CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
DISCUSSION QUESTIONS
Suggested Responses
34
1.
A trial balance is a list of all the account balances. It is used to prove that the total of all of
the debit balances equals the total of all of the credit balances. A balance sheet shows only
the balances of the asset, liability, and owner’s Capital accounts.
2.
Debit means “increase” for asset accounts, the owner’s Drawing account, and expense
accounts; however, debit means “decrease” for liability accounts, the owner’s Capital
account, and revenue accounts. Credit means “decrease” for asset accounts, the owner’s
Drawing account, and expense accounts; however, credit means “increase” for liability
accounts, the owner’s Capital account, and revenue accounts. Debit refers to the left side of
a T account, and credit to the right side.
3.
Footings are the totals of each side of a T account, often written as small, pencil-written
figures.
4.
The net income or net loss from the income statement flows to the statement of owner’s
equity, which produces the ending Capital balance. The ending Capital from the statement
of owner’s equity flows to the balance sheet Owner’s Equity section.
5.
A compound entry is a transaction that involves more than one debit and/or more than one
credit.
6.
The trial balance might not balance because one-half of a transaction was omitted or because
the transaction debits do not equal its credits. The trial balance will not reveal that transactions
were omitted or repeated or that an incorrect amount was used for a transaction.
7.
Slide: $890 for $89. Transposition: $327 for $723. You can determine whether there has
been a slide or a transposition by dividing the difference between the two balances by 9. If
the difference is evenly divisible, the error is due to either a slide or a transposition.
8.
Revenue and expense accounts are under the umbrella of owner’s equity because if a
business earns revenue, there is an increase in owner’s equity, and if a business incurs
expenses, there is a decrease in owner’s equity.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Exercise 2-1
Assets
Liabilities
–
+
=
+
–
Debit
Credit
Debit
Accounts
Payable
–
+
Cash
+
–
Debit
Credit
Debit
Accounts
Receivable
+
–
Debit
Credit
Credit
+
Owner's
Equity
–
+
Debit
Credit
D. Barlow,
Capital
–
+
Debit
Credit
+
Revenue
–
+
Debit
Credit
Income
from
Repairs
–
+
Debit
Credit
D. Barlow,
Drawing
+
–
Credit
Debit
Expenses
+
–
Debit
Credit
Wages
Expense
+
–
Debit
Credit
Rent
Expense
+
–
Credit
Debit
Equipment
+
–
Debit
–
Credit
Supplies
Expense
+
–
Credit
Debit
Credit
Utilities
Expense
+
–
Debit
Credit
Miscellaneous
Expense
+
–
Debit
Credit
Exercise 2-2
ACCOUNT
CLASSIFICATION
INCREASE
SIDE
DECREASE
SIDE
NORMAL
BALANCE
SIDE
0.
Cash
A
Debit
Credit
Debit
1.
Wages Expense
E
Debit
Credit
Debit
2.
Equipment
A
Debit
Credit
Debit
3.
L. Cross, Capital
OE
Credit
Debit
Credit
4.
Service Revenue
R
Credit
Debit
Credit
5.
L. Cross, Drawing
OE
Debit
Credit
Debit
6.
Accounts Receivable
A
Debit
Credit
Debit
7.
Rent Expense
E
Debit
Credit
Debit
8.
Fees Earned
R
Credit
Debit
Credit
9.
Accounts Payable
L
Credit
Debit
Credit
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
35
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Exercise 2-3
a.
Utilities
Expense
+
–
Debit
Credit
Cash
+
–
Debit
Credit
Debit
175
1,375
175
b.
Supplies
Expense
+
–
Debit
Credit
Accounts
Payable
–
+
Debit
135
c.
Prepaid
Insurance
+
–
Debit
Credit
Accounts
Payable
–
+
Debit
Credit
Utilities
Expense
+
–
Debit
186
36
Credit
Credit
135
130
Credit
+
–
+
–
Debit
Credit
Debit
Credit
580
1,458
Cash
i.
–
Debit
Credit
Debit
65
700
Credit
Cash
+
–
Debit
Credit
Accounts
Receivable
+
–
Debit
Credit
1,458
R. Dalberg,
Drawing
+
–
+
Debit
130
Cash
h.
Income from
Tours
–
+
1,375
Gas
Expense
+
–
Debit
65
e.
g.
Credit
Cash
580
d.
f.
Accounts
Receivable
+
–
Credit
Cash
+
–
Debit
Credit
700
Cash
+
–
Debit
Credit
186
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Exercise 2-4
a.
The owner invested $3,200 cash in the business.
b.
Paid the rent for the current month, $525.
c.
Received and paid the advertising bill, $98.
d.
Bought supplies on account, $280.
e.
Received and paid the bill for a miscellaneous expense, $75.
f.
The owner invested personal equipment with a fair market value of $3,510 in
the business.
g.
Bought equipment for $2,050, paying $1,050 in cash and placing the balance
on account.
h.
Sold services on account, $615.
i.
Received and paid the utility bill, $92.
j.
The owner withdrew $345 in cash for personal use.
k.
Sold services for cash, $1,125.
Exercise 2-5
Business Services
Trial Balance
December 31, 20-ACCOUNT NAME
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accounts Payable
T. Morris, Capital
T. Morris, Drawing
Income from Services
Wages Expense
Rent Expense
Supplies Expense
Utilities Expense
DEBIT
CREDIT
3,200
7,700
1,300
26,000
8,700
24,800
1,900
33,000
17,500
3,700
1,800
3,400
66,500
66,500
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
37
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Exercise 2-6
(a)
(c)
(i)
Cash
8,200 (b)
8,400 (d)
7,580 (f)
(g)
(h)
24,180
Bal. 16,455
Accounts Payable
(k)
2,800
(j)
82
350
1,600
175
3,400
2,200
Bal.
(g)
Salary Expense
3,400
(d)
Rent Expense
1,600
(j)
Supplies Expense
82
(f)
Utilities Expense
175
2,882
7,725
Accounts Receivable
(e)
2,600
(b)
Office Furniture
350
(k)
Office Equipment
2,800
R. Landish, Capital
(a)
8,200
(h)
R. Landish, Drawing
2,200
Modeling Fees
(c)
8,400
(e)
2,600
(i)
7,580
Bal.
18,580
Landish Modeling Agency
Trial Balance
March 31, 20-ACCOUNT NAME
Cash
Accounts Receivable
Office Furniture
Office Equipment
Accounts Payable
R. Landish, Capital
R. Landish, Drawing
Modeling Fees
Salary Expense
Rent Expense
Supplies Expense
Utilities Expense
38
DEBIT
CREDIT
16,455
2,600
350
2,800
2,882
8,200
2,200
18,580
3,400
1,600
82
175
29,662
29,662
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Exercise 2-6 (concluded)
Landish Modeling Agency
Income Statement
For Month Ended March 31, 20-Revenue:
Modeling Fees
Expenses:
Salary Expense
Rent Expense
Supplies Expense
Utilities Expense
Total Expenses
Net Income
$18,580
$3,400
1,600
82
175
5,257
$13,323
Landish Modeling Agency
Statement of Owner's Equity
For Month Ended March 31, 20-R. Landish, Capital, March 1, 20-Investment during March
Net Income for March
Subtotal
Less Withdrawals for March
Increase in Capital
R. Landish, Capital, March 31, 20--
$
0
$ 8,200
13,323
$21,523
2,200
19,323
$19,323
Landish Modeling Agency
Balance Sheet
March 31, 20-Assets
Cash
Accounts Receivable
Office Furniture
Office Equipment
Total Assets
$16,455
2,600
350
2,800
$22,205
Liabilities
Accounts Payable
$ 2,882
Owner's Equity
R. Landish, Capital
Total Liabilities and Owner's Equity
19,323
$22,205
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
39
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Exercise 2-7
DESCRIPTION
AMOUNT OF
DIFFERENCE
DEBIT OR CREDIT COLUMN
OF TRIAL BALANCE
UNDERSTATED OR OVERSTATED
0.
Example: A $149 debit to Accounts
Receivable was not recorded.
a.
A $42 debit to Supplies Expense
was recorded as $420.
378
Debit column overstated
b.
A $155 debit to Accounts Receivable
was recorded twice.
155
Debit column overstated
c.
A $179 debit to Prepaid Insurance
was not recorded.
179
Debit column understated
d.
A $65 credit to Cash was not
recorded.
65
Credit column understated
e.
A $190 debit to Equipment was
recorded twice.
190
Debit column overstated
f.
A $57 debit to Utilities Expense
was recorded as $75.
18
Debit column overstated
$149
Debit column understated
Exercise 2-8
a.
Equal totals in the trial balance because $38 was debited to Office Equipment and
$38 was credited to Cash. Since the correct amount is $380, Office Equipment is
understated by $342 and Cash is overstated by $342.
b.
Equal totals in the trial balance because $280 was debited to Accounts Receivable
and $280 was credited to Cash. Since the $280 should have been debited to
Accounts Payable, not Accounts Receivable, the error caused Accounts Receivable
to be overstated by $280 and Accounts Payable to be overstated by $280.
c.
Equal totals in the trial balance because $245 was debited to Equipment and $245
was credited to Cash. Since the $245 should have been debited to Supplies Expense,
not Equipment, the error caused Equipment to be overstated by $245 and Supplies
Expense to be understated by $245.
d.
Unequal totals in the trial balance because $76 was debited correctly to Accounts
Payable but the credit to Cash was transposed as $67. The error caused Cash to
be overstated by $9.
40
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
–
Credit
(e)
(d)
–
Credit
790
–
Credit
+
Debit
185
–
Credit
Office Equipment
+
Debit
Store Equipment
+
Debit
(b)
8,150
(f)
1,200
Bal.
9,350
Exercise Equipment
=
(g)
–
Debit
200
+
Credit
(c)
105
(d)
790
(e)
185
1,080
Bal.
880
Accounts Payable
+
Credit
Liabilities
–
Debit
+
+
Credit
–
Debit
+
Credit
(a)
35,000
(f)
1,200
Bal. 36,200
G. Elden, Capital
–
Debit
Owner's Equity
+
+
Credit
Revenue
–
Debit
+
Credit
(h)
800
Income from Services
–
Debit
–
(c)
–
Credit
Expenses
+
Debit
105
41
–
Credit
Supplies Expense
+
Debit
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
–
Credit
(b)
8,150
(g)
200
8,350
Cash
Assets
+
Debit
(a)
35,000
(h)
800
35,800
Bal. 27,450
+
Debit
Problem 2-1A
CHAPTER 2
Credit
Debit
42
600
–
Credit
–
Credit
–
Credit
Neon Sign
790
2,700
3,490
+
Debit
Office Equipment
+
Debit
(j)
Credit
Debit
–
Debit
285
+
Credit
(d)
1,000
(e)
1,350
(g)
365
(o)
115
2,830
Bal.
2,545
Accounts Payable
+
Liabilities
–
+
(n)
Credit
+
Credit
(a)
45,000
(f)
600
Bal. 45,600
+
Debit
850
–
Credit
B. Kelso, Drawing
–
Debit
B. Kelso, Capital
Debit
+
Owner's Equity
–
+
Revenue
Credit
+
–
Debit
+
Credit
(h)
1,245
(k)
1,450
Bal.
2,695
Income from Services
Debit
–
–
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
–
Credit
(b)
1,800
(c)
790
(d)
1,700
(i)
345
(j)
285
(l)
925
(m)
75
(n)
850
6,770
Computer Software
40,925
+
Debit
(e)
1,350
(c)
(d)
Bal.
(f)
Bal.
+
Debit
(a)
45,000
(h)
1,245
(k)
1,450
47,695
Cash
–
Assets
+
=
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-2A
CHAPTER 2
925
(m)
(i)
(g)
(o)
–
Credit
115
–
Credit
365
–
Credit
345
–
Credit
+
Debit
75
–
Credit
Miscellaneous
Expense
+
Debit
Utilities Expense
+
Debit
Advertising Expense
+
Debit
Supplies Expense
–
Credit
Rent Expense
+
Debit
+
Debit
(b)
1,800
(l)
–
Credit
Expenses
Wages Expense
Debit
+
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-2A (concluded)
Computer Wizards
Trial Balance
November 30, 20-ACCOUNT NAME
Cash
Computer Software
Office Equipment
Neon Sign
Accounts Payable
B. Kelso, Capital
B. Kelso, Drawing
Income from Services
Wages Expense
Rent Expense
Supplies Expense
Advertising Expense
Utilities Expense
Miscellaneous Expense
DEBIT
CREDIT
40,925
600
3,490
1,350
2,545
45,600
850
2,695
925
1,800
115
365
345
75
50,840
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
50,840
43
44
–
Credit
–
Credit
Office Furniture
595
375
970
+
Debit
(b)
1,330
(c)
(d)
Bal.
+
Debit
Office Equipment
=
(j)
Liabilities
+
Credit
–
Debit
300
+
Credit
(b)
1,330
(c)
395
(d)
375
2,100
Bal.
1,800
Accounts Payable
–
Debit
+
(m)
+
Credit
(a)
40,000
+
Debit
800
–
Credit
R. Morgis, Drawing
–
Debit
R. Morgis, Capital
+
Credit
Owner's Equity
–
Debit
+
Revenue
+
Credit
–
Debit
+
Credit
(f)
1,484
(i)
2,575
Bal.
4,059
Professional Fees
–
Debit
–
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
–
Credit
(n)
885
Accounts Receivable
39,545
+
Debit
(f)
1,484
Bal.
599
Bal.
–
Credit
(c)
200
(e)
155
(g)
190
(h)
450
(j)
300
(k)
940
(l)
880
(m)
800
3,915
Cash
Assets
+
Debit
(a)
40,000
(i)
2,575
(n)
885
43,460
+
Debit
–
Credit
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-3A
CHAPTER 2
880
–
Credit
940
–
Credit
+
Debit
155
190
345
–
Credit
Utilities Expense
+
Debit
Rent Expense
+
Debit
(h)
+
Debit
450
–
Credit
Miscellaneous Expense
(e)
(g)
Bal.
(k)
(l)
–
Credit
Expenses
Salary Expense
+
Debit
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-3A (continued)
Morgis Clinic
Trial Balance
June 30, 20-ACCOUNT NAME
DEBIT
Cash
Accounts Receivable
Office Equipment
Office Furniture
Accounts Payable
R. Morgis, Capital
R. Morgis, Drawing
Professional Fees
Salary Expense
Rent Expense
Utilities Expense
Miscellaneous Expense
CREDIT
39,545
599
970
1,330
1,800
40,000
800
4,059
880
940
345
450
45,859
45,859
Morgis Clinic
Income Statement
For Month Ended June 30, 20-Revenue:
Professional Fees
Expenses:
Salary Expense
Rent Expense
Utilities Expense
Miscellaneous Expense
Total Expenses
Net Income
$ 4,059
$880
940
345
450
2,615
$ 1,444
Morgis Clinic
Statement of Owner's Equity
For Month Ended June 30, 20-R. Morgis, Capital, June 1, 20-Investments during June
Net Income for June
Subtotal
Less Withdrawals for June
Increase in Capital
R. Morgis, Capital, June 30, 20--
$
0
$40,000
1,444
$41,444
800
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
40,644
$40,644
45
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-3A (concluded)
Morgis Clinic
Balance Sheet
June 30, 20-Assets
Cash
Accounts Receivable
Office Equipment
Office Furniture
Total Assets
$39,545
599
970
1,330
$42,444
Liabilities
Accounts Payable
$ 1,800
Owner's Equity
R. Morgis, Capital
Total Liabilities and Owner's Equity
40,644
$42,444
46
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-4A
Cash
+
–
Debit
Credit
(a)
35,000 (b)
1,870
(f)
1,925 (d)
875
(j)
1,835 (e)
3,600
38,760 (g)
1,560
(h)
1,800
(i)
285
(k)
940
(l)
800
(m)
225
(n)
280
12,235
Bal.
26,525
Accounts Payable
–
+
Debit
Credit
(h)
1,800 (c)
225
(m)
225 (e)
8,900
2,025
9,125
Bal.
7,100
Wages Expense
B. Bangle, Capital
–
+
Debit
Credit
(a)
35,000
+
–
Debit
(g)
1,560
Credit
+
–
Debit
Credit
(k)
940
Rent Expense
B. Bangle, Drawing
+
–
Debit
Prepaid Insurance
Laundry Revenue
–
+
Debit
Credit
(f)
1,925
(j)
1,835
Bal.
3,760
(l)
Credit
+
–
Debit
Credit
(d)
875
800
Supplies Expense
+
–
Debit
(c)
Credit
225
Equipment
+
–
Debit
(e)
12,500
Credit
Utilities Expense
+
–
Debit
(i)
Furniture
and Fixtures
+
(b)
Debit
1,870
Credit
285
Miscellaneous
Expense
–
Credit
(n)
+
–
Debit
Credit
280
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
47
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-4A (continued)
Self-Wash Laundry
Trial Balance
May 31, 20-ACCOUNT NAME
DEBIT
Cash
Prepaid Insurance
Equipment
Furniture and Fixtures
Accounts Payable
B. Bangle, Capital
B. Bangle, Drawing
Laundry Revenue
Wages Expense
Rent Expense
Supplies Expense
Utilities Expense
Miscellaneous Expense
CREDIT
26,525
1,560
12,500
1,870
7,100
35,000
800
3,760
940
875
225
285
280
45,860
45,860
Self-Wash Laundry
Income Statement
For Month Ended May 31, 20-Revenue:
Laundry Revenue
Expenses:
Wages Expense
Rent Expense
Supplies Expense
Utilities Expense
Miscellaneous Expense
Total Expenses
Net Income
48
$3,760
$940
875
225
285
280
2,605
$1,155
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-4A (concluded)
Self-Wash Laundry
Statement of Owner's Equity
For Month Ended May 31, 20-B. Bangle, Capital, May 1, 20-Investments during May
Plus Net Income for May
Subtotal
Withdrawals for May
Increase in Capital
B. Bangle, Capital, May 31, 20--
$
0
$35,000
1,155
$36,155
800
35,355
$35,355
Self-Wash Laundry
Balance Sheet
May 31, 20-Assets
Cash
Prepaid Insurance
Equipment
Furniture and Fixtures
Total Assets
$26,525
1,560
12,500
1,870
$42,455
Liabilities
Accounts Payable
$ 7,100
Owner's Equity
B. Bangle, Capital
Total Liabilities and Owner's Equity
35,355
$42,455
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
49
50
(e)
(d)
750
–
Credit
+
Debit
625
–
Credit
Office Equipment
+
Debit
Store Equipment
–
Credit
Shop Equipment
25,250
22,750
+
Debit
(b)
1,525
(g)
800
Bal.
2,325
Bal.
=
(f)
–
Debit
750
+
Credit
(c)
325
(d)
750
(e)
400
1,475
Bal.
725
Accounts Payable
+
Credit
Liabilities
–
Debit
+
+
Credit
–
Debit
+
Credit
(a)
25,000
(g)
800
Bal. 25,800
R. Willard, Capital
–
Debit
Owner's Equity
+
+
Credit
Revenue
–
Debit
+
Credit
(h)
250
Income from Services
–
Debit
–
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
–
Credit
(b)
1,525
(e)
225
(f)
750
2,500
Cash
Assets
+
Debit
(a)
25,000
(h)
250
+
Debit
–
Credit
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-1B
CHAPTER 2
(c)
–
Credit
Expenses
+
Debit
325
–
Credit
Supplies Expense
+
Debit
640
–
Credit
+
Debit
(f)
1,335
–
Credit
Neon Sign
–
Credit
Office Equipment
+
Debit
Computer Software
29,034
+
Debit
(b)
1,850
(m)
1,000
Bal.
2,850
(c)
Bal.
–
Credit
=
(j)
Liabilities
+
Credit
–
Debit
245
+
Credit
(c)
290
(f)
900
(g)
445
(h)
460
2,095
Bal.
1,850
Accounts Payable
–
Debit
+
(n)
+
Credit
(a)
30,000
(m)
1,000
Bal. 31,000
+
Debit
800
–
Credit
J. Carrie, Drawing
–
Debit
J. Carrie, Capital
+
Credit
Owner's Equity
–
Debit
+
Revenue
+
Credit
–
Debit
+
Credit
(e)
1,575
(k)
3,474
Bal.
5,049
Income from Services
–
Debit
–
(o)
(i)
(g)
(h)
(d)
(l)
–
Credit
Expenses
930
–
Credit
950
–
Credit
460
–
Credit
445
–
Credit
380
–
Credit
+
Debit
75
51
–
Credit
Miscellaneous
Expense
+
Debit
Utilities Expense
+
Debit
Advertising Expense
+
Debit
Supplies Expense
+
Debit
Rent Expense
+
Debit
Wages Expense
+
Debit
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
–
Credit
(b)
1,850
(c)
350
(d)
950
(f)
435
(i)
380
(j)
245
(l)
930
(n)
800
(o)
75
6,015
Cash
Assets
+
Debit
(a)
30,000
(e)
1,575
(k)
3,474
35,049
+
Debit
Problem 2-2B
CHAPTER 2
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-2B (concluded)
Carrie Photo Tours
Trial Balance
June 30, 20-ACCOUNT NAME
Cash
Computer Software
Office Equipment
Neon Sign
Accounts Payable
J. Carrie, Capital
J. Carrie, Drawing
Income from Services
Wages Expense
Rent Expense
Supplies Expense
Advertising Expense
Utilities Expense
Miscellaneous Expense
52
DEBIT
CREDIT
29,034
640
2,850
1,335
1,850
31,000
800
5,049
930
950
460
445
380
75
37,899
37,899
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
(c)
(b)
(d)
Bal.
–
Credit
+
Debit
835
–
Credit
Office Furniture
560
650
1,210
+
Debit
Office Equipment
=
(j)
Liabilities
+
Credit
–
Debit
250
+
Credit
(b)
560
(d)
400
960
Bal.
710
Accounts Payable
–
Debit
+
+
Credit
(a)
35,000
+
Debit
(n)
1,200
–
Credit
D. Julia, Drawing
–
Debit
D. Julia, Capital
+
Credit
Owner's Equity
–
Debit
+
Revenue
+
Credit
–
Debit
+
Credit
(f)
2,255
(l)
1,950
Bal.
4,205
Professional Fees
–
Debit
–
960
+
Debit
185
335
520
–
Credit
Utilities Expense
–
Credit
(g)
+
Debit
445
53
–
Credit
Miscellaneous Expense
(e)
(h)
Bal.
–
Credit
Rent Expense
+
Debit
+
Debit
(k)
1,245
(m)
–
Credit
Expenses
Salary Expense
+
Debit
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
–
Credit
(i)
1,940
Accounts Receivable
33,185
+
Debit
(f)
2,255
Bal.
315
Bal.
–
Credit
–
Credit
(c)
835
(d)
250
(e)
185
(g)
445
(h)
335
(j)
250
(k)
1,245
(m)
960
(n)
1,200
5,705
Cash
Assets
+
Debit
(a)
35,000
(i)
1,940
(l)
1,950
38,890
+
Debit
Problem 2-3B
CHAPTER 2
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-3B (continued)
Julia's Clinic
Trial Balance
July 31, 20-ACCOUNT NAME
DEBIT
Cash
Accounts Receivable
Office Equipment
Office Furniture
Accounts Payable
D. Julia, Capital
D. Julia, Drawing
Professional Fees
Salary Expense
Rent Expense
Utilities Expense
Miscellaneous Expense
CREDIT
33,185
315
1,210
835
710
35,000
1,200
4,205
960
1,245
520
445
39,915
39,915
Julia's Clinic
Income Statement
For Month Ended July 31, 20-Revenue:
Professional Fees
Expenses:
Salary Expense
Rent Expense
Utilities Expense
Miscellaneous Expense
Total Expenses
Net Income
$4,205
$ 960
1,245
520
445
3,170
$1,035
Julia's Clinic
Statement of Owner's Equity
For Month Ended July 31, 20-D. Julia, Capital, July 1, 20-Investments during July
Net Income for July
Subtotal
Less Withdrawals for July
Increase in Capital
D. Julia, Capital, July 31, 20--
54
$
0
$35,000
1,035
$36,035
1,200
34,835
$34,835
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-3B (concluded)
Julia's Clinic
Balance Sheet
July 31, 20-Assets
Cash
Accounts Receivable
Office Equipment
Office Furniture
Total Assets
$33,185
315
1,210
835
$35,545
Liabilities
Accounts Payable
$
Owner's Equity
D. Julia, Capital
Total Liabilities and Owner's Equity
34,835
$35,545
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
710
55
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-4B
Cash
+
–
Debit
Credit
(a)
25,000 (b)
725
(f)
1,742 (c)
1,750
(k)
1,820 (d)
4,000
28,562 (g)
1,375
(h)
700
(i)
438
(j)
315
(l)
75
(m)
1,200
(n)
700
11,278
Bal.
17,284
Accounts Payable
–
+
Debit
Credit
(h)
700 (d)
11,700
(j)
315 (e)
535
1,015
12,235
Bal.
11,220
Wages Expense
K. Resser, Capital
–
+
Debit
Credit
(a)
25,000
+
–
Debit
(g)
1,375
Credit
+
–
Debit
(m)
1,200
Credit
Rent Expense
K. Resser, Drawing
+
–
Debit
Prepaid Insurance
Laundry Revenue
–
+
Credit
Debit
(f)
1,742
(k)
1,820
Bal.
3,562
(n)
Credit
+
–
Debit
(c)
1,750
Credit
700
Supplies Expense
+
–
Debit
(e)
Credit
535
Equipment
+
–
Debit
(d)
15,700
Credit
Utilities Expense
–
+
438
Furniture
and Fixtures
+
Miscellaneous
Expense
–
Debit
(b)
Credit
725
(l)
56
Credit
Debit
(i)
+
–
Debit
Credit
75
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-4B (continued)
Resser's Quick Clean
Trial Balance
July 31, 20-ACCOUNT NAME
DEBIT
Cash
Prepaid Insurance
Equipment
Furniture and Fixtures
Accounts Payable
K. Resser, Capital
K. Resser, Drawing
Laundry Revenue
Wages Expense
Rent Expense
Supplies Expense
Utilities Expense
Miscellaneous Expense
CREDIT
17,284
1,375
15,700
725
11,220
25,000
700
3,562
1,200
1,750
535
438
75
39,782
39,782
Resser's Quick Clean
Income Statement
For Month Ended July 31, 20-Revenue:
Laundry Revenue
Expenses:
Wages Expense
Rent Expense
Supplies Expense
Utilities Expense
Miscellaneous Expense
Total Expenses
Net Loss
$3,562
$1,200
1,750
535
438
75
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
3,998
$ (436)
57
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
Problem 2-4B (concluded)
Resser's Quick Clean
Statement of Owner's Equity
For Month Ended July 31, 20-K. Resser, Capital, July 1, 20-Investment during July
Less Net Loss for July
Subtotal
Less Withdrawals for July
Increase in Capital
K. Resser, Capital, July 31, 20--
$
0
$25,000
436
$24,564
700
23,864
$23,864
Resser's Quick Clean
Balance Sheet
July 31, 20-Assets
Cash
Prepaid Insurance
Equipment
Furniture and Fixtures
Total Assets
$17,284
1,375
15,700
725
$35,084
Liabilities
Accounts Payable
$11,220
Owner's Equity
K. Resser, Capital
Total Liabilities and Owner's Equity
23,864
$35,084
58
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
SOLUTIONS TO ACTIVITIES
CONSIDER AND COMMUNICATE
Suggested Response
First, debits must equal credits in a transaction. Second, it is possible to have more than one debit
or credit on one side of the equation as long as they offset each other or there are debits or credits
on the other side to offset them. In this case, on the left side of the equals sign, there is a $7,000
debit to Equipment (which is a plus) and a $3,000 credit to Cash (which is a minus); on the right
side of the equals sign, there is a $4,000 credit to Accounts Payable (which is a plus). Thus, a
$4,000 net increase to the left side of the equation is offset by a $4,000 increase on the right side
of the equation.
+ 7,000 – 3,000 = + 4,000
WHAT’S WRONG WITH THIS PICTURE?
Suggested Response
The bookkeeper has acted irresponsibly. She should have requested assistance and should never
have removed the materials from the business. To further complicate her situation, she has violated
the privacy of the business’s financial materials by having her uncle attempt to assist her. It is
likely she could be fired for this unethical behavior. She should make a note of the difference and
also her efforts in attempting to find the errors. This information should then be taken to her
supervisor. Financial materials should never be removed from the business and shared with
someone outside of the circle of people who have the right to see them.
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59