b.
May 1 480,000
Capital Stock 480,000
4 84,000
21 6,000
Cash 6,000
24 2,280
360
Veterinary Service Revenue 2,640
Accounts Payable 480
Accounts Receivable 120
31 3,360
Cash 3,360
Salary Expense
Cash
Collected cash for May 24 services.
Advertising Expense
Recorded advertising expense incurred in May.
Land
Office Supplies
Purchased office supplies.
Cash
Recorded veterinary service revenue earned.
Accounts Receivable
Issued 6,000 shares of capital stock.
Cash
PROBLEM 3.5A
DR. SCHEKTER, DVM (continued)
Current Yr.
General Journal
Cash 120,000
Notes Payable 180,000
Cash 156,000
Cash 24,000
Accounts Payable 36,000
Office Fixtures and Equipment
Medical Instruments
Building
Purchased land and building.
Purchased medical instruments.
Purchased fixtures and equipment.
c.
May 1 480,000 May 4 120,000 May 4 180,000
May 24 360 May 28 120 May 16 36,000
May 27 480
May 31 Bal. 240 May 31 Bal. 36,480
May 21 6,000 May 1 480,000
May 31 Bal. 6,000 May 31 Bal. 480,000
May 9 156,000 May 24 2,640
May 31 Bal. 156,000 May 31 Bal. 2,640
May 31 Bal. 60,000 May 31 Bal. 480
Capital Stock
Advertising Expense
May 4 84,000 May 31 3,360
May 31 Bal. 84,000 May 31 Bal. 3,360
PROBLEM 3.5A
DR. SCHEKTER, DVM (continued)
Notes Payable
Accounts Payable
Salary Expense
May 24 2,280 May 9 156,000
May 28 120 May16 24,000
May 31 Bal. 173,040 May 31 Bal. 180,000
d.
173,040$
240
6,000
PROBLEM 3.5A
DR. SCHEKTER, DVM
May 31, Current Year
Cash
DR. SCHEKTER, DVM (continued)
Trial Balance
Accounts receivable
Office supplies
Office fixtures and equipment
Land
Building
Notes payable
Salary expense
Capital stock
Retained earnings
Advertising expense
Accounts payable
Medical instruments
Veterinary service revenue
Total Assets:
173,040$
240
6,000
2,640$
3,360 3,840$
Salary expense
Less: Advertising expense
Net loss
Accounts receivable
Office supplies
Cash
PROBLEM 3.5A
DR. SCHEKTER, DVM (concluded)
e.
As shown below, the business was not profitable in its first
Veterinary service revenue
month of operations:
180,000$
Medical instruments
Land
Office fixtures and equipment
Total Owners’ Equity:
Building
Total assets – total liabilities ($695,280 – $216,480)
Notes payable
Total assets
Total Liabilities:
Total liabilities
Accounts payable
a.
July 18 1,500
Capital Stock 1,500
24 25
Cash 25
25 150
Mowing Revenue 150
26 200
Mowing Revenue 200
30 150
Accounts Receivable 150
31 80
Cash 80
in July.
for mowing services provided July 25.
Collected amount due from Lost Creek Cemetery
services. Payment is due August 1.
Billed Golf View Condominium for mowing
Cash
Salaries Expense
Paid salary to Teddy Grimm for work performed
Payment is due July 30.
Accounts Receivable
PROBLEM 3.6A
50 Minutes, Strong
Current Yr.
Cash
General Journal
Issued 500 shares of capital stock.
DONEGAN’S LAWN CARE SERVICE
Billed Lost Creek Cemetery for mowing services.
Accounts Receivable
Paid for gasoline to be used in July.
Fuel Expense
Accounts Payable 100
23 2,000
Cash 400
Notes payable 1,600
Purchased office supplies on account.
Mowing Equipment
Office Supplies
Purchased mowing equipment, paying $400 cash
and issuing a $1,600 note payable for the balance.
b.
Jul 18 1,500 July 23 400 July 25 150 July 30 150
July 22 100 July 23 1,600
July 31 Bal. 100 July 31 Bal. 1,600
July 18 1,500
July 31 Bal. 1,500 July 31 Bal. 0
July 31 Bal. 350 July 31 Bal. 80
Mowing Revenue
Capital Stock
Notes Payable
Accounts Payable
PROBLEM 3.6A
DONEGAN’S LAWN CARE SERVICE (continued)
Accounts Receivable
Cash
Jul 30 150 July 24 25 July 26 200
July 31 80
July 31 Bal. 1,145 July 31 Bal. 200
July 22 100 July 23 2,000
July 31 Bal. 100 July 31 Bal. 2,000
c.
1,145$
200
100
d.
Donegan’s Retained Earnings balance is zero because the company has been in business for only
PROBLEM 3.6A
DONEGAN’S LAWN CARE SERVICE
DONEGAN’S LAWN CARE SERVICE
(concluded)
Accounts receivable
Office supplies
Trial Balance
July 31, Current Year
Cash
Mowing revenue
Salaries expense
Fuel expense
Retained earnings
Accounts payable
Mowing equipment
Capital stock
Notes payable
a.
June 4 1,800
Notes Payable 1,800
17 1,980
Inspection Revenue 1,980
25 240
Cash 240
28 1,560
Cash 1,560
30 1,320
Cash 1,320
Paid for June testing expenses.
Paid June salaries.
Salaries Expense
Testing Expense
Billed homeowners $1,980 on account.
Accounts Receivable
Borrowed cash from bank by issuing a note
payable.
Cash
PROBLEM 3.7A
50 Minutes, Strong
Current Yr.
General Journal
SANLUCAS, INC.
Advertising Expense
Paid WLIR Radio for ads to be aired June 27.
Accounts Receivable 1,920
10 180
Accounts Payable 180
Purchased inspection supplies on account.
Cash
Collected $1,920 from Nina Lesher on account.
Inspection Supplies
b.
Cash
June 1 bal. 6,120 June 25 240 June 1 bal. 3,120 June 9 1,920
Notes Payable Dividends
June 1 bal. 2,400 June 1 bal. 720
June 4 1,800
June 30 bal. 4,200 June 30 bal. 720
June 1 bal. 3,600 June 1 bal. 2,160
June 1 bal. 10,020 June 1 bal. 5,880
June 17 1,980 June 30 1,320
Accounts Receivable
PROBLEM 3.7A
SANLUCAS, INC. (continued)
June 4 1,800 June 28 1,560 June 17 1,980
June 9 1,920 June 30 1,320
June 30 bal. 6,720 June 30 bal. 3,180
June 1 bal. 960 June 1 bal. 1,020
June 10 180 June 10 180
c.
6,720$
3,180
1,140
1,200$
d.
PROBLEM 3.7A
SANLUCAS, INC. (concluded)
Trial Balance
SANLUCAS, INC.
Inspection supplies
June 30, Current Year
Cash
Accounts receivable
Accounts payable
Dividends
Testing expense
Notes payable
Capital stock
Retained earnings
Inspection revenue
Advertising expense
Salaries expense
Net Total
Total
Owners‘
Error Income Assets Liabilities Equity
NE UNE U
UNE NE NE
PROBLEM 3.8A
10 Minutes, Difficult
Recorded the issuance of capital stock by
debiting Capital Stock and crediting Cash.
HOME TEAM CORPORATION
Recorded the declaration and payment of a
dividend by debiting Interest Expense and
crediting Cash.
30 Minutes, Medium
a.
1 650,000
Capital Stock 650,000
10 6,000
Cash 6,000
12 12,000
Cash 1,000
Accounts Payable 11,000
20 750
Cash 750
25 200
Computer Systems 200
28 5,500
Cash 5,500
29
Accounts Receivable
Purchased office supplies.
Office Supplies
Accounts Receivable
Refund due from Comp Central.
Made payment on account payable.
Collected refund from Comp Central.
Accounts Payable
Office Furnishings
Purchased office furnishings.
General Journal
Apr.
Cash
Issued 10,000 shares of capital stock.
SOLUTIONS TO PROBLEMS SET B
NORTH ENTERPRISES
PROBLEM 3.1B
Purchased computer system.
Current Yr.
Computer Systems
Cash 100,000
Notes Payable 200,000
Office Building
Land
Purchased land and office building.
b.
Transaction Assets = Liabilities + Owners’ Equity
Apr. 1 + $650,000 (Capital
Apr. 6 + $60,000 (Land) $0
+ $240,000 (Office Building)
– $100,000 (Cash)
+ $200,000 (Notes
Payable)
PROBLEM 3.1B
NORTH ENTERPRISES (concluded)
+ $650,000 (Cash)
$0
Apr. 10 + $6,000 (Computer Systems) $0 $0
– $6,000 (Cash)
Apr. 12 + $12,000 (Office $0
– $1,000 (Cash)
Apr. 20 + $750 (Office Supplies) $0 $0
– $750 (Cash)
Apr. 25 + $200 (Accounts Receivable) $0 $0
– $200 (Computer Systems)
Apr. 28 – $5,500 (Cash) $0
Apr. 29 + $200 (Cash) $0 $0
– $200 (Accounts Receivable)
Payable)
30 Minutes, Medium
a. (1) (a)
(b)
(4) (a)
(b)
(5) (a)
(b)
(6) (a)
(b)
(7) (a)
(b)
The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash,
The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash,
The asset Accounts Receivable was decreased. Decreases in assets are recorded by
credits. Credit Accounts Receivable, $1,440.
The liability Accounts Payable was decreased. Decreases in liabilities are recorded by
debits. Debit Accounts Payable, $2,760 ($2,880 – $120).
LYONS, INC.
The asset Accounts Receivable was increased. Increases in assets are recorded by debits.
Debit Accounts Receivable, $6,000.
Revenue has been earned. Revenue increases owners’ equity. Increases in owners’ equity
are recorded by credits. Credit Consulting Revenue, $6,000.
The asset Cash was increased. Increases in assets are recorded by debits. Debit Cash,
$6,000.
The owners’ equity account Capital Stock was increased. Increases in owners’ equity are
recorded by credits. Credit Capital Stock, $6,000.
The asset Cash was increased. Increases in assets are recorded by debits. Debit Cash,
$1,440.
PROBLEM 3.2B
(2) (a)
(b)
(c)
(3) (a)
(b)
The asset Office Supplies was decreased. Decreases in assets are recorded by credits.
The liability Accounts Payable was increased. Increases in liabilities are recorded by
The liability Accounts Payable was decreased. Decreases in liabilities are recorded by
debits. Debit Accounts Payable, $120.
The asset Office Supplies was increased. Increases in assets are recorded by debits. Debit
The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash,
b.
1 6,000
Consulting Revenue 6,000
17 6,000
Capital Stock 6,000
22 1,440
Accounts Receivable 1,440
June 1.
29 2,760
Cash 2,760
30 2,160
Cash 2,160
Paid outstanding balance owed for office supplies
Accounts Payable
purchased on June 3.
(7)
Declared and paid a cash dividend.
Dividends
c.
d
Billed customers for services rendered.
(2)
General Journal
PROBLEM 3.2B
LYONS, INC. (continued)
Current Yr.
(1)
June
Accounts Receivable
Issued 1,000 shares of capital stock at $6/share.
(4)
Cash
Cash
(6)
Received partial payment for services billed on
(5)
The matching principle requires that expenses incurred in an accounting period be matched with
The realization principle requires that revenue be recorded when it is earned , even if cash for the
goods or services provided has not been received.
Cash 960
Accounts Payable 2,880
5 120
Office Supplies 120
Returned portion of supplies purchased June 3.
Office Supplies
Purchased Office Supplies.
(3)
Accounts Payable
a.
Revenue –Expenses = Assets –Liabilities =
NE I D D NE D
Oct. 1
Transaction
Income Statement
PROBLEM 3.3B
35 Minutes, Medium
Net
Income
DANA, INC.
Balance Sheet
Owners’
Equity
NE I D NE I D
Oct. 4
Oct. 8
b.
Oct. 1 4,000
Cash 4,000
4 8,500
Service Revenue 8,500
20 8,500
Accounts Receivable 8,500
24 300
3,300
Service Revenue 3,600
25 320
Cash 320
29 2,600
Cash 2,600
Dividends
Paid newspaper for advertisement.
Accounts Payable
Declared and paid a cash dividend.
c.
Three situations in which a cash payment does not involve an expense include: (1) the payment
Accounts Receivable
Collected partial payment from Dudley Co. and
billed remainder.
PROBLEM 3.3B
DANA, INC. (concluded)
General Journal
Rent Expense
Paid October rent.
Accounts Receivable
Billed Milton Hotels for services.
Cash
billed on Oct. 4.
Cash
Received payment from Milton Hotels for services
8 4,700
Service Revenue 4,700
12 320
Accounts Payable 320
Cash
Collected cash from Dirt Valley Development for
October 25. Total amount due in 30 days.
services provided.
Advertising Expense
Placed ad in the newspaper to be published on
Revenue –Expenses = Assets –Liabilities =
NE NE NE INE I
Mar. 2
Transaction
PROBLEM 3.4B
50 Minutes, Strong
TONE DELIVERIES
Balance Sheet
Owners’
Equity
Net
Income
Income Statement
NE NE NE I I NE
Mar. 9
Mar. 5
Mar. 4
b.
Mar. 2 80,000
Capital Stock 80,000
15 7,100
Cash 7,100
19 900
Cash 900
20 3,800
Accounts Receivable 3,800
28 14,400
Service Revenue 14,400
30 7,500
Cash 7,500
30 830
Accounts Payable 830
30 1,200
Dividends Payable 1,200
Salaries Expense
Accounts Receivable
month-end.
Billed customers for services rendered through
Declared dividend payable April 30.
Received bill for fuel used during March.
Dividends
Paid salaries through month-end.
Fuel Expense
PROBLEM 3.4B
TONE DELIVERIES (continued)
General Journal
Current Yr.
Salaries Expense
Cash
Issued stock to Mary Tone.
Paid salaries for first half of March.
Cash
Paid Bill’s Auto for repair services.
Maintenance Expense
Collected portion of amount billed to customers.
Cash 15,000
Notes Payable 30,000
5 2,500
Cash 2,500
9 11,300
Service Revenue 11,300
Paid office rent for March.
Purchased truck.
Rent Expense
Truck
Accounts Receivable
Billed customers.
c.
Debit Credit Balance
Mar. 2 80,000 80,000
4 15,000 65,000
Debit Credit Balance
Mar. 9 11,300 11,300
20 3,800 7,500
28 14,400 21,900
Debit Credit Balance
Mar. 4 45,000 45,000
Debit Credit Balance
Mar. 4 30,000 30,000
Debit Credit Balance
Mar. 30 830 830
Current Yr.
Explanation
Date
Explanation
Date
Explanation
Date
Current Yr.
Current Yr.
Current Yr.
PROBLEM 3.4B
Date
Cash
TONE DELIVERIES (continued)
Explanation
Date
Explanation
Accounts Receivable
Current Yr.
Truck
5 2,500 62,500
15 7,100 55,400
19 900 54,500
20 3,800 58,300
30 7,500 50,800