Chapter 2 – The Accounting Cycle: During the Period
Exercise 2-13 (LO 2-4)
Corrections
External Transaction
Accounts
Debit
Credit
1.
Pay cash dividends of $800 to
stockholders.
Dividends
800
Cash
800
2.
Provide services on account for
customers, $3,400
Accounts Receivable
3,400
Service Revenue
3,400
Cash
Accounts Payable
Note: Accounts in blue are corrected items.
Accounts in black need no correction.
Chapter 2 – The Accounting Cycle: During the Period
Exercise 2-14 (LO 2-5)
Cash
5,000
Exercise 2-15 (LO 2-5)
Cash
Accounts Receivable
(3)
(6)
3,400
10,200
1,100
1,000
3,700
(4)
(5)
(1)
4,200
8,400
10,200
(3)
10,000
2,400
8,400
Chapter 2 – The Accounting Cycle: During the Period
Exercise 2-16 (LO 2-5)
1. Provide services to customers for cash, $20,000.
2. Provide services to customers on account, $5,000.
Exercise 2-17 (LO 2-6)
Sooner Company
Trial Balance
April 30
Accounts
Debit
Credit
Cash
$ 3,900
Accounts Receivable
6,100
Prepaid Rent
7,400
Land
Accounts Payable
Deferred Revenue
Common Stock
Retained Earnings
Service Revenue
Supplies Expense
9,400
Salaries Expense
Chapter 2 – The Accounting Cycle: During the Period
Exercise 2-18 (LO 2-6)
Cobras Incorporated
Trial Balance
March 31
Accounts
Debit
Credit
Cash
$ 3,500
Accounts Receivable
4,200
Supplies
1,000
Prepaid Insurance
Buildings
$ 2,200
Salaries Payable
Common Stock
Retained Earnings
Service Revenue
Salaries Expense
6,400
Utilities Expense
Chapter 2 – The Accounting Cycle: During the Period
Exercise 2-19 (LO 2-4, 2-5, 2-6)
Requirement 1
(1) January 1
Debit
Credit
Cash
42,000
Common Stock
42,000
(Issue common stock)
(2) January 5
Land
Notes Payable
(3) January 9
Equipment
Cash
(Purchase storage containers)
(4) January 12
No entry
(5) January 18
Cash
13,000
Service Revenue
13,000
(Receive cash for current month’s rent)
(6) January 23
Supplies
Accounts Payable
Salaries Expense
Cash
2-26 Financial Accounting, 5e
Exercise 2-19 (continued)
Requirement 2
Cash
Common Stock
(1)
(5)
0
42,000
13,000
9,000
9,000
(3)
(7)
0
42,000
(1)
37,000
42,000
(2)
0
0
(2)
0
0
Supplies
Accounts Payable
(6)
0
3,000
0
3,000
(6)
3,000
3,000
Chapter 2 – The Accounting Cycle: During the Period
Exercise 2-19 (concluded)
Requirement 3
Green Wave Company
Trial Balance
Accounts
Debit
Credit
Cash
$37,000
Supplies
3,000
Land
Equipment
9,000
Accounts Payable
Notes Payable
Common Stock
Service Revenue
Salaries Expense
9,000
Chapter 2 – The Accounting Cycle: During the Period
2-28 Financial Accounting, 5e
Exercise 2-20 (LO 2-4, 2-5, 2-6)
Requirement 1
(1) September 3
Debit
Credit
Accounts Receivable
20,000
Service Revenue
20,000
(Provide painting on account)
(2) September 8
Equipment
(Purchase painting equipment)
Supplies
3,500
Accounts Payable
3,500
(Purchase office supplies on account)
(4) September 15
Salaries Expense
4,200
Cash
4,200
(Pay salaries for the current month)
(5) September 19
Advertising Expense
1,000
Cash
1,000
(Pay advertising for the current month)
(6) September 22
Rent Expense
Cash
5,400
(Pay rent for the current month)
(7) September 26
Cash
(Receive cash on account)
(8) September 30
Cash
6,000
Deferred Revenue
6,000
(Receive cash in advance for painting)
Chapter 2 – The Accounting Cycle: During the Period
Exercise 2-20 (continued)
Requirement 2
Accounts Receivable
Service Revenue
Beg.
(1)
1,700
20,000
15,000
(7)
0
20,000
Beg.
(1)
6,700
20,000
Supplies
Accounts Payable
Beg.
(3)
500
3,500
1,200
3,500
Beg.
(3)
4,000
4,700
Salaries Expense
Advertising Expense
Beg.
(4)
0
4,200
Beg.
(5)
0
1,000
4,200
1,000
Beg.
(6)
6,000
Beg.
6,000
Retained Earnings
Beg.
Beg.
Chapter 2 – The Accounting Cycle: During the Period
2-30 Financial Accounting, 5e
Exercise 2-20 (concluded)
Requirement 3
Boilermaker House Painting Company
Trial Balance
Accounts
Debit
Credit
Cash
$35,500
Accounts Receivable
6,700
Supplies
4,000
Equipment
Accounts Payable
Deferred Revenue
6,000
Common Stock
Retained Earnings
Service Revenue
Salaries Expense
4,200
Advertising Expense
1,000
Rent Expense
$85,200
$85,200
Chapter 2 – The Accounting Cycle: During the Period
PROBLEMS: SET A
Problem 2-1A (LO 2-2)
Transaction
Assets
=
Liabilities
+
Stockholders’
Equity
1. Issue common stock in
exchange for cash.
Increase
=
No effect
+
Increase
2. Purchase business
supplies on account.
Increase
=
+
No effect
for the current month.
4. Provide services to
Increase
=
No effect
+
Increase
5. Pay employee salaries
for the current month.
Decrease
=
No effect
+
Decrease
6. Provide services to
customers for cash.
Increase
=
No effect
+
Increase
7. Pay for advertising for
the current month.
Decrease
=
No effect
+
Decrease
8. Repay loan from the
bank.
9. Pay dividends to
Decrease
=
No effect
+
Decrease
10. Receive cash from
customers in (4)
above.
No effect*
=
No effect
+
No effect
Decrease
Decrease
No effect
Chapter 2 – The Accounting Cycle: During the Period
2-32 Financial Accounting, 5e
Problem 2-2A (LO 2-2)
Transaction
Assets
=
Liabilities
+
Stockholders’
Equity
1. Provide services to
customers on account,
$1,600.
+$1,600
=
$0
+
+$1,600
2. Pay $400 for current
month’s rent.
−$400
=
$0
+
−$400
4. Pay $100 for advertising
−$100
=
$0
+
−$100
=
$0
+
$0
6. Receive cash of $1,000
from customers in (1)
above.
+$1,000
−$1,000
=
$0
+
$0
7. Obtain a loan from the bank
for $7,000.
+$7,000
=
+$7,000
+
$0
=
+
=
$0
+
8. Receive a bill of $200 for
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-3A (LO 2-3)
Accounts
Type of Account
Normal Balance
(Debit or Credit)
1. Salaries Payable
Liability
Credit
2. Common Stock
Stockholders’ equity
Credit
3. Prepaid Rent
Asset
Debit
4. Buildings
Asset
Debit
6. Equipment
Asset
Debit
7. Rent Expense
Expense
Debit
8. Notes Payable
Liability
Credit
9. Salaries Expense
Expense
Debit
Asset
Debit
Revenue
Credit
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-4A (LO 2-4)
Transactions for Jake’s Lawn Maintenance Company
July 3
Debit
Credit
Accounts Receivable
500
Service Revenue
500
(Provide services on account)
July 6
Repairs and Maintenance Expense
450
Accounts Payable
450
(Receive maintenance on account)
July 9
Cash
500
Accounts Receivable
500
(Receive cash on account)
July 14
Notes Receivable
600
Cash
600
(Loan cash by accepting note receivable)
July 18
Advertising Expense
110
Cash
(Pay advertising for the current month)
July 20
Accounts Payable
(Pay cash on account)
July 27
No entry for Jake.
No entry for Jake.
July 31
Cash
600
Notes Receivable
600
(Receive cash on note receivable)
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-5A (LO 2-2, 2-4)
Transactions for Luke’s Repair Shop
July 3
Debit
Credit
Repairs and Maintenance Expense
500
Accounts Payable
500
(Receive services on account)
July 6
Accounts Receivable
450
Service Revenue
450
(Provide services on account)
July 9
Accounts Payable
500
Cash
500
(Pay cash on account)
July 14
Cash
600
Notes Payable
600
(Borrow by signing note payable)
July 18
No entry for Luke.
July 20
Cash
Accounts Receivable
(Receive cash on account)
July 27
Cash
800
Service Revenue
800
(Provide services for cash)
July 30
Salaries Expense
300
Cash
300
(Pay salaries to employees)
July 31
Notes Payable
600
Cash
600
(Pay note payable)
Chapter 2 – The Accounting Cycle: During the Period
2-36 Financial Accounting, 5e
Problem 2-5A (concluded)
Jake’s Lawn Maintenance Company
Luke’s Repair Shop
Assets
=
Liabilities
+
Stockholders’
Equity
Assets
=
Liabilities
+
Stockholders’
Equity
July 3
+$500
=
$0
+
+$500
$0
=
+$500
+
−$500
+
=
+
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-6A (LO 2-6)
Bruins Company
Trial Balance
November 30
Accounts
Debit
Credit
Cash
$ 40,000
Accounts Receivable
50,000
Supplies
1,100
Equipment
Accounts Payable
Salaries Payable
Interest Payable
Deferred Revenue
Notes Payable
Common Stock
50,000
Retained Earnings
35,000
Dividends
1,100
Service Revenue
65,000
Salaries Expense
30,000
Rent Expense
12,000
Interest Expense
Supplies Expense
Utilities Expense
$214,000
Chapter 2 – The Accounting Cycle: During the Period
Problem 2-7A (LO 2-4, 2-5, 2-6)
Requirement 1
Entries are numbered for posting.
(1)
March 1
Debit
Credit
Cash
3,000
Common Stock
3,000
(Issue common stock)
(2)
March 3
Equipment
2,700
2,700
(Purchase sewing equipment with note payable)
(3)
March 5
Cash
600
(Pay rent for current month)
March 7
(4)
March 12
Supplies
130
130
(Purchase sewing supplies on account)
(5)
March 15
Cash
800
Service Revenue
800
(Provide services for cash)
(6)
March 19
Cash
700
Deferred Revenue
700
(Receive cash in advance from customer)
(7)
March 25
Deferred Revenue
700
Service Revenue
700
(Provide services to customer)
(8)
March 30
(Pay utilities for current month)
(9)
March 31
Dividends
150
150
(Pay dividends)
Problem 2-7A (continued)
Requirements 2 and 3
Cash
Supplies
Equipment
(1) 3,000
600 (3)
(4) 130
(2) 2,700
150 (9)
130 (4)
(7) 700
Notes Payable
Common Stock
Dividends
2,700 (2)
3,000 (1)
(9) 150
2,700
3,000
150
Chapter 2 – The Accounting Cycle: During the Period
2-40 Financial Accounting, 5e
Problem 2-7A (concluded)
Requirement 4
Ute Sewing Shop
Trial Balance
March 31
Accounts
Debit
Credit
Cash
$3,655
Supplies
130
Equipment
Accounts Payable
$ 130
Notes Payable
2,700
Common Stock
3,000
Dividends
150
Utilities Expense