. On the income statement, total operating expenses (salary expense) would be overstated by
b
b. On the income statement, revenues (fees earned) would be overstated by $300,000, and net
income would be overstated by $300,000. On the statement of owner’s equity, the beginning
CHAPTER 2
ANALYZING TRANSACTIONS
DISCUSSION QUESTIONS
2-1
CHAPTER 2 Analyzing Transactions
PE 2–1A
1. Debit and credit entries, normal debit balance
PE 2–1B
1. Debit and credit entries, normal credit balance
PE 2–2A
Feb. 12 Office Equipment 18,000
PE 2–2B
PRACTICE EXERCISES
2-2
CHAPTER 2 Analyzing Transactions
PE 2–3A
July 9 Accounts Receivable 12,000
PE 2–3B
Aug. 13 Cash 9,000
PE 2–4A
Jan. 25 Jay Nolan, Drawing 16,000
PE 2–4B
PE 2–5A
Using the following T account, solve for the amount of cash receipts (indicated
by ? below).
Feb. 1 Bal. 14,750 93,400 Cash payments
Cash receipts ?
PE 2–5B
Using the following T account, solve for the amount of supplies expense
(indicated by ? below).
Aug. 1 Bal. 1,025 ? Supplies expense
Cash
Supplies
2-3
CHAPTER 2 Analyzing Transactions
PE 2–6A
a. The totals are unequal. The credit total is lower by $900 ($5,400 – $4,500).
PE 2–6B
a. The totals are equal since both the debit and credit entries were journalized
PE 2–7A
a. Utilities Expense 7,300
Miscellaneous Expense 7,300
2-4
CHAPTER 2 Analyzing Transactions
PE 2–7B
PE 2–8A
2014 2013 Amount Percent
PE 2–8B
2014 2013 Amount Percent
Increase/(Decrease)
Paragon Company
Income Statements
For Years Ended December 31
Fuller Company
Income Statements
For Years Ended December 31
Increase/(Decrease)
2-5
CHAPTER 2 Analyzing Transactions
Ex. 2–1
Flight Equipment Cargo and Mail Revenue
Ex. 2–2
Account
Number
Accounts Payable 21
Account
EXERCISES
Assets Revenue
Balance Sheet Accounts Income Statement Accounts
2-6
CHAPTER 2 Analyzing Transactions
Ex. 2–3
11 Cash 41 Fees Earned
12 Accounts Receivable
Ex. 2–4
Ex. 2–5
1. debit and credit entries (c)
1. Assets 4. Revenue
Balance Sheet Accounts Income Statement Accounts
2-7
CHAPTER 2 Analyzing Transactions
Ex. 2–6
a. Liability—credit e. Asset—debit
Ex. 2–7
2014
July 1 Rent Expense 3,200
Cash 3,200
10 Cash 11,400
2-8
CHAPTER 2 Analyzing Transactions
Ex. 2–8
a.
Page 19
Post.
Ref. Debit Credit
2014
Account No. 15
Post.
Ref. Debit Debit Credit
2014
Account No. 21
Post.
Ref. Debit Debit Credit
2014
Balance
JOURNAL
Account:
Account: Supplies
Accounts Payable
Date
Date
Adjusting Entries
Balance
Credit
Credit
Description
Date Item
Item
2-9
CHAPTER 2 Analyzing Transactions
Ex. 2–9 (Concluded)
b.
Ex. 2–10
Cash Accounts Payable
2-10
CHAPTER 2 Analyzing Transactions
Ex. 2–11
a.
Mar. 1 X
b.
July 1 49,000 525,000
c.
Sept. 1 28,440 X
Cash
Accounts Payable
Accounts Receivable
2-11
CHAPTER 2 Analyzing Transactions
Ex. 2–13
a. and b.
Effect Type Effect
asset + owner’s equity +
Ex. 2–14
(1) Cash 75,000
Account Debited Account Credited
Type
(1)
Transaction
2-12
CHAPTER 2 Analyzing Transactions
Ex. 2–15
a.
Debit Credit
Balances Balances
Cash 62,300
GRAND CANYON TOURS CO.
Unadjusted Trial Balance
April 30, 2014
2-13
CHAPTER 2 Analyzing Transactions
Ex. 2–16
Debit Credit
Balances Balances
Cash 13,500
Dan Leafdale, Drawing 16,000
Fees Earned 538,000
Ex. 2–17
LEAF CO.
Unadjusted Trial Balance
December 31, 2014
*
2-14
CHAPTER 2 Analyzing Transactions
Ex. 2–18
Debit Credit
Balances Balances
Cash 15,500
Ex. 2–19
(a) (b)
Error Out of Balance Difference
1. yes $6,000
(c)
Larger Total
RANGER CO.
Unadjusted Trial Balance
August 31, 2014
debit
2-15
CHAPTER 2 Analyzing Transactions
Ex. 2–20
1. The Debit column total is added incorrectly. The sum is $890,700 rather than
A corrected trial balance would be as follows:
Debit Credit
Balances Balances
Cash 36,000
MASCOT CO.
Unadjusted Trial Balance
July 31, 2014
2-16
CHAPTER 2 Analyzing Transactions
Ex. 2–22
a. Cash 17,600
Ex. 2–23
a. 1. Revenue:
$2,033 million increase ($67,390 – $65,357)
2-17
CHAPTER 2 Analyzing Transactions
Ex. 2–24
a. 1. Revenue:
$13,764 million increase ($421,849 – $408,085)
2-18
CHAPTER 2 Analyzing Transactions
Prob. 2–1A
1. and 2.
(a) 25,000 (b) 2,750 (d) 9,000
PROBLEMS
Cash Equipment
2-19
3.
Debit Credit
Balances Balances
Cash 18,035
LYNN CANTWELL, ARCHITECT
Unadjusted Trial Balance
July 31, 2014
2-20