E2-18, cont.
23
Cash
2,600
Accounts Receivable
2,600
Received cash on account from
customer.
31
Salaries Expense
1,200
Cash
1,200
Paid salaries.
E2-19 Posting journal entries to four-column accounts
Learning Objective 3
2. Cash Balance $32,150
Requirements
1. Open four-column accounts using the following account numbers: Cash, 110; Accounts Receivable,
120; Office Supplies, 130; Prepaid Advertising, 140; Building, 150; Land, 160; Accounts Payable,
210; Unearned Revenue, 220; Common Stock, 310; Service Revenue, 410; Rent Expense, 510;
Salaries Expense, 520.
2. Post the journal entries to the four-column accounts, and determine the balance in the account after
each transaction. Assume that the journal entries were recorded on page 10 of the journal. Make sure
to complete the Post. Ref. columns in the journal and ledger.
SOLUTION
Requirement 2
Date
Accounts and Explanation
Debit
Credit
May 1
Cash
85,000
Common Stock
85,000
Issued common stock in exchange for
cash.
Office Supplies
Accounts Payable
Building
48,000
Land
9,000
Cash
57,000
Cash
3,600
Service Revenue
Cash
Accounts Receivable
3,400
Service Revenue
E2-19, cont.
Rent Expense
Paid rent for the month.
Cash
1,300
services to be performed next month.
Prepaid Advertising
Cash
2,600
customer.
Salaries Expense
1,200
Paid salaries.
Requirements 1 and 2
CASH
Account No. 110
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 1
J10
85,000
85,000
May 4
J10
57,000
28,000
May 6
J10
31,600
May 9
J10
31,150
May 19
J10
29,750
May 20
J10
31,050
May 21
J10
30,750
May 23
J10
33,350
May 31
J10
32,150
ACCOUNTS RECEIVABLE
Account No. 120
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
E2-19, cont.
OFFICE SUPPLIES
Account No. 130
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 2
J10
550
PREPAID ADVERTISING
Account No. 140
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 21
J10
300
BUILDING
Account No. 150
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 4
J10
48,000
48,000
LAND
Account No. 160
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 4
J10
9,000
9,000
ACCOUNTS PAYABLE
Account No. 210
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 2
J10
550
550
May 9
J10
450
100
UNEARNED REVENUE
Account No. 220
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 20
J10
1,300
1,300
COMMON STOCK
Account No. 310
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 1
J10
85,000
85,000
E2-19, cont.
SERVICE REVENUE
Account No. 410
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 6
J10
3,600
3,600
May 17
J10
3,400
7,000
RENT EXPENSE
Account No. 510
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 19
J10
1,400
SALARIES EXPENSE
Account No. 520
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
May 31
J10
1,200
E2-20 Analyzing transactions from T-accounts
Learning Objective 3
The first nine transactions of North-West Airplane Repair have been posted to the T-accounts. Provide
an explanation for each of the nine transactions.
SOLUTION
1. The business received cash of $370,000 and issued common stock.
E2-21 Journalizing transactions from T-accounts
Learning Objective 3
In December 2016, the first five transactions of Atkins’ Lawn Care Company have been posted to the T–
accounts. Prepare the journal entries that served as the sources for the five transactions. Include an
explanation for each entry.
SOLUTION
Date
Accounts and Explanation
Posting
Ref.
Debit
Credit
1.
Cash
56,000
Common Stock
56,000
Issued common stock in exchange for
cash.
2.
Office Supplies
Accounts Payable
3.
Building
37,000
Cash
37,000
4.
Cash
49,000
Notes Payable
49,000
5.
Equipment
Cash
E2-22 Preparing a trial balance
Learning Objective 4
Total Debits $211,500
The accounts of Aker Moving Company follow with their normal balances as of August 31, 2016. The
accounts are listed in no particular order.
Prepare Aker’s trial balance as of August 31, 2016.
SOLUTION
Trucks
Building
Accounts Payable
Notes Payable
Common Stock
Dividends
6,200
Salaries Expense
7,000
Fuel Expense
3,000
Insurance Expense
600
Utilities Expense
500
Advertising Expense
200
Total
AKER MOVING COMPANY
Trial Balance
August 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 5,000
Accounts Receivable
8,700
Office Supplies
300
E2-23 Preparing a trial balance from T-accounts
Learning Objective 4
Total Debits $85,200
The T-accounts of Morris Farm Equipment Repair follow as of May 31, 2016.
Prepare Morris Farm Equipment Repair’s trial balance as of May 31, 2016.
SOLUTION
Equipment
Building
Land
Salaries Payable
Notes Payable
Common Stock
Dividends
1,200
Service Revenue
Salaries Expense
5,600
Property Tax Expense
Advertising Expense
Total
MORRIS FARM EQUIPMENT REPAIR
Trial Balance
May 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 12,680
Accounts Receivable
3,100
E2-24 Journalizing transactions, posting journal entries to four-column accounts, and preparing a
trial balance
Learning Objectives 3, 4
3. Total Debits $25,250
The following transactions occurred during the month for Tori Peel, CPA:
Requirements
1. Open the following four-column accounts of Tori Peel, CPA: Cash, 110; Accounts Receivable, 120;
Office Supplies, 130; Office Furniture, 140; Accounts Payable, 210; Utilities Payable, 220; Common
Stock, 310; Dividends, 320; Service Revenue, 410; Salaries Expense, 510; Rent Expense, 520;
Utilities Expense, 530.
2. Journalize the transactions, and then post the journal entries to the four-column accounts.
Explanations are not required for the journal entries. Keep a running balance in each account.
Assume the journal entries are recorded on page 10 of the journal.
3. Prepare the trial balance as of June 30, 2016.
SOLUTION
Requirement 2
Date
Accounts and Explanation
Post
Ref.
Debit
Credit
June 1
Cash
110
13,500
Office Furniture
140
5,400
Common Stock
310
18,900
Rent Expense
520
1,300
Cash
110
Office Supplies
130
800
Accounts Payable
210
14
Salaries Expense
510
1,700
Cash
110
18
Utilities Expense
530
250
Utilities Payable
220
21
Accounts Payable
210
600
25
Accounts Receivable
120
5,900
Service Revenue
410
28
Dividends
320
6,900
Cash
110
Requirements 1 & 2
CASH
Account No. 110
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 1
J10
13,500
13,500
June 5
J10
1,300
12,200
June 14
J10
1,700
10,500
June 21
J10
600
9,900
June 28
J10
6,900
3,000
ACCOUNTS RECEIVABLE
Account No. 120
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 25
J10
5,900
5,900
OFFICE SUPPLIES
Account No. 130
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 9
J10
800
OFFICE FURNITURE
Account No. 140
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 1
J10
5,400
5,400
ACCOUNTS PAYABLE
Account No. 210
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 9
J10
800
800
June 21
J10
600
200
UTILITIES PAYABLE
Account No. 220
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 18
J10
250
250
E2-24, cont.
COMMON STOCK
Account No. 310
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 1
J10
18,900
18,900
DIVIDENDS
Account No. 320
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 28
J10
6,900
6,900
SERVICE REVENUE
Account No. 410
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 25
J10
5,900
5,900
SALARIES EXPENSE
Account No. 510
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 14
J10
1,700
1,700
RENT EXPENSE
Account No. 520
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 5
J10
1,300
1,300
UTILITIES EXPENSE
Account No. 530
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
June 18
J10
250
250
Requirement 3
120
Accounts Receivable
130
Office Supplies
140
Office Furniture
210
Accounts Payable
310
Common Stock
320
Dividends
410
Service Revenue
510
Salaries Expense
520
Rent Expense
530
Utilities Expense
Total
E2-25 Analyzing accounting errors
Learning Objective 4
Bridget Shine has trouble keeping her debits and credits equal. During a recent month, Bridget made the
following accounting errors:
a. In preparing the trial balance, Bridget omitted a $4,000 Notes Receivable. The credit to Cash was
correct.
b. Bridget posted a $50 Utilities Expense as $500. The credit to Cash was correct.
c. In recording a $300 payment on account, Bridget debited Furniture instead of Accounts Payable.
d. In journalizing a receipt of cash for service revenue, Bridget debited Cash for $110 instead of the
correct amount of $1,100. The credit was correct.
e. Bridget recorded a $320 purchase of office supplies on account by debiting Office Supplies and
crediting Accounts Payable for $230.
Requirements
1. For each of these errors, state whether total debits equal total credits on the trial balance.
2. Identify each account that has an incorrect balance and the amount and direction of the error (such as
“Accounts Receivable $500 too high”).
TORI PEEL, CPA
Trial Balance
June 30, 2016
Acct. No.
Account Title
Balance
Debit
Credit
110
Cash
$ 3,000
SOLUTION
Requirements 1 and 2
No
Utilities Expense
450
Furniture
300
Accounts Payable
300
No
Cash
Low
Office Supplies
90
Low
Accounts Payable
90
Low
Debits equal Credits,
Yes or No
Accounts
Amount
High or Low
a.
No
Notes Receivable
$4,000
Low
E2-26 Correcting errors in a trial balance
Learning Objective 4
Total Debits $39,750
The accountant for Town and Country Painting Specialists is having a hard time preparing the trial
balance as of November 30, 2016:
Prepare the corrected trial balance as of November 30, 2016. Assume all amounts are correct and all
accounts have normal balances.
SOLUTION
TOWN AND COUNTRY PAINTING SPECIALISTS
Trial Balance
November 30, 2016
Account Title
Balance
Debit
Credit
Cash
$ 12,900
Accounts Receivable
1,100
Office Supplies
Painting Equipment
Accounts Payable
Unearned Revenue
Common Stock
Dividends
7,000
Service Revenue
Advertising Expense
Rent Expense
2,700
Salaries Expense
2,100
Utilities Expense
Total
E2-27 Correcting errors in a trial balance
Learning Objective 4
Total Debits $34,900
The following trial balance of Carla Madock Tutoring Service as of May 31, 2016, does not balance.
Investigation of the accounting records reveals that the bookkeeper:
a. Recorded a $600 cash revenue transaction by debiting Accounts Receivable. The credit entry was
correct.
b. Posted a $1,000 credit to Accounts Payable as $100.
c. Did not record Utilities Expense or the related Utilities Payable in the amount of
$300.
d. Understated Common Stock by $900.
Prepare the corrected trial balance as of May 31, 2016, complete with a heading; jour- nal entries are not
required.
SOLUTION
CARLA MADOCK TUTORING SERVICE
Trial Balance
May 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 3,500
Accounts Receivable
1,200
Office Supplies
Computer Equipment
Accounts Payable
Utilities Payable
Common Stock
Dividends
Service Revenue
Salaries Expense
1,900
Rent Expense
Utilities Expense
Total
E2-28 Calculating the debt ratio
Learning Objective 5
Total Assets $177,800
Jason Hilton, M.D., reported the following trial balance as of September 30, 2016:
Calculate the debt ratio for Jason Hilton, M.D.