CHAPTER 4
THE GENERAL JOURNAL AND THE GENERAL LEDGER
Chapter Opener: Thinking Critically
The resolution of the dispute with regards to the taxes paid by the vineyard depended upon the vineyard’s
recordkeeping and accounting practices. The Alcohol and Tobacco Tax Trade Board uncovered some
reporting errors which resulted in the vineyard having to revise statements and pay fines.
Fast Facts
• Willamette Valley Vineyards produces some 100,000 cases of wine annually that is distributed
throughout the United States, Canada, and the Pacific Rim.
• Willamette Valley Vineyards is set to become the first winery in the world to use cork stoppers
harvested from responsibly managed forestlands certified by the Rainforest Alliance to Forest
Stewardship Council (FSC) standards.
•
•
The vineyard uses biofuel in company tractors and delivery vehicles and has a biofuel policy which
offers up to 50 gallons of biofuel a month, at no cost, to each employee.
Willamette Valley (NASDAQ: WVVI) produced revenues of $16,563,712 in 2009 versus
$16,048,238 in the prior year, an increase of 3.2%.
Managerial Implications: Thinking Critically
Answers will vary but may include the following.
• Exposing the assets of the business to fraud and theft.
• Increasing the risk of producing inaccurate financial statements.
• Difficulty in auditing transactions.
• Research customer billing. (Customer says no invoice was received.)
Discussion Questions
Note to instructor: These questions are designed to check students’ understanding of new terms, concepts,
and procedures presented in the chapter.
1. Assets, liabilities, and owner’s equity first, followed by revenue accounts, then expenses. They are in
order of the financial statements.
2. Notations of the page number of the journal from which a figure comes; number of account to which
the figure was posted; to provide cross-references.
3. Chain of references; prevents fraud and errors.
4. Before entry posted: cross out incorrect item, write correct data above it. After posted: journalize and
post a correcting entry.
5. Steps performed to classify, record, and summarize financial data for a business.
6. To record business transactions in chronological order.
7. Record month, day, debited account/amount, credited account/amount, description.
8. Helps establish audit trail.
9. Entry that includes more than a single debit and credit—two or more debits and/or credits.
10. Groups of accounts.
11. Transfer of data from a journal to a ledger.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 4  49
EXERCISE 4.1
1.
2.
3.
4.
Debit Credit
Debit
101 5. 202
401
101 6. 101
517
401 7. 101
111
101
131
Credit
101
401
111
8.
9.
10.
Debit
101
121
511
Credit
301
202
101
EXERCISE 4.2
GENERAL JOURNAL
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
DATE
DESCRIPTION
2013
Sept.
1 Cash
Mary Vinzant, Capital
Beginning investment of owner
PAGE 1
POST.
REF.
DEBIT
50 0 0 0 00
101
301
50 0 0 0 00
4 Equipment
Accounts Payable
Purchased equipment on credit from
Inc., Invoice 9823, payable in 30 days
131
202
5 5 0 0 00
16 Automobile
Cash
Purchased an automobile, Check 1001
141
101
13 5 0 0 00
20 Supplies
Cash
Purchased supplies, Check 1002
121
101
4 2 0 00
23 Cash
Supplies
Returned damaged supplies and
received cash refund
101
121
1 2 0 00
30 Accounts Payable
Cash
Paid Zen, Inc., on account for
Invoice 9823, Check 1003
202
101
3 2 0 0 00
50  Chapter 4
CREDIT
5 5 0 0 00
13 5 0 0 00
4 2 0 00
1 2 0 00
3 2 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 4.2 (continued)
GENERAL JOURNAL
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
DATE
DESCRIPTION
2013
Sept. 30 Mary Vinzant, Drawing
Cash
Owner withdrew cash for personal use
PAGE 2
POST.
REF.
DEBIT
302
101
2 0 0 0 00
30 Prepaid Rent Expense
Cash
Paid October rent, Check 1004
511
101
1 2 0 0 00
30 Cash
101
401
2 2 5 0 00
517
101
3 8 5 00
Fees Income
Performed services for cash
30 Telephone Expense
Cash
Paid monthly telephone bill, Check 1005
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CREDIT
2 0 0 0 00
1 2 0 0 00
2 2 5 0 00
3 8 5 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Chapter 4  51
EXERCISE 4.3
GENERAL LEDGER
ACCOUNT
Cash
DATE
DESCRIPTION
2013
Sept. 1
16
20
23
30
30
30
30
30
ACCOUNT
DESCRIPTION
J1
J1
J1
J1
J1
J2
J2
J2
J2
DEBIT
CREDIT
50 0 0 0 00
52  Chapter 4
0
5
0
2
0
0
8
0
6
0
0
8
0
0
0
0
5
6
0
0
0
0
0
0
0
0
5
00
00
00
00
00
00
00
00
00
ACCOUNT NO. 111
POST
REF.
DEBIT
CREDIT
BALANCE
DEBIT
CREDIT
ACCOUNT NO. 121
POST
REF.
J1
J1
DEBIT
CREDIT
4 2 0 00
1 2 0 00
Equipment
DATE
DESCRIPTION
2013
Sept. 4
BALANCE
DEBIT
CREDIT
50
13 5 0 0 00 36
4 2 0 00 36
1 2 0 00
36
3 2 0 0 00 33
2 0 0 0 00 31
1 2 0 0 00 29
2 2 5 0 00
32
3 8 5 00 31
Supplies
DATE
DESCRIPTION
2013
Sept. 20
23
ACCOUNT
POST
REF.
Accounts Receivable
DATE
ACCOUNT
ACCOUNT NO. 101
BALANCE
DEBIT
CREDIT
4 2 0 00
3 0 0 00
ACCOUNT NO. 131
POST
REF.
J1
DEBIT
5 5 0 0 00
CREDIT
BALANCE
DEBIT
CREDIT
5 5 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 4.3 (continued)
ACCOUNT
Automobile
DATE DESCRIPTION
2013
Sept. 16
ACCOUNT
DATE
2013
Sept. 4
30
ACCOUNT
DATE
2013
Sept. 1
ACCOUNT
POST
REF.
DEBIT
J1
13 5 0 0 00
CREDIT
ACCOUNT NO. 202
POST
DESCRIPTION REF.
J1
J1
DEBIT
CREDIT
POST
DESCRIPTION REF.
5 5 0 0 00
DEBIT
CREDIT
BALANCE
DEBIT
CREDIT
50 0 0 0 00
Mary Vinzant, Drawing
J2
5 5 0 0 00
2 3 0 0 00
ACCOUNT NO. 301
J1
POST
REF.
BALANCE
CREDIT
DEBIT
3 2 0 0 00
Mary Vinzant, Capital
50 0 0 0 00
ACCOUNT NO. 302
DEBIT
CREDIT
2 0 0 0 00
BALANCE
DEBIT
CREDIT
2 0 0 0 00
Fees Income
DATE DESCRIPTION
2013
Sept. 30
BALANCE
DEBIT
CREDIT
13 5 0 0 00
Accounts Payable
DATE DESCRIPTION
2013
Sept. 30
ACCOUNT
ACCOUNT NO. 141
ACCOUNT NO. 401
POST
REF.
J2
DEBIT
CREDIT
2 2 5 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
2 2 5 0 00
Chapter 4  53
EXERCISE 4.3 (continued)
ACCOUNT
Rent Expense
DATE
2013
Sept. 30
ACCOUNT
DESCRIPTION
POST
REF.
J2
DEBIT
CREDIT
1 2 0 0 00
DESCRIPTION
ACCOUNT NO. 514
POST
REF.
DEBIT
CREDIT
Telephone Expense
DATE
2013
Sept. 30
54  Chapter 4
DESCRIPTION
BALANCE
DEBIT
CREDIT
1 2 0 0 00
Salaries Expense
DATE
ACCOUNT
ACCOUNT NO. 511
BALANCE
DEBIT
CREDIT
ACCOUNT NO. 517
POST
REF.
J2
DEBIT
3 8 5 00
CREDIT
BALANCE
DEBIT
CREDIT
3 8 5 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 4.4
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Nov. 5 Cash
3
Accounts Receivable
4
Fees Income
5
Performed services for Talent Search
6
receiving part of fees in cash with
7
remainder due in 60 days
8
9
18 Equipment
10
Supplies
11
Cash
12
Purchased graphing calculator and
13
supplies, Check 1008
14
15
23 Automobile Expense
16
Cash
17
Accounts Payable
18
Received Invoice 1602 from Automotive
19
Technicians Repair, issued Check 1009
20
for half the amount, balance due in 30 days
21
PAGE
POST.
REF.
DEBIT
CREDIT
14 0 0 0 00
16 0 0 0 00
30 0 0 0 00
3 7 5 00
5 2 5 00
9 0 0 00
1 6 0 0 00
8 0 0 00
8 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
EXERCISE 4.5
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 July 30 Telephone Expense
3
Utilities Expense
4
To correct July 9 error charging
5
telephone bill to Utilities Expense
6
PAGE
POST.
REF.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
DEBIT
CREDIT
9 5 0 00
9 5 0 00
1
2
3
4
5
6
Chapter 4  55
EXERCISE 4.6
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Oct.
1 Repair Expense
3
Truck
4
To correct September 16 error charging
5
truck charges to the Truck account
6
PAGE
POST.
REF.
DEBIT
CREDIT
7 5 0 00
7 5 0 00
1
2
3
4
5
6
PROBLEM 4.1A
GENERAL JOURNAL
DATE
1 2013
2 Sept.
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
10
15
16
17
18
11
19
20
21
22
12
23
24
DESCRIPTION
PAGE 1
POST.
REF.
DEBIT
Rent Expense
Cash
Paid September rent, Check 1169
1 4 0 0 00
Cash
2 5 0 0 00
1 4 0 0 00
Fees Income
Performed services for cash
Accounts Receivable
Fees Income
Performed services on credit
2 5 0 0 00
1 3 5 0 00
1 3 5 0 00
Telephone Expense
Cash
Paid monthly telephone bill, Check 1170
6 0 0 00
Equipment Repair Expense
Cash
Paid for repairs, Check 1171
8 4 0 00
Cash
56  Chapter 4
CREDIT
6 0 0 00
8 4 0 00
3 2 0 0 00
Accounts Receivable
Received cash on account
3 2 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.1A (continued)
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Sept. 15 Salaries Expense
3
Cash
4
Paid semimonthly salaries, Checks 1172-1177
5
6
18 Supplies
7
Cash
8
Paid for supplies, Check 1178
9
10
19 Equipment
11
Accounts Payable
12
Purchased tennis rackets from The Tennis
13
Supply Shop, Invoice 3108, payable in 30 days
14
15
20 Equipment
16
Cash
17
Purchased nets, Check 1179
18
19
21 Cash
20
Accounts Receivable
21
Received cash on account
22
23
21 Cash
24
Equipment
25
Returned damaged net for cash refund
26
27
22 Cash
28
Fees Income
29
Performed services for cash
30
31
23 Accounts Receivable
32
Fees Income
33
Performed services on account
34
35
26 Supplies
36
Cash
37
Paid for supplies, Check 1180
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
POST.
REF.
DEBIT
2
CREDIT
4 2 0 0 00
4 2 0 0 00
2 0 0 0 00
2 0 0 0 00
2 2 5 0 00
2 2 5 0 00
2 7 6 0 00
2 7 6 0 00
9 5 0 00
9 5 0 00
4 5 0 00
4 5 0 00
3 2 6 0 00
3 2 6 0 00
4 8 5 0 00
4 8 5 0 00
4 6 0 00
4 6 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
Chapter 4  57
PROBLEM 4.1A (continued)
PAGE 3
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Sept. 28 Utilities Expense
3
Cash
4
Paid monthly electric bill, Check 1181
5
6
30 Salaries Expense
7
Cash
Paid semimonthly salaries, Check 1182-1187
8
9
10
30 Patrice Rebello, Drawing
11
Cash
Owner withdrew cash for personal use,
12
13
Check 1188
POST.
REF.
DEBIT
2 2 5 0 00
4 2 0 0 00
4 2 0 0 00
CREDIT
1
2
2 2 5 0 00 3
4
5
6
4 2 0 0 00 7
8
9
10
4 2 0 0 00 11
12
13
Analyze: Check 1189 would be included in the journal entry description.
PROBLEM 4.2A
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Oct.
1 Cash
3
Wilson Adams, Capital
4
Beginning investment of owner
5
6
2 Rent Expense
7
Cash
8
Paid October rent, Check 1001
9
10
5 Office Equipment
11
Accounts Payable
12
Purchased equipment from Office Furniture
13
Mart, Inc., Invoice 6704, payable in 60 days
58  Chapter 4
PAGE 1
POST.
REF.
101
301
514
101
141
202
DEBIT
CREDIT
1
50 0 0 0 00
2
50 0 0 0 00 3
4
5
2 5 0 0 00
6
2 5 0 0 00 7
8
9
14 0 0 0 00
10
14 0 0 0 00 11
12
13
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2A (continued)
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013 6 Art Equipment
2 Oct.
Cash
3
Purchased art equipment, Check 1002
4
5
7 Supplies
6
Cash
7
Purchased supplies, Check 1003
8
9
10 Office Cleaning Expense
10
Cash
11
Paid for office cleaning, Check 1004
12
13
12 Cash
14
Accounts Receivable
15
Fees Income
16
Performed services for cash and on credit
17
18
15 Cash
19
Supplies
Returned damaged supplies for cash refund
20
21
22
18 Office Equipment
23
Cash
24
Accounts Payable
25
Purchased equip. from Office Furniture Mart, Inc.,
26
Invoice 7108; Check 1005; balance due in 30 days
27
28
20 Accounts Payable
29
Cash
30
Paid Office Furniture Mart, Inc., on account,
31
Invoice 6704; Check 1006
PAGE
2
POST.
DEBIT
CREDIT
REF.
151
2 7 0 0 00
101
2 7 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
121
101
1 0 5 0 00
511
101
5 0 0 00
101
111
401
3 6 0 0 00
1 4 0 0 00
101
121
3 0 0 00
141
101
202
2 5 0 0 00
202
101
7 0 0 0 00
1 0 5 0 00
5 0 0 00
5 0 0 0 00
3 0 0 00
1 5 0 0 00
1 0 0 0 00
7 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Chapter 4  59
PROBLEM 4.2A (continued)
GENERAL JOURNAL
DATE
1 2013 26
2 Oct.
3
4
5
27
6
7
8
9
30
10
11
12
13
30
14
15
16
17
30
18
19
20
60  Chapter 4
DESCRIPTION
Accounts Receivable
Fees Income
Performed services on credit
PAGE
POST.
REF.
DEBIT
CREDIT
111 3 9 0 0 00
401
3 9 0 0 00
Telephone Expense
Cash
Paid monthly telephone bill, Check 1007
520
101
2 7 5 00
Cash
101
111
3 2 0 0 00
Utilities Expense
Cash
Paid monthly utility bill, Check 1008
523
101
3 5 0 00
Salaries Expense
Cash
Paid monthly salaries, Checks 1009-1011
517
101
7 5 0 0 00
Accounts Receivable
Received cash on account
3
2 7 5 00
3 2 0 0 00
3 5 0 00
7 5 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2A (continued)
GENERAL LEDGER
ACCOUNT
Cash
DATE
2013
Oct.
1
2
6
7
10
12
15
18
20
27
30
30
30
ACCOUNT
POST
DESCRIPTION REF.
J1
J1
J1
J1
J1
J1
J1
J2
J2
J2
J2
J2
J2
DEBIT
POST
DESCRIPTION REF.
J1
J2
J2
50 0 0 0 00
2 5 0 0
2 7 0 0
1 0 5 0
5 0 0
00
00
00
00
3 6 0 0 00
3 0 0 00
1 5 0 0 00
7 0 0 0 00
2 7 5 00
3 2 0 0 00
3 5 0 00
7 5 0 0 00
50
47
44
43
43
46
47
45
38
38
41
41
33
0
5
8
7
2
8
1
6
6
3
5
2
7
0
0
0
5
5
5
5
5
5
7
7
2
2
0
0
0
0
0
0
0
0
0
5
5
5
5
00
00
00
00
00
00
00
00
00
00
00
00
00
ACCOUNT NO. 111
DEBIT
CREDIT
1 4 0 0 00
3 9 0 0 00
3 2 0 0 00
Supplies
DATE
2013
Oct.
7
15
BALANCE
DEBIT
CREDIT
CREDIT
Accounts Receivable
DATE
2013
Oct. 12
26
30
ACCOUNT
ACCOUNT NO. 101
BALANCE
CREDIT
DEBIT
1 4 0 0 00
5 3 0 0 00
2 1 0 0 00
ACCOUNT NO. 121
POST
DESCRIPTION REF.
J1
J1
DEBIT
CREDIT
1 0 5 0 00
3 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
1 0 5 0 00
7 5 0 00
Chapter 4  61
PROBLEM 4.2A (continued)
GENERAL LEDGER
ACCOUNT
Office Equipment
DATE
2013
Oct.
5
18
ACCOUNT
ACCOUNT NO. 141
POST
DESCRIPTION REF.
J1
J2
14 0 0 0 00
2 5 0 0 00
ACCOUNT NO. 151
DEBIT
CREDIT
2 7 0 0 00
BALANCE
DEBIT
CREDIT
2 7 0 0 00
ACCOUNT NO. 202
POST
DESCRIPTION REF.
J1
J2
J2
DEBIT
CREDIT
14 0 0 0 00
1 0 0 0 00
7 0 0 0 00
Wilson Adams, Capital
POST
DATE DESCRIPTION REF.
2013
Oct.
1
J1
62  Chapter 4
BALANCE
DEBIT
CREDIT
14 0 0 0 00
16 5 0 0 00
Accounts Payable
DATE
2013
Oct.
5
18
20
ACCOUNT
CREDIT
Art Equipment
POST
DATE DESCRIPTION REF.
2013
Oct.
6
J1
ACCOUNT
DEBIT
BALANCE
DEBIT
CREDIT
14 0 0 0 00
15 0 0 0 00
8 0 0 0 00
ACCOUNT NO. 301
DEBIT
CREDIT
50 0 0 0 00
BALANCE
DEBIT
CREDIT
50 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2A (continued)
GENERAL LEDGER
ACCOUNT
Wilson Adams, Drawing
POST
DESCRIPTION REF.
DATE
ACCOUNT
CREDIT
POST
DESCRIPTION REF.
DEBIT
J1
J2
POST
DESCRIPTION REF.
CREDIT
BALANCE
DEBIT
CREDIT
5 0 0 0 00
3 9 0 0 00
5 0 0 0 00
8 9 0 0 00
ACCOUNT NO. 511
DEBIT
CREDIT
5 0 0 00
BALANCE
DEBIT
CREDIT
5 0 0 00
Rent Expense
DATE
DESCRIPTION
2013
Oct.
2
BALANCE
CREDIT
DEBIT
ACCOUNT NO. 401
Office Cleaning Expense
DATE
2013
Oct. 10
ACCOUNT
DEBIT
Fees Income
DATE
2013
Oct. 12
26
ACCOUNT
ACCOUNT NO. 302
ACCOUNT NO. 514
POST
REF.
J1
DEBIT
CREDIT
2 5 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
2 5 0 0 00
Chapter 4  63
PROBLEM 4.2A (continued)
GENERAL LEDGER
ACCOUNT
Salaries Expense
DATE
2013
Oct. 30
ACCOUNT
ACCOUNT NO. 517
POST
DESCRIPTION REF.
J2
CREDIT
7 5 0 0 00
ACCOUNT NO. 520
DEBIT
CREDIT
2 7 5 00
BALANCE
CREDIT
DEBIT
2 7 5 00
Utilities Expense
DATE
2013
Oct. 30
BALANCE
DEBIT
CREDIT
7 5 0 0 00
Telephone Expense
POST
DATE DESCRIPTION REF.
2013
Oct. 27
J2
ACCOUNT
DEBIT
ACCOUNT NO. 523
POST
DESCRIPTION REF.
J2
DEBIT
CREDIT
3 5 0 00
BALANCE
DEBIT
CREDIT
3 5 0 00
Analyze: General ledger account 202 has an $8,000 credit balance.
PROBLEM 4.3A
April 1: The debit should be to Accounts Receivable, not Accounts Payable.
April 2: The debit and credit amounts are reversed. Telephone Expense should be debited and Cash
should be credited.
April 3: The two debit amounts and the credit amount in the entry are not equal because of a math error.
The credit for Cash should be $8,000.
Analyze: After correcting the three entries, the assets are increased by $11,800 ($12,400 - $1,000 + $400).
64  Chapter 4
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.4A
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Nov. 1 Cash
3
Tools
4
Erwin Tobias, Capital
5
Beginning investment of owner
6
7
2 Equipment
8
Office Supplies
9
Cash
10
Accounts Payable
11
Purchased equipment and office supplies from
12
Office Depot, Invoice 501; issued Check 100
13
for a down payment, balance payable in 30 days
14
15
10 Cash
16
Accounts Receivable
17
Fees Income
18
Services for cash and credit
19
20
20 Machinery
21
Cash
22
Accounts Payable
23
Purchased machinery from Cottle Machinery Inc.,
24
Invoice 709; issued Check 101
25
for a down payment, balance due in 30 days
26
PAGE
POST.
REF.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
DEBIT
101
131
301
45 0 0 0 00
1 0 0 0 00
151
121
101
202
1 9 5 0 00
4 5 0 00
101
111
401
5 0 0 00
1 4 0 0 00
141
101
202
3 0 0 0 00
1
CREDIT
46 0 0 0 00
6 0 0 00
1 8 0 0 00
1 9 0 0 00
1 0 0 0 00
2 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Chapter 4  65
PROBLEM 4.4A (continued)
GENERAL LEDGER
ACCOUNT
Cash
DATE
2013
Nov. 1
2
10
20
ACCOUNT
POST
DESCRIPTION REF.
J1
J1
J1
J1
45 0 0 0 00
5 0 0 00
45
6 0 0 00 44
44
1 0 0 0 00 43
J1
DEBIT
CREDIT
1 4 0 0 00
0
0
0
0
0
0
0
0
00
00
00
00
BALANCE
CREDIT
DEBIT
ACCOUNT NO. 121
POST
REF.
J1
DEBIT
CREDIT
4 5 0 00
BALANCE
DEBIT
CREDIT
4 5 0 00
Tools
66  Chapter 4
0
4
9
9
1 4 0 0 00
Office Supplies
DATE
2013
Nov. 1
BALANCE
DEBIT
CREDIT
CREDIT
ACCOUNT NO. 111
POST
DESCRIPTION REF.
DATE
DESCRIPTION
2013
Nov. 2
ACCOUNT
DEBIT
Accounts Receivable
DATE
2013
Nov. 10
ACCOUNT
ACCOUNT NO. 101
ACCOUNT NO. 131
POST
DESCRIPTION REF.
J1
DEBIT
1 0 0 0 00
CREDIT
BALANCE
DEBIT
CREDIT
1 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.4A (continued)
GENERAL LEDGER
ACCOUNT
Machinery
DATE
2013
Nov. 20
ACCOUNT
POST
DESCRIPTION REF.
J1
CREDIT
3 0 0 0 00
ACCOUNT NO. 151
POST
REF.
J1
DEBIT
CREDIT
1 9 5 0 00
BALANCE
DEBIT
CREDIT
1 9 5 0 00
ACCOUNT NO. 202
POST
DESCRIPTION REF.
DEBIT
J1
J1
CREDIT
1 8 0 0 00
2 0 0 0 00
Erwin Tobias, Capital
DATE
2013
Nov. 1
BALANCE
CREDIT
DEBIT
3 0 0 0 00
Accounts Payable
DATE
2013
Nov. 2
20
ACCOUNT
DEBIT
Equipment
DATE
DESCRIPTION
2013
Nov. 2
ACCOUNT
ACCOUNT NO. 141
POST
DESCRIPTION REF.
J1
BALANCE
CREDIT
DEBIT
1 8 0 0 00
3 8 0 0 00
ACCOUNT NO. 301
DEBIT
CREDIT
46 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
46 0 0 0 00
Chapter 4  67
PROBLEM 4.4A (continued)
GENERAL LEDGER
ACCOUNT
Fees Income
DATE
2013
Nov. 10
ACCOUNT NO. 401
POST
DESCRIPTION REF.
DEBIT
J1
CREDIT
BALANCE
DEBIT
CREDIT
1 9 0 0 00
1 9 0 0 00
Analyze: The business owes $3,800 as of November 30.
PROBLEM 4.1B
GENERAL JOURNAL
DATE
1 2013
2 Sept. 1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
7
15
16
17
18
9
19
20
68  Chapter 4
DESCRIPTION
Cash
PAGE 1
POST
REF.
DEBIT
CREDIT
25 0 0 0 00
Cathy Cox
Beginning investment of owner
Cash
25 0 0 0 00
2 8 0 0 00
Fees Income
Performed services for cash
2 8 0 0 00
Rent Expense
Cash
Paid for September, Check 1000
1 8 0 0 00
Accounts Receivable
Fees Income
Performed services on credit
3 6 0 0 00
Telephone Expense
Cash
Paid telephone bill, Check 1001
1 8 0 0 00
3 6 0 0 00
4 0 0 00
4 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.1B (continued)
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Sept. 10 Equipment Repair Expense
3
Cash
4
Paid for equipment repairs, Check 1002
5
6
12 Cash
7
Accounts Receivable
8
Received cash on account
9
10
14 Salaries Expense
11
Cash
12
Paid semimonthly salaries to employees,
13
Checks 1003-1004
14
15
18 Cleaning Supplies Expense
16
Cash
17
Paid for cleaning supplies, Check 1005
18
19
19 Office Supplies Expense
20
Cash
21
Paid for office supplies, Check 1006
22
23
20 Equipment
24
Cash
25
Accounts Payable
26
Purchase from Reese Equipment, Inc.,
27
Invoice 1012; issued Check 1007 for down
28
payment, balance due in 30 days
29
30
22 Cash
31
Fees Income
32
Performed services for cash
33
34
24 Utilities Expense
35
Cash
36
Paid utility bill, Check 1008
PAGE
POST.
REF.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
DEBIT
2
CREDIT
2 5 0 00
2 5 0 00
4 9 0 0 00
4 9 0 0 00
9 5 0 0 00
9 5 0 0 00
7 0 0 00
7 0 0 00
6 0 0 00
6 0 0 00
5 0 0 0 00
2 0 0 0 00
3 0 0 0 00
2 9 5 0 00
2 9 5 0 00
4 5 0 00
4 5 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Chapter 4  69
PROBLEM 4.1B (continued)
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Sept. 26 Accounts Receivable
3
Fees Income
4
Performed services on account
5
6
30 Salaries Expense
7
Cash
Paid semimonthly salaries,
8
9
Checks 1009-1010
10
11
30 Cathy Cox, Drawing
12
Cash
13
Owner withdrew cash for personal use,
14
Check 1011
15
PAGE
POST.
REF.
DEBIT
3 6 0 0 00
9 5 0 0 00
3 0 0 0 00
3
CREDIT
1
2
3 6 0 0 00 3
4
5
6
9 5 0 0 00 7
8
9
10
11
3 0 0 0 00 12
13
14
15
Analyze: Eight transactions affected expense accounts.
PROBLEM 4.2B
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 June
1 Cash
3
Wallace King, Capital
4
Beginning investment of owner
5
6
2 Rent Expense
7
Cash
8
Paid rent for June, Check 1001
9
10
5 Office Equipment
11
Accounts Payable
Purchased office equipment from Brown,
12
13
Inc., Invoice 5312, payable in 60 days
14
70  Chapter 4
PAGE 1
POST.
REF.
101
301
514
101
141
202
DEBIT
CREDIT
1
2
16 0 0 0 00 3
4
5
9 0 0 00
6
9 0 0 00 7
8
9
3 7 5 0 00
10
3 7 5 0 00 11
12
13
14
16 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2B (continued)
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 June 6 Photographic Equipment
3
Cash
4
Purchased photo equipment, Check 1002
5
6
7 Supplies
7
Cash
8
Purchased supplies, Check 1003
9
10
10 Office Cleaning Expense
11
Cash
12
Paid for office cleaning, Check 1004
13
14
12 Cash
15
Accounts Receivable
16
Fees Income
17
Performed services for cash and credit
18
19
15 Cash
20
Supplies
21
Returned damaged supplies for cash
22
23
18 Office Equipment
24
Cash
25
Accounts Payable
26
Purchase from Craft Office Supply,
27
Invoice 304; issued Check 1005 for down
28
payment, balance payable in 30 days
29
30
20 Accounts Payable
31
Cash
32
Paid Brown, Inc., on account, Invoice
33
5312, Check 1006
34
35
26 Accounts Receivable
36
Fees Income
37
Performed services on credit
PAGE
POST.
REF.
DEBIT
151
101
9 5 0 00
121
101
2 3 8 00
511
101
2 0 0 00
101
111
401
6 5 0 00
6 5 0 00
101
121
7 5 00
141
101
202
1 0 2 5 00
202
101
2 1 0 0 00
111
401
1 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
2
CREDIT
9 5 0 00
2 3 8 00
2 0 0 00
1 3 0 0 00
7 5 00
5 0 0 00
5 2 5 00
2 1 0 0 00
1 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
Chapter 4  71
PROBLEM 4.2B (continued)
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 June 27 Telephone Expense
3
Cash
4
Paid monthly phone bill, Check 1007
5
6
30 Cash
7
Accounts Receivable
8
Received cash on account
9
10
30 Utilities Expense
11
Cash
12
Paid monthly utility bill, Check 1008
13
14
30 Salaries Expense
15
Cash
16
Paid monthly salaries to employees,
17
Checks 1009-1011
18
72  Chapter 4
PAGE
POST.
REF.
DEBIT
520
101
2 9 0 00
101
111
1 0 5 0 00
523
101
2 7 5 00
517
101
2 8 0 0 00
3
CREDIT
2 9 0 00
1 0 5 0 00
2 7 5 00
2 8 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2B (continued)
GENERAL LEDGER
ACCOUNT
DATE
2013
June 1
2
6
7
10
12
15
18
20
27
30
30
30
ACCOUNT
DATE
2013
June 12
26
30
ACCOUNT
DATE
2013
June 7
15
Cash
ACCOUNT NO. 101
POST
DESCRIPTION REF.
J1
J1
J1
J1
J1
J1
J1
J2
J2
J2
J2
J2
J2
DEBIT
BALANCE
DEBIT
CREDIT
CREDIT
16 0 0 0 00
9
9
2
2
0
5
3
0
0
0
8
0
00
00
00
00
6 5 0 00
7 5 00
5 0 0 00
2 1 0 0 00
2 9 0 00
1 0 5 0 00
2 7 5 00
2 8 0 0 00
Accounts Receivable
16
15
14
13
13
14
14
13
11
11
12
12
9
0
1
1
9
7
3
4
9
8
5
5
3
5
0
0
5
1
1
6
3
3
3
4
9
2
2
0
0
0
2
2
2
7
7
7
7
7
2
2
00
00
00
00
00
00
00
00
00
00
00
00
00
ACCOUNT NO. 111
POST
DESCRIPTION REF.
J1
J2
J2
DEBIT
CREDIT
6 5 0 00
1 0 0 0 00
1 0 5 0 00
Supplies
BALANCE
DEBIT
CREDIT
6 5 0 00
1 6 5 0 00
6 0 0 00
ACCOUNT NO. 121
POST
DESCRIPTION REF.
J1
J1
DEBIT
CREDIT
2 3 8 00
7 5 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
2 3 8 00
1 6 3 00
Chapter 4  73
PROBLEM 4.2B (continued)
GENERAL LEDGER
ACCOUNT
Office Equipment
DATE
DESCRIPTION
2013
June
5
18
ACCOUNT
J1
J2
DEBIT
CREDIT
3 7 5 0 00
1 0 2 5 00
POST
REF.
J1
ACCOUNT NO. 151
DEBIT
CREDIT
9 5 0 00
74  Chapter 4
BALANCE
DEBIT
CREDIT
9 5 0 00
ACCOUNT NO. 202
POST
REF.
J1
J2
J2
DEBIT
CREDIT
3 7 5 0 00
5 2 5 00
2 1 0 0 00
Wallace King, Capital
DATE
DESCRIPTION
2013
June
1
BALANCE
DEBIT
CREDIT
3 7 5 0 00
4 7 7 5 00
Accounts Payable
DATE
DESCRIPTION
2013
June
5
18
20
ACCOUNT
POST
REF.
Photographic Equipment
DATE
DESCRIPTION
2013
June
6
ACCOUNT
ACCOUNT NO. 141
POST
REF.
J1
BALANCE
DEBIT
CREDIT
3 7 5 0 00
4 2 7 5 00
2 1 7 5 00
ACCOUNT NO. 301
DEBIT
CREDIT
16 0 0 0 00
BALANCE
DEBIT
CREDIT
16 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.2B (continued)
GENERAL LEDGER
ACCOUNT
Wallace King, Drawing
POST
DESCRIPTION REF.
DATE
ACCOUNT
CREDIT
BALANCE
DEBIT
CREDIT
ACCOUNT NO. 401
POST
DESCRIPTION REF.
DEBIT
J1
J2
CREDIT
POST
DESCRIPTION REF.
1 3 0 0 00
2 3 0 0 00
ACCOUNT NO. 511
DEBIT
CREDIT
2 0 0 00
BALANCE
DEBIT
CREDIT
2 0 0 00
Rent Expense
POST
DATE
DESCRIPTION REF.
2013
June
2
J1
BALANCE
DEBIT
CREDIT
1 3 0 0 00
1 0 0 0 00
Office Cleaning Expense
DATE
2013
June 10
ACCOUNT
DEBIT
Fees Income
DATE
2013
June 12
26
ACCOUNT
ACCOUNT NO. 302
ACCOUNT NO. 514
DEBIT
CREDIT
9 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
9 0 0 00
Chapter 4  75
PROBLEM 4.2B (continued)
GENERAL LEDGER
ACCOUNT
DATE
2013
June 30
ACCOUNT
Salaries Expense
ACCOUNT NO. 517
POST
DESCRIPTION REF.
J2
DATE
2013
June 30
CREDIT
2 8 0 0 00
BALANCE
DEBIT
CREDIT
2 8 0 0 00
Telephone Expense
ACCOUNT NO. 520
POST
DATE DESCRIPTION REF.
2013
June 27
J2
ACCOUNT
DEBIT
DEBIT
CREDIT
2 9 0 00
BALANCE
DEBIT
CREDIT
2 9 0 00
Utilities Expense
ACCOUNT NO. 523
POST
DESCRIPTION REF.
J2
DEBIT
2 7 5 00
CREDIT
BALANCE
DEBIT
CREDIT
2 7 5 00
Analyze: The Cash account balance after the June 27 transaction was $11,547.
PROBLEM 4.3B
January 1: The debit should be to Accounts Receivable, not Accounts Payable.
January 2: The debit and credit amounts are reversed. Telephone Expense should be
debited and Cash should be credited.
January 3: The two debit amounts and the credit amount in the entry are not equal
because of a mathematical error. The credit for Cash should be $470.
Analyze: The assets increased by $305.
(Accounts Receivable + $450; Cash - $125 [$62.50 x 2]; Cash - $20)
76  Chapter 4
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.4B
GENERAL JOURNAL
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
DATE
2013
Dec.
3 Cash
DESCRIPTION
PAGE
POST.
REF.
DEBIT
101
301
15 0 0 0 00
4 Computers
Cash
Paid cash for computer
131
101
1 2 0 0 00
5 Furnitures and Fixtures
Accounts Payable
Purchased office furniture on credit
151
202
4 0 0 0 00
6 Office Equipment
Cash
Paid cash for equipment
141
101
1 0 9 5 00
10 Accounts Receivable
Fees Income
Rendered services on account
111
401
1 3 0 0 00
11 Office Supplies
Cash
Paid cash for supplies
121
101
4 5 0 00
15 Accounts Payable
Cash
Paid invoice for furniture purchased on
December 5
202
101
4 0 0 0 00
Richard Boley, Capital
Beginning investment of owner
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1
CREDIT
15 0 0 0 00
1 2 0 0 00
4 0 0 0 00
1 0 9 5 00
1 3 0 0 00
4 5 0 00
4 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
Chapter 4  77
PROBLEM 4.4B (continued)
GENERAL LEDGER
ACCOUNT
Cash
DATE
2013
Dec. 3
4
6
11
15
ACCOUNT
POST
DESCRIPTION REF.
J1
J1
J1
J1
J1
CREDIT
15 0 0 0 00
1 2 0
1 0 9
4 5
4 0 0
0
5
0
0
00
00
00
00
J1
DEBIT
CREDIT
1 3 0 0 00
0
8
7
2
2
0
0
0
5
5
0
0
5
5
5
00
00
00
00
00
BALANCE
DEBIT
CREDIT
ACCOUNT NO. 121
POST
REF.
J1
DEBIT
CREDIT
4 5 0 00
BALANCE
DEBIT
CREDIT
4 5 0 00
Computers
78  Chapter 4
15
13
12
12
8
1 3 0 0 00
Office Supplies
DATE
2013
Dec. 4
BALANCE
DEBIT
CREDIT
ACCOUNT NO. 111
POST
DESCRIPTION REF.
DATE
DESCRIPTION
2013
Dec. 11
ACCOUNT
DEBIT
Accounts Receivable
DATE
2013
Dec. 10
ACCOUNT
ACCOUNT NO. 101
ACCOUNT NO. 131
POST
DESCRIPTION REF.
J1
DEBIT
1 2 0 0 00
CREDIT
BALANCE
DEBIT
CREDIT
1 2 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 4.4B (continued)
GENERAL LEDGER
ACCOUNT
DATE
2013
Dec. 6
ACCOUNT
Office Equipment
POST
DESCRIPTION REF.
J1
DATE
2013
Dec. 5
15
ACCOUNT
DATE
2013
Dec. 3
DEBIT
CREDIT
1 0 9 5 00
POST
REF.
J1
BALANCE
DEBIT
CREDIT
1 0 9 5 00
Furniture and Fixtures
DATE
DESCRIPTION
2013
Dec. 5
ACCOUNT
ACCOUNT NO. 141
ACCOUNT NO. 151
DEBIT
CREDIT
4 0 0 0 00
BALANCE
DEBIT
CREDIT
4 0 0 0 00
Accounts Payable
ACCOUNT NO. 202
POST
DESCRIPTION REF.
J1
J1
DEBIT
CREDIT
4 0 0 0 00
4 0 0 0 00
Richard Boley, Capital
POST
DESCRIPTION REF.
J1
BALANCE
DEBIT
CREDIT
4 0 0 0 00
− 0 −
ACCOUNT NO. 301
DEBIT
CREDIT
15 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
15 0 0 0 00
Chapter 4  79
PROBLEM 4.4B (continued)
GENERAL LEDGER
ACCOUNT
Fees Income
DATE
2013
Dec. 10
DESCRIPTION
ACCOUNT NO. 401
POST
REF.
J1
DEBIT
CREDIT
1 3 0 0 00
BALANCE
DEBIT
CREDIT
1 3 0 0 00
Analyze: Two postings were recorded, one debit and one credit.
CRITICAL THINKING PROBLEM 4.1
Income Statement Errors:
1. The third line of the heading is incorrect; this line must indicate the time period covered by the income
statement.
2. Drawing is not an expense but a reduction of owner’s equity and is included in the calculation of
ending owner’s equity, not on the income statement.
3. Arithmetic errors were made in adding column of expenses and in subtracting total expenses from
revenue.
Balance Sheet Errors:
1. The third line of the heading is incorrect; the balance sheet is identified by the last day of the
accounting period.
2. Accounts Payable and Accounts Receivable are classified incorrectly; they should be interchanged.
Accounts Payable is a liability and Accounts Receivable is an asset.
3.
4.
The assets are not listed in the correct order.
The amount for Owner’s Equity on the balance sheet should be the ending owner’s equity, not the
beginning owner’s equity. A statement of owner’s equity should be prepared to compute ending
owner’s equity.
80  Chapter 4
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL THINKING PROBLEM 4.1 (continued)
Oxford Beauty Supply
Income Statement
Month Ended April 30, 2013
Revenue
Fees Income
Expenses
Salaries Expense
Rent Expense
Repair Expense
Utilities Expense
Total Expenses
Net Income
18 3 0 0 00
4 5
9
1
8
0
0
5
5
0
0
0
0
00
00
00
00
6 4 0 0 00
11 9 0 0 00
Oxford Beauty Supply
Statement of Owner's Equity
Month Ended April 30, 2013
Ken Oxford, Capital, April 1, 2013
Net Income for April
Less Withdrawals for April
Increase in Capital
Ken Oxford, Capital, April 30, 2013
24 6 0 0 00
11 9 0 0 00
2 0 0 0 00
9 9 0 0 00
34 5 0 0 00
Oxford Beauty Supply
Balance Sheet
April 30, 2013
Assets
Cash
Accounts Receivable
Land
Building
Total Assets
7
3
6
20
37
5
5
0
0
0
0
0
0
0
0
0
0
0
0
0
Liabilities
Accounts Payable
00
00
00
Owner's Equity
00 Ken Oxford, Capital
00 Total Liabilities & Owner's Equity
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
2 5 0 0 00
34 5 0 0 00
37 0 0 0 00
Chapter 4  81
CRITICAL THINKING PROBLEM 4.2
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 June 1 Cash
3
Wade Wilson, Capital
4
Beginning investment of owner
5
6
2 Rent Expense
7
Cash
8
Paid rent for June, Check 201
9
10
3 Office Furniture
11
Cash
12
Accounts Payable
13
Purchased furniture from Davis
14
Office Supply, Invoice 5103; issued
15
Check 202, balance due in 30 days
16
17
4 Supplies
18
Cash
19
Purchased supplies, Check 203
20
21
6 Cash
22
Fees Income
23
Performed services for cash
24
25
7 Advertising Expense
26
Cash
27
Paid for advertising, Check 204
28
29
8 Recording Equipment
30
Cash
31
Accounts Payable
32
Purchased equipment from Rhythms
33
and Moves, Inc., Invoice 2122;
issued Check 205, balance due in 30 days
34
35
36
10 Accounts Receivable
37
Fees Income
38
Performed services on account
82  Chapter 4
PAGE 1
POST.
REF.
DEBIT
101
301
15 0 0 0 00
514
101
9 0 0 00
141
101
202
6 0 0 0 00
121
101
8 0 0 00
101
401
3 0 0 0 00
511
101
1 0 0 0 00
151
101
202
7 5 0 0 00
111
401
2 4 5 0 00
CREDIT
15 0 0 0 00
9 0 0 00
2 0 0 0 00
4 0 0 0 00
8 0 0 00
3 0 0 0 00
1 0 0 0 00
2 5 0 0 00
5 0 0 0 00
2 4 5 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL THINKING PROBLEM 4.2 (continued)
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 June 11 Accounts Payable
3
Cash
4
Paid Davis Office Supply on account
5
for Invoice 5103, Check 206
6
7
12 Cash
8
Fees Income
9
Performed services for cash
10
11
15 Salaries Expense
12
Cash
13
Paid semimonthly salary, Check 207
14
15
18 Cash
16
Accounts Receivable
17
Received payment on account
18
19
20 Accounts Payable
20
Cash
21
Paid Rhythms and Moves, Inc.,
22
on account, Invoice 2122, Check 208
23
24
25 Telephone Expense
25
Cash
26
Paid telephone bill, Check 209
27
28
27 Utilities Expense
29
Cash
30
Paid utility bill, Check 210
31
32
28 Wade Wilson, Drawing
33
Cash
34
Owner withdrew cash for personal use,
35
Check 211
36
37
30 Salaries Expense
38
Cash
39
Paid semimonthly salary, Check 212
PAGE
POST.
REF.
DEBIT
202
101
1 5 0 0 00
101
401
4 5 0 0 00
517
101
2 5 0 0 00
101
111
2 0 0 0 00
202
101
3 0 0 0 00
520
101
1 7 5 00
523
101
4 0 0 00
302
101
2 0 0 0 00
517
101
2 5 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
2
CREDIT
1 5 0 0 00
4 5 0 0 00
2 5 0 0 00
2 0 0 0 00
3 0 0 0 00
1 7 5 00
4 0 0 00
2 0 0 0 00
2 5 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Chapter 4  83
CRITICAL THINKING PROBLEM 4.2 (continued)
GENERAL LEDGER
ACCOUNT
Cash
POST
DESCRIPTION REF.
DATE
2013
June 1
2
3
4
6
7
8
11
12
15
18
20
25
27
28
30
ACCOUNT
ACCOUNT NO. 101
J1
J1
J1
J1
J1
J1
J1
J2
J2
J2
J2
J2
J2
J2
J3
J3
DEBIT
BALANCE
DEBIT
CREDIT
CREDIT
15 0 0 0 00
9 0 0 00
2 0 0 0 00
8 0 0 00
3 0 0 0 00
1 0 0 0 00
2 5 0 0 00
1 5 0 0 00
4 5 0 0 00
2 5 0 0 00
2 0 0 0 00
3 0
1
4
2 0
2 5
0
7
0
0
0
0
5
0
0
0
00
00
00
00
00
Accounts Receivable
DATE
2013
June 10
18
84  Chapter 4
0
1
1
3
3
3
8
3
8
3
3
3
1
7
7
2
0
0
0
0
0
0
0
0
0
0
0
0
2
2
2
2
0
0
0
0
0
0
0
0
0
0
0
0
5
5
5
5
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
ACCOUNT NO. 111
POST
DESCRIPTION REF.
J2
J2
DEBIT
CREDIT
2 4 5 0 00
2 0 0 0 00
ACCOUNT Supplies
DATE
2013
June 4
15
14
12
11
14
13
10
9
13
11
13
10
10
9
7
5
BALANCE
DEBIT
CREDIT
2 4 5 0 00
4 5 0 00
ACCOUNT NO. 121
POST
DESCRIPTION REF.
J1
DEBIT
8 0 0 00
CREDIT
BALANCE
DEBIT
CREDIT
8 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL THINKING PROBLEM 4.2 (continued)
GENERAL LEDGER
ACCOUNT
Office Furniture
DATE
DESCRIPTION
2013
June
3
ACCOUNT
DEBIT
J1
6 0 0 0 00
CREDIT
ACCOUNT NO. 151
POST
REF.
DEBIT
J1
7 5 0 0 00
CREDIT
BALANCE
DEBIT
CREDIT
7 5 0 0 00
ACCOUNT NO. 202
POST
REF.
J1
J1
J2
J2
DEBIT
CREDIT
4 0 0 0 00
5 0 0 0 00
1 5 0 0 00
3 0 0 0 00
Wade Wilson, Capital
DATE
DESCRIPTION
2013
June
1
BALANCE
DEBIT
CREDIT
6 0 0 0 00
Accounts Payable
DATE
DESCRIPTION
2013
June
3
8
11
20
ACCOUNT
POST
REF.
Recording Equipment
DATE
DESCRIPTION
2013
June
8
ACCOUNT
ACCOUNT NO. 141
POST
REF.
J1
BALANCE
DEBIT
CREDIT
4
9
7
4
0
0
5
5
0
0
0
0
0
0
0
0
00
00
00
00
ACCOUNT NO. 301
DEBIT
CREDIT
15 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
15 0 0 0 00
Chapter 4  85
CRITICAL THINKING PROBLEM 4.2 (continued)
GENERAL LEDGER
ACCOUNT
Wade Wilson, Drawing
DATE
DESCRIPTION
2013
June 28
ACCOUNT
CREDIT
2 0 0 0 00
ACCOUNT NO. 401
POST
REF.
DEBIT
J1
J2
J2
CREDIT
86  Chapter 4
BALANCE
DEBIT
CREDIT
3 0 0 0 00
2 4 5 0 00
4 5 0 0 00
3 0 0 0 00
5 4 5 0 00
9 9 5 0 00
ACCOUNT NO. 511
POST
REF.
J1
DEBIT
CREDIT
1 0 0 0 00
BALANCE
DEBIT
CREDIT
1 0 0 0 00
Rent Expense
DATE
DESCRIPTION
2013
June
2
BALANCE
DEBIT
CREDIT
2 0 0 0 00
Advertising Expense
DATE
DESCRIPTION
2013
June
7
ACCOUNT
J3
DEBIT
Fees Income
DATE
DESCRIPTION
2013
June
6
10
12
ACCOUNT
POST
REF.
ACCOUNT NO. 302
ACCOUNT NO. 514
POST
REF.
J1
DEBIT
9 0 0 00
CREDIT
BALANCE
DEBIT
CREDIT
9 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL THINKING PROBLEM 4.2 (continued)
GENERAL LEDGER
ACCOUNT
Salaries Expense
DATE
DESCRIPTION
2013
June 15
30
ACCOUNT
POST
REF.
J2
J2
DEBIT
CREDIT
2 5 0 0 00
2 5 0 0 00
ACCOUNT NO. 520
POST
REF.
J2
DEBIT
CREDIT
1 7 5 00
BALANCE
DEBIT
CREDIT
1 7 5 00
Utilities Expense
DATE
DESCRIPTION
2013
June 27
BALANCE
DEBIT
CREDIT
2 5 0 0 00
5 0 0 0 00
Telephone Expense
DATE
DESCRIPTION
2013
June 25
ACCOUNT
ACCOUNT NO. 517
ACCOUNT NO. 523
POST
REF.
J2
DEBIT
CREDIT
4 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
BALANCE
DEBIT
CREDIT
4 0 0 00
Chapter 4  87
CRITICAL THINKING PROBLEM 4.2 (continued)
California Talent Agency
Trial Balance
June 30, 2013
Cash
Accounts Receivable
Supplies
Office Furniture
Recording Equipment
Accounts Payable
Wade Wilson, Capital
Wade Wilson, Drawing
Fees Income
Advertising Expense
Rent Expense
Salaries Expense
Telephone Expense
Utilities Expense
Totals
5 2
4
8
6 0
7 5
2
5
0
0
0
5
0
0
0
0
00
00
00
00
00
4 5 0 0 00
15 0 0 0 00
2 0 0 0 00
9 9 5 0 00
1 0
9
5 0
1
4
29 4
0
0
0
7
0
5
0
0
0
5
0
0
00
00
00
00
00
00
29 4 5 0 00
California Talent Agency
Income Statement
Month Ended June 30, 2013
Revenue
Fees Income
Expenses
Advertising Expense
Rent Expense
Salaries Expense
Telephone Expense
Utilities Expense
Total Expenses
Net Income
88  Chapter 4
9 9 5 0 00
1 0
9
5 0
1
4
0
0
0
7
0
0
0
0
5
0
00
00
00
00
00
7 4 7 5 00
2 4 7 5 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL THINKING PROBLEM 4.2 (continued)
California Talent Agency
Statement of Owner's Equity
Month Ended June 30, 2010
Wade Wilson, Capital, June 1, 2013
Net Income for June
Less Withdrawals for June
Increase in Owner's Equity
Wade Wilson, Capital, June 30, 2013
15 0 0 0 00
2 4 7 5 00
2 0 0 0 00
4 7 5 00
15 4 7 5 00
California Talent Agency
Balance Sheet
June 30, 2013
Assets
Cash
Accounts Receivable
Supplies
Office Furniture
Recording Equipment
Total Assets
5 2
4
8
6 0
7 5
19 9
2
5
0
0
0
7
5
0
0
0
0
5
00
00
00
00
00
00
Liabilities
Accounts Payable
Owner's Equity
Wade Wilson, Capital
Total Liabilities & Owner's
Equity
4 5 0 0 00
15 4 7 5 00
19 9 7 5 00
Analyze: There were 16 postings in the Cash account.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 4  89
SOLUTIONS TO BUSINESS CONNECTIONS
Managerial Focus:
1. Journal: detailed chronological record. Ledger: permanent, classified record of all financial events.
2. To assure accuracy and safeguards against fraud.
3. For prompt and accurate journalizing of all transactions.
4. Inefficient flow of information; errors and insufficient information.
Ethical Dilemma:
You must check to see if the cash account is going down because of her actions. Is Louisa keeping
the cash from the reversed sales because she has made so many errors? Is this something she does
each month? It is unethical to accept a dinner for fixing her error.
Financial Statement Analysis:
1. Debit Transportation Equipment account, credit Accounts Payable.
2. Invoice from the supplier.
3. Dates for equipment purchases, posting reference, purchase amount, account balance
($2,355 million at January 31, 2010).
Analyze Online:
Answers will vary depending on the year.
Teamwork:
Answers will vary. Journal Entry to General Ledger to Trial Balance to Financial Statement.
Internet Connection:
Sites that might be displayed are: www.careerbank.com , www.careersinaccounting.com ,
www.account.com .
Suggested experience would require 5 years or more, with an AA degree. Skills would include good
communication skills, detailed and multi-task oriented.
90  Chapter 4
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
SOLUTIONS TO PRACTICE TEST
Part A Matching
1. i
2. h
3. d
4. e
5. c
6. g
7. a
8. f
9. b
10. j
Part B Completion
1. debit
2. year
3. chronological or date
4. assets or balance sheet accounts
5. posted
6. ledger
7. posting references
8. brief or concise
9. credit
10. debit
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 4  91