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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
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
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 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
Accounts Receivable
Cash
Salary Expense
Land
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
Total Assets:
173,040$
240
6,000
2,640$
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:
a.
July 18 1,500
Capital Stock 1,500
24 25
Cash 25
25 150
Mowing Revenue 150
26 200
Mowing Revenue 200
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
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
Notes Payable
Accounts Payable
PROBLEM 3.6A
DONEGAN'S LAWN CARE SERVICE (continued)
Accounts Receivable
Cash
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
a.
June 4 1,800
Notes Payable 1,800
17 1,980
Inspection Revenue 1,980
25 240
Cash 240
Billed homeowners $1,980 on account.
Accounts Receivable
Borrowed cash from bank by issuing a note
payable.
Cash
PROBLEM 3.7A
50 Minutes, Strong
Current Yr.
General Journal
SANLUCAS, INC.
Advertising Expense
Paid WLIR Radio for ads to be aired June 27.
b.
Cash
June 1 bal. 6,120 June 25 240 June 1 bal. 3,120 June 9 1,920
Notes Payable Dividends
June 1 bal. 2,400 June 1 bal. 720
June 4 1,800
June 30 bal. 4,200 June 30 bal. 720
Accounts Receivable
PROBLEM 3.7A
SANLUCAS, INC. (continued)
c.
6,720$
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
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
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
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
30 Minutes, Medium
a. (1) (a)
(b)
(4) (a)
(b)
(5) (a)
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
b.
1 6,000
Consulting Revenue 6,000
17 6,000
Capital Stock 6,000
22 1,440
Accounts Receivable 1,440
June 1.
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.
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
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
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
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
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
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.
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
Current Yr.
PROBLEM 3.4B
Date
Cash
TONE DELIVERIES (continued)
Explanation
Date
Explanation
Accounts Receivable
Current Yr.
Truck
