Mar. 31
Balance
5,000
Apr. 28
6,600
Mar. 31
Balance
Apr. 27
1,600
Requirement 4
STEVE MENTZ, CPA
Trial Balance
April 30, 2017
Acct. No.
Account Title
Balance
Debit
Credit
11
Cash
$ 16,700
12
Accounts Receivable
11,400
13
Office Supplies
1,500
14
Furniture
4,600
15
Automobile
8,000
16
Land
26,000
21
Accounts Payable
22
Unearned Revenue
31
Common Stock
33
Dividends
8,000
41
Service Revenue
51
Salaries Expense
6,600
52
Rent Expense
1,600
Total
P2-33A Correcting errors in a trial balance
Learning Objective 4
Total Debits $115,900
The trial balance of Creative Child Care does not balance.
The following errors are detected:
a. Cash is understated by $1,400.
b. A $3,900 debit to Accounts Receivable was posted as a credit.
c. A $1,300 purchase of office supplies on account was neither journalized nor posted.
d. Equipment was incorrectly transferred from the ledger as $84,300. It should have been transferred as
$76,500.
e. Salaries Expense is overstated by $300.
f. A $200 cash payment for advertising expense was neither journalized nor posted.
g. A $240 cash dividend was incorrectly journalized as $2,400.
h. Service Revenue was understated by $4,500.
i. A 12-month insurance policy was posted as a $1,800 credit to Prepaid Insurance. Cash was posted
correctly.
Prepare the corrected trial balance as of August 31, 2017. Journal entries are not required.
SOLUTION
CREATIVE CHILD CARE
Trial Balance
August 31, 2017
Account Title
Balance
Debit
Credit
Cash
$ 10,200
Accounts Receivable
15,000
Office Supplies
2,500
Prepaid Insurance
3,900
Equipment
76,500
Accounts Payable
Notes Payable
Common Stock
Dividends
3,400
Service Revenue
Salaries Expense
3,500
Rent Expense
Advertising Expense
Total
Explanations:
a. Increase Cash by $1,400.
b. Increase Accounts Receivable by $7,800 ($3,900 × 2).
c. Increase Office Supplies and Accounts Payable by $1,300 each.
P2-34A Preparing financial statements from the trial balance and calculating the debt ratio
Learning Objectives 4, 5
2. Ending Retained Earnings $5,890
The trial balance as of July 31, 2017, for Sandra Sousa, Registered Dietician, is presented below:
Requirements
1. Prepare the income statement for the month ended July 31, 2017.
2. Prepare the statement of retained earnings for the month ended July 31, 2017. The beginning balance
of retained earnings was $0.
3. Prepare the balance sheet as of July 31, 2017.
4. Calculate the debt ratio as of July 31, 2017.
SOLUTION
Requirement 1
SANDRA SOUSA, REGISTERED DIETICIAN
Income Statement
Month Ended July 31, 2017
Service Revenue
Net Income
Retained Earnings, July 1, 2017
Net income for the month
Dividends
Retained Earnings, July 31, 2017
P2-34A, cont.
Requirements 3
SANDRA SOUSA, REGISTERED DIETICIAN
Balance Sheet
July 31, 2017
Assets
Liabilities
Cash
$ 33,000
Accounts Payable
$ 3,300
Accounts Receivable
9,500
Unearned Revenue
2,810
Office Supplies
1,500
Notes Payable
Prepaid Insurance
2,000
Total Liabilities
Equipment
Common Stock
Requirement 4
Debt ratio = Total liabilities / Total assets = $31,110 / $61,000 = 0.51 = 51%
Problems (Group B)
P2-35B Journalizing transactions, posting journal entries to T-accounts, and preparing a trial
balance
Learning Objectives 3, 4
2. Cash Balance $70,020
Vito York practices medicine under the business title Vito York, M.D. During March, the medical
practice completed the following transactions:
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts
Payable; Advertising Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service
Revenue; Salaries Expense; Rent Expense; Utilities Expense; and Advertising Expense.
Requirements
1. Journalize each transaction. Explanations are not required.
2. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger
accounts. Label the balance of each account Bal.
3. Prepare the trial balance of Vito York, M.D., as of March 31, 2017.
SOLUTION
Requirement 1
Date
Accounts and Explanation
Posting
Ref.
Debit
Credit
Mar. 1
Cash
64,000
Common Stock
64,000
Rent Expense
630
Cash
630
Land
13,000
Cash
13,000
10
Office Supplies
1,800
Accounts Payable
1,800
19
Cash
24,000
Notes Payable
24,000
22
Accounts Payable
1,200
Cash
1,200
28
Advertising Expense
270
Advertising Payable
270
31
Cash
6,600
Accounts Receivable
5,800
Service Revenue
12,400
31
Salaries Expense
2,700
Rent Expense
1,500
Utilities Expense
400
Cash
4,600
31
Cash
1,450
Unearned Revenue
1,450
31
Dividends
6,600
Cash
6,600
P2-35B, cont.
Requirement 2
Cash
Accounts Payable
Mar. 1 64,000
630 Mar. 5
Mar. 22 1,200
1,800 Mar. 10
Mar. 19 24,000
13,000 Mar. 9
600 Bal.
Mar. 31 6,600
1,200 Mar. 22
Mar. 31 1,450
4,600 Mar. 31
Advertising Payable
6,600 Mar. 31
270 Mar. 28
Bal. 70,020
270 Bal.
Accounts Receivable
Mar. 31 5,800
1,450 Mar. 31
Bal. 5,800
1,450 Bal.
24,000 Mar. 19
24,000 Bal.
Land
Mar. 9 13,000
64,000 Mar. 1
Bal. 13,000
64,000 Bal.
Dividends
Mar. 31 6,600
Bal. 6,600
Service Revenue
12,400 Mar. 31
12,400 Bal.
Salaries Expense
Mar. 31 2,700
Mar. 5 630
Mar. 31 1,500
Mar. 31 400
Bal. 400
P2-35B, cont.
Requirement 3
VITO YORK, MD
Trial Balance
March 31, 2017
Account Title
Balance
Debit
Credit
Cash
$ 70,020
Accounts Receivable
5,800
Office Supplies
1,800
Land
13,000
Accounts Payable
Advertising Payable
Unearned Revenue
Notes Payable
Common Stock
Dividends
6,600
Service Revenue
Salaries Expense
2,700
Rent Expense
2,130
Utilities Expense
Advertising Expense
Total
P2-36B Journalizing transactions, posting journal entries to T-accounts, and preparing a trial
balance
Learning Objectives 3, 4
4. Total Debits $49,500
Deb Sikes started her practice as a design consultant on November 1, 2017. During the first month of
operations, the business completed the following transactions:
Requirements
1. Record each transaction in the journal using the following account titles: Cash; Accounts
Receivable; Office Supplies; Prepaid Insurance; Furniture; Land; Accounts Payable; Utilities
Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent
Expense; Utilities Expense. Explanations are not required.
2. Open a T-account for each of the accounts.
3. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger
accounts. Label the balance of each account Bal.
4. Prepare the trial balance of Deb Sikes, Designer, as of November 30, 2017.
SOLUTION
Requirement 1
Date
Accounts and Explanation
Posting
Ref.
Debit
Credit
Nov. 1
Cash
39,000
Common Stock
39,000
4
Office Supplies
900
Furniture
1,800
Accounts Payable
2,700
6
Cash
2,000
Service Revenue
2,000
7
Land
24,000
Cash
24,000
10
Accounts Receivable
1,200
Service Revenue
1,200
14
Accounts Payable
1,800
Cash
1,800
15
Salaries Expense
1,410
Cash
1,410
17
Cash
1,000
Accounts Receivable
1,000
20
Accounts Receivable
900
Service Revenue
900
25
Cash
2,100
Unearned Revenue
2,100
28
Cash
2,800
Service Revenue
2,800
29
Prepaid Insurance
1,080
Cash
1,080
30
Salaries Expense
1,410
Cash
1,410
30
Rent Expense
800
P2-36B, cont.
Nov. 30
Utilities Expense
600
Utilities Payable
600
30
Dividends
4,000
Cash
4,000
Requirements 2 and 3
24,000 Nov. 7
Nov. 14 1,800
2,700 Nov. 4
1,800 Nov. 14
900 Bal.
1,410 Nov. 15
1,080 Nov. 29
1,410 Nov. 30
800 Nov. 30
600 Nov. 30
4,000 Nov. 30
600 Bal.
Bal. 12,400
Nov. 10 1,200
1,000 Nov. 17
2,100 Nov. 25
Nov. 20 900
2,100 Bal.
Bal. 1,100
Nov. 4 1,800
2,000 Nov. 6
Bal. 1,800
1,200 Nov. 10
900 Nov. 20
2,800 Nov. 28
Nov. 7 24,000
6,900 Bal.
Nov. 15 1,410
Nov. 30 1,410
Office Supplies
Common Stock
Nov. 4 900
39,000 Nov. 1
Bal. 900
39,000 Bal.
Prepaid Insurance
Dividends
Nov. 29 1,080
Nov. 30 4,000
Bal. 1,080
Bal. 4,000
P2-36B, cont.
Requirement 4
DEB SIKES, DESIGNER
Trial Balance
November 30, 2017
Account Title
Balance
Debit
Credit
Cash
$ 12,400
Accounts Receivable
1,100
Office Supplies
Prepaid Insurance
1,080
Furniture
1,800
Land
Accounts Payable
Utilities Payable
Unearned Revenue
Common Stock
39,000
Dividends
4,000
Service Revenue
Salaries Expense
2,820
Rent Expense
Utilities Expense
Total
Rent Expense
Nov. 30 800
Bal. 800
Utilities Expense
Nov. 30 600
Bal. 600
P2-37B Journalizing transactions, posting journal entries to four-column accounts, and preparing
a trial balance
Learning Objectives 3, 4
3. Service Revenue Balance $6,000
Trevor Moore opened a law office on April 1, 2017. During the first month of operations, the business
completed the following transactions:
Requirements
1. Record each transaction in the journal, using the following account titles: Cash; Accounts
Receivable; Office Supplies; Prepaid Insurance; Furniture; Building; Land; Accounts Payable;
Utilities Payable; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense;
Rent Expense; and Utilities Expense. Explanations are not required.
2. Open the following four-column accounts including account numbers: Cash, 101; Accounts
Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Furniture, 141; Building, 151; Land,
161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301;
Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities
Expense, 531.
3. Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal
references, and posting references. Assume the journal entries were recorded on page 1 of the
journal.
4. Prepare the trial balance of Trevor Moore, Attorney, at April 30, 2017.
SOLUTION
Requirement 1
Date
Accounts and Explanation
Posting
Ref.
Debit
Credit
Apr. 1
Cash
101
76,000
Common Stock
301
76,000
Office Supplies
121
400
Furniture
141
2,200
Accounts Payable
201
2,600
Cash
101
900
Service Revenue
411
900
Building
151
Land
161
29,000
Cash
101
45,000
Notes Payable
221
11
Accounts Receivable
111
800
Service Revenue
411
800
15
Salaries Expense
511
1,230
Cash
101
1,230
16
Accounts Payable
201
400
Cash
101
400
18
Cash
101
2,800
Service Revenue
411
2,800
19
Accounts Receivable
111
1,500
Service Revenue
411
1,500
25
Utilities Expense
531
650
Utilities Payable
211
650
28
Cash
101
1,700
Accounts Receivable
111
1,700
29
Prepaid Insurance
131
4,800
Cash
101
4,800
29
Salaries Expense
511
1,230
Cash
101
1,230
P2-37B, cont.
Rent Expense
521
101
Dividends
311
101
Requirements 2 and 3
CASH
Account No. 101
Date
Item
Post Ref.
Debit
Credit
Balance
Debit
Credit
Apr. 1
J1
76,000
76,000
Apr. 4
J1
900
76,900
Apr. 7
J1
45,000
31,900
Apr. 15
J1
30,670
Apr. 16
J1
30,270
Apr. 18
J1
33,070
Apr. 28
J1
34,770
Apr. 29
J1
29,970
Apr. 29
J1
28,740
Apr. 30
J1
27,640
Apr. 30
J1
25,640
ACCOUNTS RECEIVABLE
Account No. 111
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 11
J1
800
800
Apr. 19
J1
1,500
2,300
Apr. 28
J1
1,700
600
OFFICE SUPPLIES
Account No. 121
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 3
J1
400
400
P2-37B, cont.
PREPAID INSURANCE
Account No. 131
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 29
J1
4,800
4,800
FURNITURE
Account No. 141
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 3
J1
2,200
2,200
BUILDING
Account No. 151
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 7
J1
LAND
Account No. 161
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 7
J1
29,000
29,000
ACCOUNTS PAYABLE
Account No. 201
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 3
J1
2,600
2,600
Apr. 16
J1
400
2,200
UTILITIES PAYABLE
Account No. 211
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 25
J1
650
650
NOTES PAYABLE
Account No. 221
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 7
J1
P2-37B, cont.
COMMON STOCK
Date
Item
Post Ref.
Debit
Debit
Apr. 1
J1
DIVIDENDS
Account No. 311
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 30
J1
2,000
SERVICE REVENUE
Account No. 411
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 4
J1
900
900
Apr. 11
J1
800
1,700
Apr. 18
J1
2,800
4,500
Apr. 19
J1
1,500
6,000
SALARIES EXPENSE
Account No. 511
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 15
J1
1,230
Apr. 29
J1
1,230
RENT EXPENSE
Account No. 521
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 30
J1
1,100
UTILITIES EXPENSE
Account No. 531
Date
Item
Post Ref.
Debit
Credit
Debit
Credit
Apr. 25
J1
650
650
P2-37B, cont.
Requirement 4
TREVOR MOORE, ATTORNEY
Trial Balance
April 30, 2017
Account Title
Balance
Debit
Credit
Cash
$ 25,640
Accounts Receivable
600
Office Supplies
400
Prepaid Insurance
Furniture
Building
Land
Accounts Payable
Utilities Payable
Notes Payable
Common Stock
Dividends
Service Revenue
Salaries Expense
Rent Expense
Utilities Expense
Total