Vol. 1, Chapter 2 - Accounting for Business Transactions
Problem 1
Account
Cash
Accounts Receivable
Rent Expense
Jacob, Capital
Accounts Payable
Room Revenue
Interest Income
Wages Expense
Taxes Expense
Water Expense
Notes Payable
Laundry Expense
Normal Balance
Debit
Debit
Debit
Credit
Credit
Credit
Credit
Debit
Debit
Debit
Credit
Debit
Problem 2
3/31
(a)
Cash
$6,700.00
1,750.20
8,450.20
(b)
$2,430.00
6,020.20
(c)
(d)
(e)
(f)
(g)
2,419.22
3,600.98
–
180.26
3,781.24
5,100.00
8,881.24
–
$8,881.24
–
–
Transactions (d) and (g) do not affect the cash account.
Problem 3
Feb. 1
Feb. 1
Feb. 2
Feb. 3
Feb. 4
Feb. 5
Beginning Balance
(–) Check #181
(–) Check #182
(+) Cash Sales Deposit
(–) Check #183
(–) Check #184
Cash Account Balance
Accounting for Business Transactions
$ 850.18
– 230.00
– 536.00
2,428.36
– 352.00
– 228.52
$ 1,932.02
1
Problem 4
Accounts Affected
Equipment
Cash
Notes Payable
Normal
Balance
Debit
Debit
Credit
Debit or
Credit
Debit
Credit
Credit
(b)
Salary Expense
Cash
Debit
Debit
Debit
Credit
(c)
Kati Litchfield, Capital
Cash
Credit
Debit
Debit
Credit
(d)
Supplies Expense
Accounts Payable
Debit
Credit
Debit
Credit
(e)
Accounts Receivable
Sales
Debit
Credit
Debit
Credit
(f)
Marketable Securities
Cash
Debit
Debit
Debit
Credit
(g)
Accounts Payable
Cash
Credit
Debit
Debit
Credit
(h)
Prepaid Rent
Cash
Debit
Debit
Debit
Credit
(a)
Problem 5
$
Wage Expense
2,000
Food Sales
$
$
5,500
Rent Expense
700
Beverage Sales
$
400
Cost of Food Sales (Expense)
$
1,700
Cost of Beverage Sales (Expense)
$
100
Accounting for Business Transactions
2
Problem 6
Transactions
a)
b)
c)
d)
e)
f)
g)
Debit
Food Expense
Cash
To record food purchases for cash
Equipment
Accounts Payable, Circus Supply
To record the purchase of equipment from Circus Supply
Cash
Food Sales
To record food sales
Wages Expense
Cash
To record wages paid
Cash
Beverage Sales
To record beverage sales
Beverage Expense
Cash
To record the purchase of beverages for cash
Accounts Payable, Circus Supply
Cash
To record payment to Circus Supply on account
Problem 7
Turner Café
Trial Balance
December 31, 20XX
Cash
J. Turner, Capital
Food Inventory
Prepaid Expenses
Accounts Payable
Equipment
Notes Payable
Sales
Cost of Food Sold
Rent Expense
Wages Expense
Other Expenses
Accounting for Business Transactions
Debit
$ 3,500
Credit
$ 10,500
4,500
700
2,100
14,400
7,400
42,000
14,000
2,000
16,000
6,900
–
$ 62,000
$ 62,000
3
Credit
$ 75
$ 75
$150
$150
$300
$300
$110
$110
$100
$100
$ 12
$ 12
$ 10
$ 10
Problem 8
Tyler Motel
Trial Balance
Cash
Accounts Receivable
Inventory
Prepaid Insurance
Land
Buildings
Acc. Dep.—Buildings
Equipment
Acc. Dep.—Equipment
Accounts Payable
Notes Payable
Tyler, Wray, Capital
Room Revenue
Wages Expense
Laundry Expense
Advertising Expense
Utilities Expense
Insurance Expense
Property Taxes Expense
Interest Expense
Depreciation Expense
Supplies Expense
Maintenance Expense
$
Debit
12,400
40,500
18,300
2,100
150,000
2,400,000
$1,250,000
900,000
235,000
35,000
846,000
32,800
2,350,000
751,000
50,000
36,000
52,000
22,000
20,000
82,000
115,000
33,000
64,500
$ 4,748,800
Problem 9
Debit
Accounts Payable
Accounts Receivable
Building
Cash
Chuck Franko, Capital
Delivery Equipment
Interest Expense
Interest Payable
Land
Merchandise Inventory
Mortgage Payable
Notes Payable
Notes Receivable
Office Equipment
Office Supplies
Prepaid Insurance
Prepaid Interest
Revenue
Store Equipment
Accounting for Business Transactions
Credit
Credit
$ 2,400
$ 4,500
25,500
2,000
18,300
2,500
200
150
8,200
9,500
6,500
1,200
300
1,600
85
160
15
35,950
5,450
4
$ 4,748,800
Store Supplies
Taxes Payable
Telephone Expense
Truck Repairs
Wages Expense
Wages Payable
155
250
110
130
4,420
–
75
$ 64,825
$ 64,825
Problem 10
1.
Transactions
October 2
October 3
October 3
October 4
October 4
October 5
To record the investment of cash and equipment by the owner
To pay the rent for November in advance
To record the purchase of food and beverages (to be sold this period) on account
To record the sale of food and beverages for cash and on account
To record the wage expense incurred but not yet paid
Payment of cash from an account receivable
2.
Cash
$ 12,000
$ 1,000
500
100
$ 11,600
Prepaid Rent
$ 1,000
$ 1,000
Food Sales
$
$
Equipment
$ 10,000
$ 10,000
Accts. Pay., Bixbie Food
$ 2,500
$ 2,500
600
600
Beverage Expense
$ 500
$ 500
Beverage Sales
$ 100
$ 100
Wages Expense
$
195
$
195
Mary Ramaker, Capital
$ 22,000
$ 22,000
Accounts Receivable
$ 200
$ 100
$ 100
Food Expense
$ 2,000
$ 2,000
Wages Payable
$ 195
$ 195
Problem 11
June 1
June 6
June 6
June 8
June 12
June 15
Beginning Balance
(+) 3 Meals Total Cost
(+) Tip from 3 Meals (15%)
(–) Pay Down Account
(+) Breakfast
(+) 2 Lunches
Accounting for Business Transactions
$ 480.00
34.00
5.10
– 300.00
12.42
24.15
5
(1)
June 15
June 21
June 28
June 28
June 28
(+) Tip from 2 Lunches (20%)
(–) Pay Down Account
(+) Anniversary Dinner
(+) Service Charge (15%)
(+) Sales Tax (6%)
Ending Account Balance
(1)
(2)
(3)
(4)
4.83
– 100.00
480.00
72.00
33.12
$ 745.62
(2)
(3)
(4)
34.00 × .15 = 5.10
24.15 × .20 = 4.83
480.00 × .15 = 72.00
480.00 – 72.00 = 552.00 × .06 = 33.12
Problem 12
1. and 2.
Cash
$
a
Marketable Securities
1,500
$
5,000
10
$
5,000
$
200 b
Accts. Rec., Erica Lee
$
20
$
–
10
$
10 a
100 d
5 e
20 f
h
310
$
$
b
1,495
Accts. Rec., Monica Ray
15
5
$
20
$
$
Office Supplies
2,250
2,250
$
$
Furniture
1,000
1,000
Equipment
2,000
2,000
$
$
Notes Pay., Mineral State Bank
$
1,500
$
1,500
$
$
Cleaning Supplies
500
500
Accts. Pay., Stacie Supply, Inc.
$
400
250
$
650
Stephanie Smith, Capital
$
2,085
$
2,085
Food Sales
$
$
Beverage Sales
$
Accounting for Business Transactions
7,000
Food Expense
10,000
$
6
$
Beverage Expense
2,000
25,000
4
250
25,254
1g
60 h
7,061
$
$
Wages Expense
8,000
20
8,020
$
$
Insurance Expense
500
500
$
f
c
250
10,250
$
$
Utilities Expense
1,000
100
$
1,100
$
d
Office Supplies Expense
$
100
$
100
$
b
$
$
e
$
3.
Stephanie's Steakhouse
Trial Balance
July 1, 20X1
Cash
Marketable Securities
Accounts Receivable, Erica Lee
Accounts Receivable, Monica Ray
Office Supplies
Cleaning Supplies
Furniture
Equipment
Accounts Payable, Stacie Supply Inc.
Notes Payable, Mineral State Bank
Stephanie Smith, Capital
Food Sales
Beverage Sales
Food Expense
Beverage Expense
Wages Expense
Utilities Expense
Rent Expense
Insurance Expense
Office Supplies Expense
Advertising Expense
Accounting for Business Transactions
Debit
$ 1,495
5,000
10
20
2,250
500
1,000
2,000
Credit
$
650
1,500
2,085
25,254
7,061
10,250
2,000
8,020
1,100
2,200
500
100
105
–
$ 36,550
$ 36,550
7
2,000
Rent Expense
2,000
200
2,200
Advertising Expense
100
5
105
Problem 13
Cash
5,000 (a)
Food and Beverage Inventory
1,200 (f)
400 (f)
1,600
800 ( c)
150 (d)
450 (e)
80 (g)
Furniture
5,000 (a)
5,000
2,400 (h)
5,920
Equipment
50,000 (a)
800 ( c)
50,800
Land
100,000 (a)
100,000
Accounts Payable
Building
450,000 (a)
450,000
400 (b)
1,200 (f)
400 (f)
2,000
B. Wilson, Capital
5,000 (a)
5,000 (a)
50,000 (a)
100,000 (a)
450,000 (a)
610,000
Food and Beverage Sales
2,400 (h)
2,400
Operating Supplies Expenses
400 (b)
400
Advertising Expenses
150 (d)
150
Utilities Expenses
80 (g)
80
Wages Expenses
450 (e)
450
Problem 14
1. and 2.
Cash
a
Furniture
$ 2,000
a
$
200 c
30
50
250
10
100
i
Equipment
$
2,000
a
$
2,000
c
d
e
f
g
h
$
3,000
200
$
3,200
900
$ 2,260
Building
Accounting for Business Transactions
Accts. Pay., Edgar's Food Supply, Inc.
8
Paul Olivia, Capital
a
$ 8,000
$ 8,000
h
$
Food Sales
$
50
$
50
$
500
$
500
$
15,000 a
–
$
15,000
$
500
100
Beverage Sales
Advertising Expense
750 i
$
150 i d
$
30
$
750
$
150
$
30
Wages Expense
f
$
250
$
250
Food Expense
b
600 b
$
Utilities Expense
e
$
Cooking Supplies Expense
g
$
10
$
10
Beverage Expense
b
$
100
$
100
3.
Trial Balance
Cash
Furniture
Equipment
Building
Accounts Payable
Paul Olivia, Capital
Food Sales
Beverage Sales
Advertising Expense
Utilities Expense
Wages Expense
Cooking Supplies Expense
Food Expense
Beverage Expense
Debit
$ 2,260
2,000
3,200
8,000
Credit
$ 500
15,000
750
150
30
50
250
10
500
100
–
$16,400
$16,400
Problem 15
1. Transactions
a)
Prepaid Rent
Cash
To record prepayment of September rent
b)
Cash
Room Sales
To record cash sales for August
c)
Accounts Receivable
Room Sales
To record room sales on account
d)
Cleaning Supplies
Cash
To record purchase of cleaning supplies for cash
Accounting for Business Transactions
9
Debit
$ 1,000
Credit
$ 1,000
$15,000
$15,000
$
$
250
$
250
$
290
290
e)
Office Supplies
Accounts Payable (Bing’s Office Supplies)
To record the purchase of office supplies on account
Cash
Jack Wicks, Capital
To record new investment by the owner
Accounts Payable (Bing’s)
Cash
To record payment to Bing’s Office Supply Hut on account
Cash
Rental Income
To record additional revenue from vending machines
Wages Expense
Cash
To record the payment of wages with cash
f)
g)
h)
i)
$
150
$
150
$ 1,000
$ 1,000
$
$
50
$
50
$
75
75
$ 5,700
$ 5,700
2. and 3.
$
b
Cash
3,120
$
15,000
1,000 a b
Accounts Receivable
$ 200
250
$ 450
Prepaid Rent
1,000
1,000
a$
$
290 d
f
1,000
h
75
–
$
12,155
50 g
$
d
$
5,700 i
Cleaning Supplies
30
290
320
e
Office Supplies
$ 100
150
$ 250
Accts. Pay. (Bing’s)
$
g
$
50
$
Notes Pay. (Mineral State Bank)
$
400
$
400
Rental Income (Revenue)
$
75 h i
$
75
Accounting for Business Transactions
Jack Wicks, Capital
$ 3,000
1,000 f
$ 4,000
Wages Expense
$ 5,700
$ 5,700
10
Room Sales
$
$
50
150 e
–
150
15,000 b
250 c
15,250
4.
Rodeside Motel
Trial Balance
August 31, 20X3
Debit
$ 12,155
450
1,000
320
250
Cash
Accounts Receivable
Prepaid Rent
Cleaning Supplies
Office Supplies
Accounts Payable (Bing's)
Notes Payable
Jack Wicks, Capital
Room Sales
Rental Income
Wages Expense
Accounting for Business Transactions
Credit
$
11
5,700
150
400
4,000
15,250
75
–
$ 19,875
$ 19,875