3
Beginning the
Accounting Cycle
ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL
THINKING/ETHICAL CASE
1. Disagree; the accounting cycle represents a certain period of time a business has
3. The calendar year runs from January 1 to December 31. The fiscal year is any 12
5. Disagree; transactions are first journalized in a book of original entry and then
7. The chart of accounts provides all the titles of the accounts that will be used in the
13. Transposition is a rearrangement of digits when writing a number: 5,132 →5,312
14. The question in this case is whether Mandy should be allowed to copy another
SOLUTIONS TO CONCEPT CHECKS
1.
a.
201X
f.
Initial investment by owner
2.
3.
Cash
111
Balance
Date
PR
Dr.
Cr.
Dr.
Cr.
201X
3.
ERICKSON CO.
TRIAL BALANCE
JULY 31, 201X
Dr.
Cr.
Cash
16
Equipment
12
12
16
19
Totals
5.
Date Account Titles Dr. Cr.
201X
SOLUTIONS TO SET A EXERCISES
3A-1.
Date
Account Titles and Description
PR
Dr.
Cr.
201X
May
1
Cash
170
0
0
0
00
Equipment
0
0
0
00
0
0
0
00
3
Building
50
0
0
0
00
Accounts Payable
50
0
0
0
00
Purchase of building on account
12
Truck
9
0
0
0
00
Cash
9
0
0
0
00
Purchase truck for cash
18
Supplies
3
0
0
00
Accounts Payable
3
0
0
00
Purchase of supplies on account
3A–2.
Date
Account Titles and Description
PR
Dr.
Cr.
201X
May
1
Cash
90
0
0
0
00
R. Stathos, Capital
90
0
0
0
00
Owner investment
5
Equipment
7
0
0
0
00
7
0
0
0
00
Purchase of equipment for cash
8
Equipment
0
0
0
00
10
0
0
0
00
Purchase of equipment on account
Cash
9
0
0
00
9
0
0
00
Collected cash revenue
Accounts Receivable
7
5
0
00
7
5
0
00
Earned revenue on account
R. Stathos, Withdrawals
4
0
0
00
4
0
0
00
Owner withdrawal
3A-3.
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Feb.
6
Cash
111
8
0
0
0
00
311
8
0
0
0
Cash investment
14
Equipment
121
4
2
0
0
00
111
3
5
0
0
211
7
0
0
Purchase of equipment
CASH
ACCOUNT NO. 111
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Feb.
6
GJ4
8
0
0
0
00
8
0
0
0
00
14
GJ4
3
5
0
0
4
5
0
0
00
EQUIPMENT
ACCOUNT NO. 121
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
A. KILMER, CAPITAL
ACCOUNT NO. 311
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
EXERCISES (CONTINUED)
3A-4
(a) PAGE 1
Date
201X
Account Titles and Description
PR
Dr.
Cr.
July
1
Cash
111
9
0
0
0
00
J. Leslie, Capital
311
9
0
0
0
00
Owner investment
4
Equipment
121
8
0
0
00
0
0
0
0
Fees Earned
411
7
0
0
0
00
18
Cash
111
5
0
0
0
00
5
0
0
Services performed for cash
24
Salaries Expense
511
1
2
0
0
00
Cash
111
1
2
0
0
00
Salaries paid
Cash
111
7
0
0
00
Owner withdrawal
(b)
CASH
ACCOUNT NO. 111
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
July
1
GJ1
9
0
0
0
00
9
0
0
0
00
5
0
0
0
14
0
0
0
GJ1
1
2
0
0
12
8
0
0
00
7
0
0
12
0
0
EXERCISES (CONTINUED)
ACCOUNTS RECEIVABLE
ACCOUNT NO. 112
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
EQUIPMENT
ACCOUNT NO. 121
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
July
4
GJ1
8
0
0
00
8
0
0
00
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
4
J. LESLIE, CAPITAL
ACCOUNT NO. 311
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
1
9
J. LESLIE, WITHDRAWALS
ACCOUNT NO. 312
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
FEES EARNED
ACCOUNT NO. 411
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
7
7
5
EXERCISES (CONTINUED)
SALARIES EXPENSE
ACCOUNT NO. 511
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
(c)
LESLIE COMPANY
TRIAL BALANCE
July 31, 201X
Dr.
Cr.
Cash
12
1
0
0
00
Accounts Receivable
7
0
0
0
00
Accounts Payable
9
7
0
0
00
Fees Earned
2
0
0
00
21
8
0
0
00
3A-5
SCARSDALE CO.
TRIAL BALANCE
OCTOBER 31, 201X
Dr.
Cr.
Cash
13
0
0
0
00
Accounts Receivable
1
5
0
0
00
Accounts Payable
5
A. Scarsdale, Capital
8
8
0
0
00
2
Concessions Earned
2
Rent Expense
5
0
0
00
Salaries Expense
2
7
0
0
00
Miscellaneous Expense
1
2
0
0
00
19
7
0
0
00
7
EXERCISES (CONTINUED)
SOLUTIONS TO SET B EXERCISES
3B-1.
Date
Account Titles and Description
PR
Dr.
Cr.
201X
Mar.
1
Cash
50
0
0
0
00
Equipment
9
0
0
0
00
0
0
0
Owner investment
3
Building
90
0
0
0
00
Accounts Payable
0
0
0
12
Truck
13
0
0
0
00
Cash
0
0
0
18
Supplies
4
0
0
Accounts Payable
4
0
0
3B–2.
Date
Account Titles and Description
PR
Dr.
Cr.
201X
May
1
Cash
0
0
0
00
R. Tacks, Capital
0
0
0
00
Owner investment
5
Equipment
0
0
0
00
0
0
0
00
Purchase of equipment for cash
8
Equipment
0
0
0
00
0
0
0
00
Purchase of equipment on account
Cash
8
0
0
00
8
0
0
00
Collected cash revenue
Accounts Receivable
8
0
0
00
8
0
0
00
Earned revenue on account
R. Tacks, Withdrawals
4
5
0
00
4
5
0
00
Owner withdrawal
EXERCISES (CONTINUED)
3B–3.
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Feb.
6
Cash
111
9
0
0
0
00
A. Kilian, Capital
311
9
0
0
0
00
Cash investment
14
Equipment
121
8
7
0
0
00
Cash
111
8
0
0
0
00
Accounts Payable
211
7
0
0
00
Purchase of equipment
CASH
ACCOUNT NO. 111
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Feb.
6
GJ4
9
0
0
0
00
9
0
0
0
00
14
GJ4
8
0
0
0
1
0
0
0
00
EQUIPMENT
ACCOUNT NO. 121
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
A. KILIAN, CAPITAL
ACCOUNT NO. 311
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
EXERCISES (CONTINUED)
3B–4. (a) PAGE 1
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Nov.
1
Cash
111
22
0
0
0
00
J. Leslie, Capital
311
22
0
0
0
00
Owner investment
6
Equipment
121
1
8
0
0
00
1
0
0
Purchase of equipment on account
0
0
Fees Earned
411
7
0
0
0
00
18
Cash
111
5
0
0
0
00
5
0
0
Services performed for cash
24
Salaries Expense
511
1
2
0
0
00
Cash
111
1
2
0
0
00
Salaries paid
Cash
111
7
0
0
00
Owner withdrawal
(b)
CASH
ACCOUNT NO. 111
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Nov.
1
GJ1
22
0
0
0
00
22
0
0
0
00
18
GJ1
5
0
0
0
00
27
0
0
0
00
GJ1
2
0
0
00
25
8
0
0
00
7
0
0
0
0
EXERCISES (CONTINUED)
ACCOUNTS RECEIVABLE
ACCOUNT NO. 112
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
7
EQUIPMENT
ACCOUNT NO. 121
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
6
GJ1
1
1
J. LESLIE, CAPITAL
ACCOUNT NO. 311
1
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
J. LESLIE, WITHDRAWALS
ACCOUNT NO. 312
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
FEES EARNED
ACCOUNT NO. 411
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
7
7
EXERCISES (CONTINUED)
SALARIES EXPENSE
ACCOUNT NO. 511
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
(c.)
LESLIE COMPANY
TRIAL BALANCE
NOVEMBER 30, 201X
Dr.
Cr.
Cash
25
1
0
0
00
Accounts Receivable
7
0
0
0
00
Equipment
1
8
0
0
00
Accounts Payable
7
0
0
00
Fees Earned
1
2
0
0
00
8
0
0
00
8
3B-5
SIMONE CO.
TRIAL BALANCE
AUGUST 31, 201X
Dr.
Cr.
Cash
5
0
0
0
00
Accounts Receivable
1
8
0
0
00
Accounts Payable
6
0
0
0
00
A. Simone, Capital
5
0
00
1
1
5
0
00
4
7
0
0
00
Concessions Earned
9
Rent Expense
1
3
0
0
00
Salaries Expense
2
6
0
0
00
Miscellaneous Expense
1
8
0
0
00
13
6
5
0
00
13
6
5
0
00
SOLUTIONS TO SET A PROBLEMS
PROBLEM 3A-1
JOHN’S CLEANING SERVICE
GENERAL JOURNAL
PAGE 1
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Aug.
1
Prepaid Rent
10
0
0
0
00
Cleaning Equipment
15
0
0
0
00
Purchased equipment on account
12
Cleaning Supplies
8
0
0
00
Cash
1
3
0
0
00
1
5
0
00
1
5
0
Owner withdrawal
21
Advertising Expense
2
5
0
00
2
5
0
1
2
0
5
0
0
PROBLEM 3A-1 (CONCLUDED)
JOHN’S CLEANING SERVICE
GENERAL JOURNAL
PAGE 2
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Aug.
29
Accounts Receivable
2
6
0
0
00
30
Accounts Payable
7
5
0
0
00
Paid on account
PROBLEM 3A-2
(a, b)
BRITTNEY’S ART STUDIO
GENERAL JOURNAL
PAGE 1
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Sept.
1
Cash
111
0
0
0
B. Slater, Capital
311
0
0
0
00
1
Prepaid Rent
114
2
1
0
0
00
Cash
111
2
1
0
0
00
Rent paid in advance
3
Equipment
131
2
1
0
0
00
Accounts Payable
211
2
1
0
0
00
Purchase of equipment on account
5
Cash
111
7
0
0
0
00
Art Fees Earned
411
7
0
0
0
00
Fee earned for cash
8
Art Supplies
121
2
5
0
00
Cash
111
2
5
0
00
9
Accounts Receivable
112
2
0
0
0
411
0
0
0
111
7
0
0
B. Slater, Withdrawals
312
7
0
0
111
7
0
0
111
1
0
0
PROBLEM 3A-2 (CONTINUED)
Date
Accounts and Explanation
Debit
Credit
Sept.
Telephone Expense
2
2
0
GENERAL LEDGER OF BRITTNEY’S ART STUDIO
CASH
ACCOUNT NO. 111
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Sept.
1
GJ1
20
0
0
0
00
20
0
0
0
00
1
GJ1
2
1
0
0
00
17
9
0
0
00
5
8
GJ1
2
5
0
00
24
6
5
0
00
GJ1
1
0
0
00
23
1
5
0
00
GJ1
2
0
0
00
22
9
5
0
00
ACCOUNTS RECEIVABLE
ACCOUNT NO. 112
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Sept.
9
GJ1
2
0
0
00
2
0
0
0
00
PREPAID RENT
ACCOUNT NO. 114
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
GJ1
ART SUPPLIES
ACCOUNT NO. 121
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Sept.
8
GJ1
5
0
00
2
5
0
PROBLEM 3A-2 (CONTINUED)
EQUIPMENT
ACCOUNT NO. 131
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Sept.
3
GJ1
2
1
0
0
00
2
1
0
0
00
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
GJ1
B. SLATER, CAPITAL
ACCOUNT NO. 311
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
GJ1
B. SLATER, WITHDRAWALS
ACCOUNT NO. 312
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
GJ1
ART FEES EARNED
ACCOUNT NO. 411
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Sept.
5
GJ1
7
0
0
0
00
7
0
0
0
00
GJ1
PROBLEM 3A-2 (CONCLUDED)
ELECTRICAL EXPENSE
ACCOUNT NO. 511
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Sept.
28
GJ1
00
SALARIES EXPENSE
ACCOUNT NO. 521
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Sept.
10
TELEPHONE EXPENSE
ACCOUNT NO. 531
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
(c)
BRITTNEY’S ART STUDIO
TRIAL BALANCE
SEPTEMBER 30, 201X
Dr.
Cr.
Cash
22
9
5
0
00
Accounts Receivable
0
0
0
00
Art Supplies
2
5
0
00
Equipment
2
1
0
0
00
Accounts Payable
2
1
0
0
00
B. Slater, Capital
0
0
0
B. Slater, Withdrawals
7
0
0
00
Art Fees Earned
9
0
0
0
1
0
0
Salaries Expense
7
0
0
00
1
0
0
00
1
0
0