CHAPTER 2
The Recording Process
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 2-1
1.
2.
3.
4.
5.
6.
Accounts Payable
Advertising Expense
Service Revenue
Accounts Receivable
B. C. King, Capital
B. C. King, Drawing
(a)
Debit
Effect
Decrease
Increase
Decrease
Increase
Decrease
Increase
(b)
Credit
Effect
Increase
Decrease
Increase
Decrease
Increase
Decrease
(c)
Normal
Balance
Credit
Debit
Credit
Debit
Credit
Debit
BRIEF EXERCISE 2-2
June 1
2
3
12
Account Debited
Cash
Equipment
Rent Expense
Accounts Receivable
Account Credited
Kaustav Sen, Capital
Accounts Payable
Cash
Service Revenue
BRIEF EXERCISE 2-3
June 1Cash
2
3
............................................................. 4,000
Kaustav Sen, Capital ...................................
4,000
Equipment ...........................................................
Accounts Payable........................................
900
Rent Expense ......................................................
Cash .............................................................
800
2-1
900
800
12
Accounts Receivable ..........................................
Service Revenue ..........................................
2-2
300
300
BRIEF EXERCISE 2-4
The basic steps in the recording process are:
1.
Analyze each transaction. In this step, business documents are
examined to determine the effects of the transaction on the accounts.
2.
Enter each transaction in a journal. This step is called journalizing and
it results in making a chronological record of the transactions.
3.
Transfer journal information to ledger accounts. This step is called
posting. Posting makes it possible to accumulate the effects of
journalized transactions on individual accounts.
BRIEF EXERCISE 2-5
(a)
Aug. 1
Effect on Accounting
Equation
(b)
Debit-Credit Analysis
The asset Cash is increased;
the owner’s equity account J.A.
Motzek, Capital is increased.
Debits increase assets:
debit Cash $5,000.
Credits increase owner’s equity:
credit J.A. Motzek, Capital $5,000.
4
The asset Prepaid Insurance is
increased; the asset Cash is
decreased.
Debits increase assets:
debit Prepaid Insurance $1,800.
Credits decrease assets:
credit Cash $1,800.
16
The asset Cash is increased;
the revenue Service Revenue is
increased.
Debits increase assets:
debit Cash $800.
Credits increase revenues:
credit Service Revenue $800.
27
The expense Salaries Expense
is increased; the asset Cash is
decreased.
Debits increase expenses:
debit Salaries Expense $1,000.
Credits decrease assets:
credit Cash $1,000.
2-3
BRIEF EXERCISE 2-6
Aug. 1
4
16
27
Cash ......................................................................
J. A. Motzek, Capital .....................................
5,000
Prepaid Insurance ................................................
Cash ..............................................................
1,800
Cash ......................................................................
Service Revenue...........................................
800
Salaries Expense .................................................
Cash ..............................................................
1,000
5,000
1,800
800
1,000
BRIEF EXERCISE 2-7
Cash
5/12
2,400
5/15
3,000
Ending bal. 5,400
5/5
Accounts Receivable
6,000 5/12
Service Revenue
5/5
6,000
5/15
3,000
Ending bal. 9,000
2,400
Ending bal. 3,600
BRIEF EXERCISE 2-8
Cash
Date
May 12
15
Explanation
Ref.
J1
J1
2-4
Debit
2,400
3,000
Credit
Balance
2,400
5,400
BRIEF EXERCISE 2-8 (Continued)
Accounts Receivable
Date
Explanation
May 5
12
Service Revenue
Date
Explanation
May 5
15
Ref.
J1
J1
Ref.
J1
J1
Debit
6,000
Debit
Credit
2,400
Balance
6,000
3,600
Credit
6,000
3,000
Balance
6,000
9,000
BRIEF EXERCISE 2-9
P. J. FARVE COMPANY
Trial Balance
June 30, 2005
Cash ............................................................................
Accounts Receivable .................................................
Equipment...................................................................
Accounts Payable ......................................................
P. J. Farve, Capital .....................................................
P. J. Farve, Drawing ...................................................
Service Revenue ........................................................
Salaries Expense ........................................................
Rent Expense .............................................................
2-5
Debit
$ 6,800
3,000
17,000
Credit
$ 9,000
20,000
1,200
6,000
6,000
1,000
$35,000
$35,000
BRIEF EXERCISE 2-10
CHENG COMPANY
Trial Balance
December 31, 2005
Cash ...........................................................................
Prepaid Insurance .....................................................
Accounts Payable......................................................
Unearned Revenue ....................................................
P. Cheng, Capital .......................................................
P. Cheng, Drawing .....................................................
Service Revenue ........................................................
Salaries Expense .......................................................
Rent Expense.............................................................
2-6
Debit
$16,800
3,500
Credit
$ 3,000
4,200
13,000
4,500
25,600
18,600
2,400
$45,800
$45,800
SOLUTIONS TO EXERCISES
EXERCISE 2-1
2-7
EXERCISE 2-2
General Journal
Date
Account Titles and Explanation
Jan. 2
Cash
H. Burns, Capital
3
9
11
16
20
23
28
Ref.
Debit
J1
Credit
15,000
15,000
Equipment
Cash
4,000
4,000
Supplies
Accounts Payable
500
500
Accounts Receivable
Service Revenue
1,800
Advertising Expense
Cash
200
Cash
Accounts Receivable
700
Accounts Payable
Cash
300
H. Burns, Drawing
Cash
2,000
1,800
200
700
300
2,000
EXERCISE 2-3
Oct. 1
Debits increase assets: debit Cash $20,000.
Credits increase owner’s equity: credit Lynn Robbins, Capital
$20,000.
2
No transaction.
3
Debits increase assets: debit Office Furniture $1,900.
Credits increase liabilities: credit Accounts Payable $1,900.
2-8
EXERCISE 2-3 (Continued)
Oct. 6
Debits increase assets: debit Accounts Receivable $3,200.
Credits increase revenues: credit Service Revenue $3,200.
27
Debits decrease liabilities: debit Accounts Payable $700.
Credits decrease assets: credit Cash $700.
30
Debits increase expenses: debit Salaries Expense $2,000.
Credits decrease assets: credit Cash $2,000.
EXERCISE 2-4
General Journal
Date
Oct. 1
Accounts Titles and Explanation
Cash
Lynn Robbins, Capital
Ref.
Debits
20,000
20,000
2
No entry.
3
Office Furniture
Accounts Payable
1,900
Accounts Receivable
Service Revenue
3,200
6
27
30
Credit
1,900
3,200
Accounts Payable
Cash
700
700
Salaries Expense
Cash
2,000
2,000
2-9
EXERCISE 2-5
(a)
Aug. 1
10
31
Bal.
Cash
3,000 Aug. 12
2,400
900
5,300
Accounts Receivable
Aug. 25
1,600 Aug. 31
Bal.
700
Notes Payable
Aug. 12
1,000
Roberta Mendez, Capital
Aug. 1
3,000
900
Service Revenue
Aug. 10
25
Bal.
Office Equipment
Aug. 12
5,000
(b)
4,000
2,400
1,600
4,000
ROBERTA MENDEZ, INVESTMENT BROKER
Trial Balance
August 31, 2005
Debit
$5,300
700
5,000
Cash ........................................................................
Accounts Receivable .............................................
Office Equipment ...................................................
Notes Payable ........................................................
Roberta Mendez, Capital .......................................
Service Revenue .................................................... _______
$11,000
2-10
Credit
$4,000
3,000
4,000
$11,000
EXERCISE 2-6
(a)
General Journal
Date
Apr. 1
12
15
25
29
Accounts Titles and Explanation
Cash
L. Padre, Capital
(Owner’s investment of
cash in business)
Debits
10,000
Credit
10,000
Cash
Service Revenue
(Received cash for
services provided)
900
Salaries Expense
Cash
(Paid salaries to date)
600
Accounts Payable
Cash
(Paid creditors on account)
900
600
1,500
1,500
Cash
Accounts Receivable
(Received cash in payment
of account)
30
Ref.
400
400
Cash
Unearned Revenue
(Received cash for future
services)
2-11
1,000
1,000
EXERCISE 2-6 (Continued)
(b)
PADRE LANDSCAPING COMPANY
Trial Balance
April 30, 2005
Cash ....................................................................
Accounts Receivable .........................................
Supplies ..............................................................
Accounts Payable ..............................................
Unearned Revenue ............................................
J. Padre, Capital .................................................
Service Revenue ................................................
Salaries Expense................................................
Debit
$10,200
2,800
1,800
Credit
$
600
$15,400
300
1,000
10,000
4,100
_______
$15,400
EXERCISE 2-7
(a) Oct. 1
10
10
20
20
Cash ...............................................................
Maxim, Capital .......................................
(Owner’s investment of cash in
business)
5,000
Cash ...............................................................
Service Revenue ....................................
(Received cash for services
provided)
650
Cash ...............................................................
Notes Payable ........................................
(Obtained loan from bank)
3,000
Cash ...............................................................
Accounts Receivable .............................
(Received cash in payment of
account)
500
Accounts Receivable ....................................
Service Revenue ....................................
(Billed clients for services
provided)
940
2-12
5,000
650
3,000
500
940
EXERCISE 2-7 (Continued)
(b)
MAXIM CO.
Trial Balance
October 31, 2005
Cash.....................................................................
Accounts Receivable ..........................................
Supplies ..............................................................
Furniture ..............................................................
Notes Payable .....................................................
Accounts Payable ...............................................
Maxim, Capital ....................................................
Maxim, Drawing ..................................................
Service Revenue .................................................
Store Wages Expense ........................................
Rent Expense
Debit
$8,200
1,240
400
2,000
Credit
$ 3,000
500
7,000
300
2,390
500
250
$12,890
_______
$12,890
EXERCISE 2-8
(a)
General Journal
Date
Sept. 1
5
25
30
Accounts Titles and Explanation
Cash
Neve Campbell, Capital
Ref.
101
301
Debit
10,000
Equipment
Cash
Accounts Payable
157
101
201
12,000
Accounts Payable
Cash
201
101
3,000
Neve Campbell, Drawing
Cash
306
101
500
2-13
J1
Credit
10,000
6,000
6,000
3,000
500
EXERCISE 2-8 (Continued)
(b)
Cash
Date
Sept. 1
Sept. 5
Sept. 25
Sept. 30
Explanation
Equipment
Date
Explanation
Sept. 5
Accounts Payable
Date
Explanation
Sept. 5
25
Neve Campbell, Capital
Date
Explanation
Sept. 1
Neve Campbell, Drawing
Date
Explanation
Sept. 30
Ref.
J1
J1
J1
J1
Ref.
J1
Ref.
J1
J1
Ref.
J1
Ref.
J1
2-14
Debit
10,000
Credit
6,000
3,000
500
Debit
12,000
Debit
Credit
No. 157
Balance
12,000
Credit
6,000
No. 201
Balance
6,000
3,000
3,000
Debit
Debit
500
No. 101
Balance
10,000
4,000
1,000
500
Credit
10,000
Credit
No. 301
Balance
10,000
No. 306
Balance
500
EXERCISE 2-9
Error
1.
2.
3.
4.
5.
6.
(a)
In Balance
No
Yes
Yes
No
Yes
No
(b)
Difference
$400
—
—
300
—
36
(c)
Larger Column
Debit
—
—
Credit
—
Credit
EXERCISE 2-10
SPEEDY DELIVERY SERVICE
Trial Balance
July 31, 2005
Debit
Cash ($90,907 – Debit total without Cash
$69,340) ...................................................................
Accounts Receivable .................................................
Prepaid Insurance ......................................................
Delivery Equipment ....................................................
Notes Payable .............................................................
Accounts Payable ......................................................
Salaries Payable .........................................................
I. M. Speedy, Capital...................................................
I. M. Speedy, Drawing ................................................
Service Revenue ........................................................
Salaries Expense ........................................................
Gas and Oil Expense..................................................
Repair Expense ..........................................................
Insurance Expense.....................................................
2-15
Credit
$21,567
10,642
1,968
49,360
$26,450
8,396
815
44,636
700
10,610
4,428
758
961
523
$90,907
$90,907
SOLUTIONS TO PROBLEMS
PROBLEM 2-1A
Date
Mar. 1
3
5
6
10
18
Account Titles and Explanation
Cash
Bill Affleck, Capital
(Owner’s investment of cash
in business)
Land
Buildings
Equipment
Cash
(Purchased Lee’s Golf Land)
Ref.
Debit
60,000
60,000
23,000
9,000
6,000
38,000
Advertising Expense
Cash
(Paid for advertising)
1,600
Prepaid Insurance
Cash
(Paid for one-year insurance
policy)
1,480
Equipment
Accounts Payable
(Purchased equipment on
account)
2,600
Cash
1,600
1,480
2,600
800
Golf Revenue
(Received cash for services
provided)
19
J1
Credit
800
Cash
Unearned Revenue
(Received cash for coupon
books sold)
2-16
1,500
1,500
PROBLEM 2-1A (Continued)
Date
Mar. 1
30
30
31
Accounts Titles and Explanation
Bill Affleck, Drawing
Cash
(Withdrew cash for personal
use)
Salaries Expense
Cash
(Paid salaries)
Ref.
Debit
1,000
Credit
1,000
600
600
Accounts Payable
Cash
(Paid creditor on account)
Cash
2,600
2,600
500
Gold Revenue
(Received cash for services
provided)
2-17
500
PROBLEM 2-2A
(a)
Date
Apr. 1
Account Titles and Explanation
Cash
Judi Dench, Capital
(Owner’s investment of cash
in business)
Ref.
101
301
Debit
25,000
25,000
1
No entry—not a transaction.
2
Rent Expense
Cash
(Paid monthly office rent)
729
101
800
Supplies
Accounts Payable
(Purchased supplies on account from Halo Company)
126
201
1,500
Accounts Receivable
Service Revenue
(Billed clients for services
provided)
112
400
900
Cash
101
205
500
101
400
1,500
726
101
1,500
3
10
11
Unearned Revenue
(Received cash for future
service)
20
Cash
Service Revenue
(Received cash for services
provided)
30
Salaries Expense
Cash
(Paid monthly salary)
2-18
J1
Credit
800
1,500
900
500
1,500
1,500
PROBLEM 2-2A (Continued)
Date
Apr. 30
Accounts Titles and Explanation
Accounts Payable
Cash
(Paid Halo Company on
account)
Ref.
201
101
Debits
600
Credit
600
(b)
Cash
Date
Apr. 1
2
11
20
30
30
Explanation
Accounts Receivable
Date
Explanation
Apr. 10
Supplies
Date
Explanation
Apr. 3
Accounts Payable
Date
Explanation
Apr. 3
30
Unearned Revenue
Date
Explanation
Apr. 11
Ref.
J1
J1
J1
J1
J1
J1
Ref.
J1
Ref.
J1
Ref.
J1
J1
Ref.
J1
2-19
Debit
25,000
Credit
800
500
1,500
1,500
600
Debit
900
Debit
1,500
Debit
Credit
No. 112
Balance
900
Credit
No. 126
Balance
1,500
Credit
1,500
No. 201
Balance
1,500
900
600
Debit
No. 101
Balance
25,000
24,200
24,700
26,200
24,700
24,100
Credit
500
No. 205
Balance
500
PROBLEM 2-2A (Continued)
Judi Dench, Capital
Date
Explanation
Apr. 1
Service Revenue
Date
Explanation
Apr. 10
20
Salaries Expense
Date
Explanation
Apr. 30
Rent Expense
Date
Explanation
Apr. 2
(c)
Ref.
J1
Ref.
J1
J1
Ref.
J1
Ref.
J1
Debit
Debit
Debit
1,500
Debit
800
Credit
25,000
No. 301
Balance
25,000
Credit
900
1,500
No. 400
Balance
900
2,400
Credit
No. 726
Balance
1,500
Credit
No. 729
Balance
800
JUDI DENCH, ARCHITECT
Trial Balance
April 30, 2005
Cash ....................................................................
Accounts Receivable .........................................
Supplies ..............................................................
Accounts Payable ..............................................
Unearned Revenue ............................................
Judi Dench, Capital............................................
Service Revenue ................................................
Salaries Expense ...............................................
Rent Expense .....................................................
2-20
Debit
$24,100
900
1,500
Credit
$
900
500
25,000
2,400
1,500
800
$28,800
_______
$28,800
PROBLEM 2-3A
(a)
Trans.
1.
Account Titles and Explanation
Cash
Dennis Chambers, Capital
Debit
120,000
120,000
2.
No entry.
3.
Prepaid Rent
Rent Expense
Cash
33,000
3,000
Furniture & Equipment
Cash
Accounts Payable
70,000
4.
5.
6.
7.
8.
9.
10.
36,000
20,000
50,000
Prepaid Insurance
Insurance Expense
Cash
2,750
250
Office Supplies
Cash
1,000
Office Supplies
Accounts Payable
3,000
3,000
1,000
3,000
Cash
Accounts Receivable
Brokerage Revenue
10,000
20,000
30,000
Accounts Payable
Cash
800
800
Cash
5,000
Accounts Receivable
11.
Credit
Utility Expense
Accounts Payable
5,000
400
400
2-21
PROBLEM 2-3A (Continued)
Trans.
12.
Account Titles and Explanation
Salaries Expense
Cash
Debit
4,000
Credit
4,000
(b)
(1)
(8)
(10)
(8)
(6)
(7)
(5)
(3)
Cash
120,000
(3)
(4)
(5)
(6)
10,000
(9)
5,000
(12)
70,200
(4)
36,000
20,000
3,000
1,000
800
(9)
4,000
Accounts Receivable
20,000
(10)
5,000
15,000
Furniture & Equipment
70,000
70,000
Accounts Payable
(4)
50,000
(7)
3,000
800
(11)
400
52,600
Dennis Chambers, Capital
(1)
120,000
120,000
Brokerage Revenue
(8)
30,000
30,000
Office Supplies
1,000
3,000
4,000
Prepaid Insurance
2,750
2,750
Prepaid Rent
33,000
33,000
2-22
(12)
Salaries Expense
4,000
4,000
(3)
Rent Expense
3,000
3,000
PROBLEM 2-3A (Continued)
(11)
(c)
Utility Expense
400
400
(5)
Insurance Expense
250
250
CHAMBERS BROKERAGE SERVICES
Trial Balance
May 31, 2005
Cash.................................................................
Accounts Receivable ......................................
Office Supplies ...............................................
Prepaid Insurance...........................................
Prepaid Rent ...................................................
Furniture & Equipment ...................................
Accounts Payable ...........................................
Dennis Chambers, Capital .............................
Brokerage Revenue ........................................
Salaries Expense ............................................
Rent Expense ..................................................
Utility Expense ................................................
Insurance Expense .........................................
2-23
Debit
$ 70,200
15,000
4,000
2,750
33,000
70,000
Credit
$ 52,600
120,000
30,000
4,000
3,000
400
250
$202,600
________
$202,600
PROBLEM 2-3A (Continued)
(d)
CHAMBERS BROKERAGE SERVICES
Income Statement
For the Month Ended May 31, 2005
Revenues
Brokerage Revenue.......................................
Expenses
Salaries expense ...........................................
Rent expense .................................................
Utility expense ...............................................
Insurance expense ........................................
Total expenses .......................................
Net income ............................................................
$30,000
$4,000
3,000
400
250
7,650
$22,350
CHAMBERS BROKERAGE SERVICES
Statement of Owner’s Equity
For the Month Ended May 31, 2005
Capital, May 1, 2005 ...............................................................
Add: Net income ..................................................................
Capital, May 31, 2005 .............................................................
$120,000
22,350
$142,350
ALTERNATIVE PRESENTATION:
Beginning Capital ..................................................................
Add: Investment ...................................................................
Add: Net income ..................................................................
Ending Capital ........................................................................
2-24
$
0
120,000
22,350
$142,350
PROBLEM 2-3A (Continued)
CHAMBERS BROKERAGE SERVICES
Balance Sheet
May 31, 2005
Assets
Cash........................................................................................
Accounts receivable ..............................................................
Office supplies .......................................................................
Prepaid insurance..................................................................
Prepaid rent............................................................................
Furniture & equipment ..........................................................
Total assets ....................................................................
$ 70,200
15,000
4,000
2,750
33,000
70,000
$194,950
Liabilities and Owner’s Equity
Liabilities
Accounts payable ..........................................................
Owner’s equity
Dennis Chambers, Capital .............................................
Total liabilities and owner’s equity .......................
2-25
$ 52,600
142,350
$194,950
PROBLEM 2-4A
RON SALEM CO.
Trial Balance
June 30, 2005
Cash ($3,840 + $180) .................................................
Accounts Receivable ($3,231 – $180) ......................
Supplies ($800 – $340) ..............................................
Equipment ($3,000 + $340) ........................................
Accounts Payable ($2,666 – $309 – $390) ................
Unearned Revenue ....................................................
R. Salem, Capital .......................................................
R. Salem, Drawing ($800 + $500) ..............................
Service Revenue ($2,380 + $801) ..............................
Salaries Expense ($3,400 + $367 – $500) .................
Office Expense ..........................................................
2-26
Debit
$ 4,020
3,051
460
3,340
Credit
$ 1,967
2,200
9,000
1,300
3,181
3,267
910
$16,348
_______
$16,348
PROBLEM 2-5A
(a) & (c)
Cash
Date
Mar. 1
2
9
10
12
20
20
31
31
31
Explanation
Balance
Accounts Receivable
Date
Explanation
Mar. 31
Land
Date
Mar. 1
Explanation
Balance
Buildings
Date
Explanation
Mar. 1
Balance
Equipment
Date
Explanation
Mar. 1
Balance
Ref.

J1
J1
J1
J1
J1
J1
J1
J1
J1
Ref.
J1
Ref.

Ref.

Ref.

2-27
400
12,000
No. 101
Balance
16,000
13,000
19,500
10,500
9,700
16,900
13,900
9,100
9,500
21,500
Debit
400
Credit
No. 112
Balance
400
Credit
No. 140
Balance
42,000
Credit
No. 145
Balance
18,000
Credit
No. 157
Balance
16,000
Debit
Credit
3,000
6,500
9,000
800
7,200
3,000
4,800
Debit
Debit
Debit
PROBLEM 2-5A (Continued)
Accounts Payable
Date
Explanation
Mar. 1
Balance
2
10
A. Russo, Capital
Date
Explanation
Mar. 1
Balance
Admission Revenue
Date
Explanation
Mar. 9
20
31
Concession Revenue
Date
Explanation
Mar. 31
Advertising Expense
Date
Explanation
Mar. 12
Film Rental Expense
Date
Explanation
Mar. 2
20
Ref.

J1
J1
Ref.

Ref.
J1
J1
J1
Ref.
J1
Ref.
J1
Ref.
J1
J1
2-28
Debit
Credit
6,000
9,000
Debit
Debit
Debit
Debit
800
Debit
9,000
3,000
Credit
No. 201
Balance
12,000
18,000
9,000
No. 301
Balance
80,000
Credit
6,500
7,200
12,000
No. 405
Balance
6,500
13,700
25,700
Credit
800
No. 406
Balance
800
Credit
Credit
No. 610
Balance
800
No. 632
Balance
9,000
12,000
PROBLEM 2-5A (Continued)
Salaries Expense
Date
Explanation
Mar. 31
Ref.
J1
Debit
4,800
Credit
No. 726
Balance
4,800
(b)
Date
Mar. 2
Account Titles and Explanation
Film Rental Expense
Accounts Payable
Cash
(Rented films for cash and
on account)
3
No entry.
9
Cash
Admission Revenue
(Received cash for services
provided)
10
Accounts Payable ($6,000 + $3,000)
Cash
(Paid creditors on account)
Ref.
632
201
101
Debit
9,000
101
405
6,500
201
101
9,000
6,000
3,000
6,500
9,000
11
No entry.
12
Advertising Expense
Cash
(Paid advertising expense)
610
101
800
Cash
101
405
7,200
632
101
3,000
20
Admission Revenue
(Received cash for services
provided)
20
Film Rental Expense
Cash
(Paid film rental)
2-29
J1
Credit
800
7,200
3,000
PROBLEM 2-5A (Continued)
Date
Account Titles and Explanation
Mar. 31 Salaries Expense
Cash
(Paid salaries expense)
Ref.
726
101
Debit
4,800
31 Cash
Accounts Receivable
Concession Revenue
(10% X $8,000)
(Received cash and balance
on account for concession
revenue)
101
112
406
400
400
31 Cash
101
405
12,000
Admission Revenue
(Received cash for services
provided)
(d)
Credit
4,800
800
12,000
RUSSO THEATER
Trial Balance
March 31, 2005
Cash.................................................................
Accounts Receivable......................................
Land ..................................................................
Buildings ..........................................................
Equipment ........................................................
Accounts Payable ............................................
A. Russo, Capital .............................................
Admission Revenue ........................................
Concession Revenue ......................................
Advertising Expense .......................................
Film Rental Expense .......................................
Salaries Expense ............................................
2-30
Debit
$ 21,500
400
42,000
18,000
16,000
Credit
$
800
12,000
4,800
$115,500
9,000
80,000
25,700
800
_______
$115,500
PROBLEM 2-1B
Date
Apr. 1
4
Account Titles and Explanation
Cash
C. J. Amaro, Capital
(Owner’s investment of cash
in business)
Land
Ref.
Debit
50,000
50,000
30,000
Cash
(Purchased land for cash)
8
11
1,800
Salaries Expense
Cash
(Paid salaries)
1,500
No entry.
13
Prepaid Insurance
Cash
(Paid for one-year
insurance policy)
20
30,000
Advertising Expense
Accounts Payable
(Incurred advertising
expense on account)
12
17
J1
Credit
1,800
1,500
1,500
1,500
C. J. Amaro, Drawing
Cash
(Withdrew cash for personal
use)
Cash
600
600
5,700
Admission Revenue
(Received cash for services
provided)
2-31
5,700
PROBLEM 2-1B (Continued)
Date
Apr. 25
30
Account Titles and Explanation
Cash
Unearned Admission Revenue
(Received cash for future
services)
Cash
Ref.
Debit
2,500
2,500
8,900
Admission Revenue
(Received cash for services
provided)
30
Credit
Accounts Payable
Cash
(Paid creditor on account)
2-32
8,900
900
900
PROBLEM 2-2B
(a)
Date
May 1
Account Titles and Explanation
Cash
Kara Shin, Capital
(Owner’s investment of cash
in business)
Ref.
101
301
Debit
20,000
20,000
2
No entry—not a transaction.
3
Supplies
Accounts Payable
(Purchased supplies on
account)
126
201
1,500
Rent Expense
Cash
(Paid office rent)
729
101
900
Accounts Receivable
Service Revenue
(Billed client for services
provided)
112
400
2,100
Cash
101
205
3,500
101
400
1,200
726
101
1,000
7
11
12
Unearned Revenue
(Received cash for future
services)
17
Cash
Service Revenue
(Received cash for services
provided)
31
Salaries Expense
Cash
(Paid salaries)
2-33
J1
Credit
1,500
900
2,100
3,500
1,200
1,000
PROBLEM 2-2B (Continued)
Date
May 31
Account Titles and Explanation
Accounts Payable ($1,500 X 40%)
Cash
(Paid creditor on account)
Ref.
201
101
Debit
600
Credit
600
(b)
Cash
Date
May 1
7
12
17
31
31
Explanation
Accounts Receivable
Date
Explanation
May 11
Supplies
Date
Explanation
May 3
Accounts Payable
Date
Explanation
May 3
31
Unearned Revenue
Date
Explanation
May 12
Ref.
J1
J1
J1
J1
J1
J1
Ref.
J1
Ref.
J1
Ref.
J1
J1
Ref.
J1
2-34
Debit
20,000
Credit
900
3,500
1,200
1,000
600
Debit
2,100
Debit
1,500
Debit
Credit
No. 112
Balance
2,100
Credit
No. 126
Balance
1,500
Credit
1,500
600
Debit
No. 101
Balance
20,000
19,100
22,600
23,800
22,800
22,200
No. 201
Balance
900
Credit
3,500
No. 205
Balance
3,500
PROBLEM 2-2B (Continued)
Kara Shin, Capital
Date
Explanation
May 1
Service Revenue
Date
Explanation
May 11
17
Salaries Expense
Date
Explanation
May 31
Rent Expense
Date
Explanation
May 7
(c)
Ref.
J1
Ref.
J1
J1
Ref.
J1
Ref.
J1
Debit
Debit
Debit
1,000
Debit
900
Credit
20,000
No. 301
Balance
20,000
Credit
2,100
1,200
No. 400
Balance
2,100
3,300
Credit
No. 726
Balance
1,000
Credit
No. 729
Balance
900
KARA SHIN, CPA
Trial Balance
May 31, 2005
Debit
Cash..................................................................... $22,200
Accounts Receivable ..........................................
2,100
Supplies ..............................................................
1,500
Accounts Payable ...............................................
Unearned Revenue .............................................
Kara Shin, Capital ...............................................
Service Revenue .................................................
Salaries Expense ................................................
1,000
Rent Expense ......................................................
900
$27,700
2-35
Credit
$
900
3,500
20,000
3,300
$27,700
PROBLEM 2-3B
(a) As indicated in item (9), $4,000 was paid for four months in advance on
December 1. One month has passed, so 1/4 X $4,000 = $1,000 of rent has
expired and become an expense. Three months are still to come, so 3/4 X
$4,000 = $3,000 remains in the prepaid rent account as an asset.
(b) & (d)
Cash
Mark Hockenberry, Capital
Balance 41,000
Balance 8,000
(1)
(3)
(4)
13,000
(7)
5,000
1,000
2,000
(5)
15,000
(8)
(10)
3,000
2,000
Mark Hockenberry, Drawings
(10)
2,000
Repair Services Revenue
(7)
14,000
Accounts Receivable
Balance15,000
(4)
13,000
(7)
9,000
Parts Inventory
Balance13,000
(2)
4,000
(6)
Prepaid Rent
Balance 3,000
(9)
4,000
1,000
Shop Equipment
Balance21,000
(5)
Accounts Payable
Balance
(2)
15,000
(1)
Advertising Expense
1,000
(3)
Miscellaneous Expense
2,000
(6)
Repair Parts Expense
4,000
(9)
Rent Expense
1,000
(8)
Wage Expense
3,000
19,000
4,000
2-36
PROBLEM 2-3B (Continued)
(c)
Trans.
1.
2.
3.
4.
Account Titles and Explanation
Advertising Expense
Cash
Debit
1,000
Parts Inventory
Accounts Payable
4,000
Miscellaneous Expense
Cash
2,000
1,000
4,000
2,000
Cash
13,000
Accounts Receivable
5.
6.
7.
8.
9.
10.
Credit
Accounts Payable
Cash
13,000
15,000
15,000
Repair Parts Expense
Parts Inventory
4,000
Cash
Accounts Receivable
Repair Services Revenue
5,000
9,000
Wage Expense
Cash
3,000
Rent Expense
Prepaid Rent
1,000
Mark Hockenberry, Drawings
Cash
2,000
4,000
14,000
3,000
1,000
2-37
2,000
PROBLEM 2-3B (Continued)
(e)
BYTE REPAIR SERVICE
Trial Balance
January 31, 2005
Cash ....................................................................
Accounts Receivable .........................................
Parts Inventory ...................................................
Prepaid Rent.......................................................
Shop Equipment ................................................
Accounts Payable ..............................................
Mark Hockenberry, Capital ................................
Mark Hockenberry, Drawings ............................
Repair Services Revenue ..................................
Advertising Expense .........................................
Miscellaneous Expense .....................................
Repair Parts Expense ........................................
Rent Expense .....................................................
Wage Expense ...................................................
(f)
Cash ..................................................
Accounts Receivable .......................
Parts Inventory .................................
Prepaid Rent.....................................
Shop Equipment ..............................
Total Assets .....................................
(g) Repair Services Revenue ................
Advertising Expense .......................
Miscellaneous Expense ...................
Repair Parts Expense ......................
Rent Expense ...................................
Wage Expense .................................
Net Income .......................................
2-38
$ 3,000
11,000
13,000
2,000
21,000
$50,000
$14,000
(1,000)
(2,000)
(4,000)
(1,000)
(3,000)
$ 3,000
Debit
$ 3,000
11,000
13,000
2,000
21,000
Credit
$ 8,000
41,000
2,000
14,000
1,000
2,000
4,000
1,000
3,000
$63,000
$63,000
PROBLEM 2-4B
GARLAND COMPANY
Trial Balance
May 31, 2005
Cash ($3,850 + $520 – $405) ........................................
Accounts Receivable ($2,570 – $420) .........................
Prepaid Insurance ($700 + $100) .................................
Supplies ($0 + $520) .....................................................
Equipment ($12,000 – $520).........................................
Accounts Payable ($4,500 – $100 + $520 – $420) .......
Property Taxes Payable ...............................................
M. Garland, Capital ($11,700 + $1,000) ........................
M. Garland, Drawing ($0 + $1,000)...............................
Service Revenue ..........................................................
Salaries Expense ($4,200 + $200) ................................
Advertising Expense ($1,100 + $405) ..........................
Property Tax Expense ($800 + $100)...........................
2-39
Debit
$ 3,965
2,150
800
520
11,480
Credit
$ 4,500
560
12,700
1,000
8,960
4,400
1,505
900
$26,720
$26,720
PROBLEM 2-5B
(a) & (c)
Cash
Date
Apr. 1
2
9
10
12
25
29
30
30
Explanation
Balance
Accounts Receivable
Date
Explanation
Apr. 30
Prepaid Rentals
Date
Explanation
Apr. 30
Land
Date
Apr. 1
Explanation
Balance
Buildings
Date
Explanation
Apr. 1
Balance
Ref.

J1
J1
J1
J1
J1
J1
J1
J1
Ref.
J1
Ref.
J1
Ref.

Ref.

2-40
Debit
Credit
800
1,800
3,000
300
5,200
1,600
85
900
Debit
85
Debit
900
Debit
Debit
No. 101
Balance
6,000
5,200
7,000
4,000
3,700
8,900
7,300
7,385
6,485
Credit
No. 112
Balance
85
Credit
No. 136
Balance
900
Credit
No. 140
Balance
10,000
Credit
No. 145
Balance
8,000
PROBLEM 2-5B (Continued)
Equipment
Date
Explanation
Apr. 1
Balance
Accounts Payable
Date
Explanation
Apr. 1
Balance
10
20
Mortgage Payable
Date
Explanation
Apr. 1
Balance
10
Alvin Wasicko, Capital
Date
Explanation
Apr. 1
Balance
Admission Revenue
Date
Explanation
Apr. 9
25
Concession Revenue
Date
Explanation
Apr. 30
Ref.

Ref.

J1
J1
Ref.

J1
Ref.

Ref.
J1
J1
Ref.
J1
2-41
Debit
Debit
Credit
Credit
1,000
1,000
Debit
Credit
2,000
Debit
Debit
Debit
Credit
No. 157
Balance
6,000
No. 201
Balance
2,000
1,000
2,000
No. 275
Balance
8,000
6,000
No. 301
Balance
20,000
Credit
1,800
5,200
No. 405
Balance
1,800
7,000
Credit
170
No. 406
Balance
170
PROBLEM 2-5B (Continued)
Advertising Expense
Date
Explanation
Apr. 12
Film Rental Expense
Date
Explanation
Apr. 2
20
Salaries Expense
Date
Explanation
Apr. 29
Ref.
J1
Ref.
J1
J1
Ref.
J1
Debit
300
Debit
800
1,000
Debit
1,600
Credit
Credit
Credit
No. 610
Balance
300
No. 632
Balance
800
1,800
No. 726
Balance
1,600
(b)
Date
Apr. 2
Account Titles and Explanation
Film Rental Expense
Cash
(Paid film rental)
3
No entry—not a transaction.
9
Cash
Admission Revenue
(Received cash for services
provided)
10
Mortgage Payable
Accounts Payable
Cash
(Made payments on
mortgage and accounts
payable)
2-42
Ref.
632
101
Debit
800
101
405
1,800
275
201
101
2,000
1,000
J1
Credit
800
1,800
3,000
PROBLEM 2-5B (Continued)
Date
Apr. 11
12
20
25
Account Titles and Explanation
No entry—not a transaction.
Ref.
Debit
Advertising Expense
Cash
(Paid advertising expenses)
610
101
300
Film Rental Expense
Accounts Payable
(Rented film on account)
632
201
1,000
Cash
101
405
5,200
Salaries Expense
Cash
(Paid salaries expense)
726
101
1,600
Cash
Accounts Receivable
Concession Revenue
(17% X $1,000)
(Received cash and
balance on account for
concession revenue)
101
112
406
85
85
Prepaid Rentals
Cash
(Paid cash for future film
rentals)
136
101
900
Admission Revenue
(Received cash for services
provided)
29
30
30
2-43
Credit
300
1,000
5,200
1,600
170
900
PROBLEM 2-5B (Continued)
(d)
LAKE THEATER
Trial Balance
April 30, 2005
Cash ....................................................................
Accounts Receivable .........................................
Prepaid Rentals ..................................................
Land ....................................................................
Buildings ............................................................
Equipment ..........................................................
Accounts Payable ..............................................
Mortgage Payable ..............................................
Alvin Wasicko, Capital .......................................
Admission Revenue...........................................
Concession Revenue .........................................
Advertising Expense .........................................
Film Rental Expense ..........................................
Salaries Expense ...............................................
2-44
Debit
$ 6,485
85
900
10,000
8,000
6,000
Credit
$ 2,000
6,000
20,000
7,000
170
300
1,800
1,600
$35,170
$35,170