Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
79
Exercise 2-19 (20 minutes)
a. Cash ………………………………………………………… 6,000
Common Stock …………………………………… 6,000
Owner investment in exchange for stock.
Exercise 2-20 (15 minutes)
Chase Company
Trial Balance
December 31
Debit
Credit
Cash …………………………………………………..
$ 5,000
Supplies ……………………………………………..
3,500
Accounts payable ………………………………..
Common stock ……………………………………
Services revenue …………………………………
5,000
Rent expense ………………………………………
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
80
Exercise 2-21 (15 minutes)
JINDAL CO.
Trial Balance
December 31
Debit
Credit
Cash ……………………………………………………..
$ 8,000
Accounts receivable ………………………………
1,000
Equipment* ……………………………………………
18,000
Unearned revenue ………………………………….
Common stock ………………………………………
Dividends ………………………………………………
Services revenue ……………………………………
Wages expense ……………………………………..
Rent expense …………………………………………
81
Exercise 2-22 (20 minutes)
Description
(1)
Difference
between
Debit and
Credit
Columns
(2)
Column
with the
Larger
Total
(3)
Identify
account(s)
incorrectly
stated
(4)
Amount that account(s)
is overstated or
understated
a.
$3,600 debit to Rent
Expense is posted as
a $1,340 debit.
$2,260
Credit
Rent Expense
Rent Expense is
understated by $2,260
$1,390 debit to Store
Supplies is not
posted.
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
82
Exercise 2-23 (15 minutes)
Overstated, Understated, or Correctly-Stated
Amount
a.
Correctly-stated. The debit column is correctly stated because
the erroneous debit (to Accounts Payable) is deducted from an
account with a (larger assumed) credit balance.
$0
Understated. The credit column is understated by $37,900
because Accounts Payable was debited — it should have been
credited.
$37,900
Correctly-stated. The Automobiles account balance is correctly
stated.
understated by $37,900. It should have been increased
(credited) by $18,950 but the posting error decreased (debited)
it by $18,950.
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
83
Exercise 2-24 (20 minutes)
Calculation of change in equity for part a through part d
Assets
–
Liabilities
=
Equity
Beginning of the year ……….
$ 60,000
–
$20,000
=
$40,000
–
=
$ ?
Plus owner investments …………………………..….
0
Less dividends …………………………………………..
Change in equity …………………………………………
b. Net income (or loss) …………………………………….
$ ?
Plus owner investments …………………………..….
0
Less dividends ……………………………………………
(15,000)
Change in equity …………………………………………
$29,000
Net Income = $44,000
The dividends were added back because they reduced equity
without reducing net income.
Plus owner investment ………………………………..
Less dividends ……………………………………………
Change in equity …………………………………………
d. Net income (or loss) …………………………………….
$ ?
Plus owner investment ………………………………..
35,000
Less dividends …………………………………………..
84
Exercise 2-25 (15 minutes)
HELP TODAY
Income Statement
For Month Ended December 31
Revenues
Consulting revenue …………………………. $ 27,000
Expenses
Exercise 2-26 (15 minutes)
HELP TODAY
Statement of Retained Earnings
For Month Ended December 31
Retained earnings, December 1 ……………. $ 0
Exercise 2-27 (15 minutes)
HELP TODAY
Balance Sheet
December 31
Assets Liabilities
Cash …………………………. $ 25,360 Accounts payable ……………. $ 10,500
Accounts receivable …. 22,360 Total liabilities ………………… 10,500
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
85
Exercise 2-28 (15 minutes)
CBS
ABC
CNN
NBC
Answers
$(28,000)
$42,000
$73,000
$(45,000)
Computations:
Equity, beginning of year ……….
$ 0
$ 0
$ 0
$ 0
Owner investments ……………….
Exercise 2-29 (15 minutes)
a.
Company
Liabilities
/
Assets
=
Debt Ratio
Dreamworks
$ 30,000
$ 40,000
0.75
Pixar
0.98
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
86
PROBLEM SET A
Problem 2-1A (90 minutes)
Part 1
April 1 Cash……………………………………………………. 101 80,000
Office Equipment …………………………………. 163 26,000
Common Stock …………………………….. 307 106,000
Received cash for services.
9 Accounts Receivable …………………………... 106 6,000
Services Revenue …………………………. 403 6,000
Billed client for completed work.
13 Accounts Payable ……………………………….. 201 11,600
Billed client for completed work.
28 Dividends ……………………………………………. 319 5,500
Cash …………………………………………….. 101 5,500
Paid cash dividends.
29 Office Supplies ……………………………………. 124 600
Accounts Payable …………………………. 201 600
Purchased supplies on account.
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
87
Problem 2-1A (Continued)
Part 2
Cash
Acct. No. 101
Date
Explanation
PR
Debit
Credit
Balance
April
1
G1
80,000
80,000
2
G1
9,000
71,000
6
G1
4,000
75,000
13
G1
11,600
63,400
19
G1
2,400
61,000
22
G1
4,400
65,400
28
G1
5,500
59,900
30
G1
435
59,465
Accounts Receivable
Acct. No. 106
Date
Explanation
PR
Debit
Credit
Balance
April
9
G1
6,000
6,000
22
G1
4,400
1,600
25
G1
2,890
4,490
Office Supplies
Acct. No. 124
Date
Explanation
PR
Debit
Credit
Balance
April
3
G1
3,600
3,600
29
G1
600
4,200
Acct. No. 128
Date
Explanation
PR
Debit
Credit
Balance
April
19
G1
2,400
2,400
Acct. No. 131
Date
Explanation
PR
Debit
Credit
Balance
April
2
G1
9,000
9,000
Acct. No. 163
Date
Explanation
PR
Debit
Credit
Balance
April
1
G1
26,000
26,000
3
G1
8,000
34,000
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
88
Problem 2-1A (Continued)
Accounts Payable
Acct. No. 201
Date
Explanation
PR
Debit
Credit
Balance
April
3
G1
11,600
11,600
13
G1
11,600
0
29
G1
600
600
Acct. No. 307
Date
Explanation
PR
Debit
Credit
Balance
April
1
G1
Acct. No. 319
Date
Explanation
PR
Debit
Credit
Balance
April
28
G1
5,500
Services Revenue
Acct. No. 403
Date
Explanation
PR
Debit
Credit
Balance
April
6
G1
4,000
4,000
9
G1
6,000
10,000
25
G1
2,890
12,890
Acct. No. 690
Date
Explanation
PR
Debit
Credit
Balance
April
30
G1
435
435
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
89
Problem 2-1A (Continued)
Part 3
LINKWORKS
Trial Balance
April 30
Debit Credit
Cash …………………………………………………………….. $ 59,465
Accounts receivable …………………………………….. 4,490
Office supplies ……………………………………………… 4,200
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
90
Problem 2-2A (90 minutes)
Part 1
a. Cash……………………………………………………. 101 100,000
Office Equipment …………………………………. 163 5,000
c. Building ………………………………………………. 170 55,000
Cash …………………………………………….. 101 55,000
Purchased building.
f. Drafting Equipment ……………………………… 164 20,000
Cash …………………………………………….. 101 9,500
Notes Payable ………………………………. 250 10,500
Purchased equipment with cash and note
payable.
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
91
Problem 2-2A (Part 1 Continued)
i. Accounts Receivable …………………………... 106 22,000
Services Revenue …………………………. 403 22,000
Billed client for completed work.
l. Wages Expense …………………………………… 601 1,200
Cash …………………………………………….. 101 1,200
Paid employee wages.
p. Wages Expense …………………………………… 601 1,200
Cash …………………………………………….. 101 1,200
Paid employee wages.
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
92
Problem 2-2A (Continued)
Part 2
Cash No. 101
Accounts Payable No. 201
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
(a)
100,000
100,000
(h)
1,150
1,150
(b)
6,300
93,700
(j)
1,333
2,483
(c)
55,000
38,700
(m)
1,150
1,333
(d)
3,000
35,700
Notes Payable No. 250
Date
PR
Debit
Credit
Balance
(k)
7,000
39,400
(b)
42,700
42,700
(l)
1,200
38,200
10,500
53,200
(n)
36,125
Common Stock No. 307
Date
PR
Debit
Credit
Balance
(q)
2,500
22,945
(a)
Accounts Receivable No. 106
Dividends No. 319
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
(g)
14,000
14,000
(o)
9,480
9,480
(i)
22,000
36,000
(k)
7,000
29,000
Services Revenue No. 403
Date
PR
Debit
Credit
Balance
Prepaid Insurance No. 108
(e)
6,200
6,200
Date
PR
Debit
Credit
Balance
(g)
14,000
20,200
(d)
3,000
3,000
(i)
22,000
42,200
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
(a)
5,000
5,000
(l)
1,200
1,200
(h)
1,150
6,150
(p)
1,200
2,400
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
20,000
80,000
(q)
2,500
3,833
Building No. 170
Repairs Expense No. 604
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
(c)
55,000
55,000
(n)
925
925
Date
PR
Debit
Credit
Balance
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
93
Problem 2-2A (Concluded)
Part 3
ARACEL ENGINEERING
Trial Balance
June 30
Debit Credit
Cash ……………………………………………………. $ 22,945
Accounts receivable ……………………………. 29,000
Prepaid insurance ……………………………….. 3,000
Dividends …………………………..……………….. 9,480
Services revenue …………………………………. 42,200
Wages expense …………………………………… 2,400
94
Problem 2-3A (90 minutes)
Part 1
Mar. 1 Cash……………………………………………………. 101 150,000
Office Equipment …………………………………. 163 22,000
Common Stock …………………………….. 307 172,000
Owner investment in exchange for stock.
6 Cash……………………………………………………. 101 4,000
Services Revenue …………………………. 403 4,000
Received cash for services.
9 Accounts Receivable …………………………... 106 7,500
Services Revenue …………………………. 403 7,500
Billed client for completed work.
Billed client for completed work.
29 Dividends ……………………………………………. 319 5,100
Cash …………………………………………….. 101 5,100
Paid cash dividends.
30 Office Supplies ……………………………………. 124 600
Accounts Payable …………………………. 201 600
Purchased supplies on account.
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
95
Problem 2-3A (Continued)
Part 2
Cash
Acct. No. 101
Date
Explanation
PR
Debit
Credit
Balance
Mar.
1
G1
150,000
150,000
2
G1
6,000
144,000
6
G1
4,000
148,000
12
G1
4,200
143,800
19
G1
5,000
138,800
22
G1
3,500
142,300
29
G1
5,100
137,200
Accounts Receivable
Acct. No. 106
Date
Explanation
PR
Debit
Credit
Balance
Mar.
9
G1
7,500
7,500
22
G1
3,500
4,000
25
G1
3,820
7,820
Office Supplies
Acct. No. 124
Date
Explanation
PR
Debit
Credit
Balance
Mar.
3
G1
1,200
1,200
30
G1
1,800
Acct. No. 128
Date
Explanation
PR
Debit
Credit
Balance
Mar.
19
G1
5,000
5,000
Prepaid Rent
Acct. No. 131
Date
Explanation
PR
Debit
Credit
Balance
Mar.
2
G1
6,000
6,000
Acct. No. 163
Date
Explanation
PR
Debit
Credit
Balance
Mar.
1
G1
3
G1
3,000
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
96
Problem 2-3A (Continued)
Part 2 (Continued)
Accounts Payable
Acct. No. 201
Date
Explanation
PR
Debit
Credit
Balance
Mar.
3
G1
4,200
4,200
12
G1
4,200
0
30
G1
600
600
Acct. No. 307
Date
Explanation
PR
Debit
Credit
Balance
Mar.
1
G1
Acct. No. 319
Date
Explanation
PR
Debit
Credit
Balance
Mar.
29
G1
5,100
5,100
Services Revenue
Acct. No. 403
Date
Explanation
PR
Debit
Credit
Balance
Mar.
6
G1
4,000
4,000
9
G1
7,500
11,500
25
G1
3,820
15,320
Acct. No. 690
Date
Explanation
PR
Debit
Credit
Balance
Mar.
31
G1
500
500
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
97
Problem 2-3A (Concluded)
Part 3
VENTURE CONSULTANTS
Trial Balance
March 31
Debit Credit
Cash ……………………………………………………………. $136,700
Accounts receivable …………………………………….. 7,820
Wild and Shaw, Financial and Managerial Accounting 9e Solutions Manual: Chapter 2
98
Problem 2-4A (90 minutes)
Part 1
a. Cash …………………………………………………. 101 60,000
Office Equipment ………………………………. 163 25,000
Common Stock …………………………... 307 85,000
Owner investment in exchange for stock.
d. Automobiles ……………………………………… 164 16,500
Common Stock…………………………... 307 16,500
Owner investment in exchange for stock.
e. Office Equipment ………………………………. 163 5,600
Accounts Payable ………………………. 201 5,600
Purchased office equipment on account.