Quick Study 2-2
Accounts Receivable
1,000
650
400
920
920 1,500
3,000
Bal. 2,250
Utilities Expense
610
520
390
275
Bal. 1,795
Accounts Payable
250
250
900
1,800
650
1,400
650
2,300 Bal.
Cash
3,900
2,400
17,800
3,900
14,500 21,800
340
Bal. 8,440
Service Revenue
13,000
2,500
810
3,500
19,810 Bal.
Notes Payable
4,000
50,000
8,000
38,000 Bal.
Quick Study 2-3
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
Equipment ...........................................
Debit
Land ...........................................
Debit
Al Tait, Withdrawals ....................
Debit
Rent Expense ...............................
Debit
Interest Revenue ..........................
Credit
Prepaid Rent ......................... Debit
Accounts Receivable ............ Debit
Office Supplies ..................... Debit
Notes Receivable .................. Debit
Notes Payable ....................... Credit
Al Tait, Capital....................... Credit
Rent Earned .......................... Credit
Rent Payable ......................... Credit
Interest Expense ................... Debit
Interest Payable .................... Credit
Problem 2-6B (90 minutes)
Part 1
Date
2014
Nov.
General Journal
Account Titles and Explanations
1
Cash ................................................................ 101
Office Equipment ........................................... 163
Tait Unger, Capital.................................. 301
Owner invested in the business.
Debit
Page 1
Credit
62,000
19,000
81,000
2
4
8
12
13
19
22
24
Prepaid Rent................................................... 131
Cash ........................................................ 101
Prepaid three months’ rent.
21,000
Office Equipment ........................................... 163
Office Supplies ............................................... 124
Accounts Payable .................................. 201
Purchased equipment and supplies on credit.
9,000
1,650
Cash ................................................................ 101
Service Fees Earned .............................. 401
Received cash from client for completed work.
5,200
Accounts Receivable ..................................... 106
Service Fees Earned .............................. 401
Billed client for completed work.
4,800
Accounts Payable .......................................... 201
Cash ........................................................ 101
Paid balance due on accounts payable.
10,650
Prepaid Insurance .......................................... 128
Cash ........................................................ 101
Paid annual premium for insurance.
3,750
Cash ................................................................ 101
Accounts Receivable ............................. 106
Collected part of the amount owed by a client.
2,000
Accounts Receivable ..................................... 106
Service Fees Earned .............................. 401
Billed client for completed work.
3,600
21,000
10,650
5,200
4,800
10,650
3,750
2,000
3,600
Problem 2-6B (continued)
Part 1
Nov.
28
29
30
30
Tait Unger, Withdrawals ................................ 302
Cash ........................................................ 101
Owner withdrew cash for personal use.
5,300
Office Supplies ............................................... 124
Accounts Payable .................................. 201
Purchased supplies on credit.
1,700
Wages Expense.............................................. 680
Cash ........................................................ 101
Paid wages.
19,000
Utilities Expense ............................................ 690
Cash ........................................................ 101
Paid monthly utility bill.
1,650
5,300
1,700
19,000
Note: Assume all entries were journalized on Page 1 of the General Journal.
1,650
Problem 2-6B (continued)
Parts 2 and 3
Date
2014
Nov.
1
2
8
13
19
22
28
30
30
Date
2014
Nov.
12
22
24
Date
2014
Nov.
4
29
Date
2014
Nov.
19
Date
2014
Nov.
2
Cash
Explanation
Accounts Receivable
Explanation
PR
Debit
G1
G1
G1
G1
G1
G1
G1
G1
G1
62,000
PR
G1
G1
G1
Office Supplies
Explanation
PR
G1
G1
Prepaid Insurance
Explanation
PR
G1
Prepaid Rent
Explanation
Acct. No. 101
Credit
Balance
21,000
5,200
10,650
3,750
2,000
5,300
19,000
1,650
Debit
Acct. No. 106
Credit
Balance
4,800
2,000
3,600
Debit
1,650
1,700
Debit
3,750
PR
Debit
G1
21,000
62,000
41,000
46,200
35,550
31,800
33,800
28,500
9,500
7,850
4,800
2,800
6,400
Acct. No. 124
Credit
Balance
1,650
3,350
Acct. No. 128
Credit
Balance
3,750
Acct. No. 131
Credit
Balance
21,000
Problem 2-6B (continued)
Parts 2 and 3
Date
2014
Nov.
1
4
Date
2014
Nov.
4
13
29
Date
2014
Nov.
1
Date
2014
Nov.
28
Date
2014
Nov.
8
12
24
Date
2014
Nov.
30
Date
2014
Nov.
30
Office Equipment
Explanation
Accounts Payable
Explanation
PR
Debit
G1
G1
19,000
9,000
PR
Debit
G1
G1
G1
Tait Unger, Capital
Explanation
PR
PR
G1
Service Fees Earned
Explanation
PR
Utilities Expense
Explanation
1,700
Debit
Debit
G1
19,000
G1
5,300
Acct. No. 401
Credit
Balance
5,200
4,800
3,600
Debit
Debit
1,650
81,000
Acct. No. 302
Credit
Balance
5,300
Debit
10,650
0
1,700
Acct. No. 301
Credit
Balance
81,000
PR
PR
Acct. No. 201
Credit
Balance
10,650
G1
G1
G1
Wages Expense
Explanation
19,000
28,000
10,650
G1
Tait Unger, Withdrawals
Explanation
Acct. No. 163
Credit
Balance
5,200
10,000
13,600
Acct. No. 680
Credit
Balance
19,000
Acct. No. 690
Credit
Balance
1,650
Problem 2-6B (concluded)
Part 4
WiCOM SERVICING
Trial Balance
November 30, 2011
Acct.
No.
101
106
124
128
131
163
201
301
302
401
680
690
Account Title
Cash .....................................................
Accounts receivable............................
Office supplies.....................................
Prepaid insurance ...............................
Prepaid rent .........................................
Office equipment .................................
Accounts payable ................................
Tait Unger, capital ...............................
Tait Unger, withdrawals ......................
Service fees earned .............................
Wages expense ...................................
Utilities expense ..................................
Totals ...................................................
Debit
$ 7,850
6,400
3,350
3,750
21,000
28,000
Credit
$ 1,700
81,000
5,300
13,600
19,000
1,650
$96,300
$96,300
Analysis component:
The November 29 purchase of office supplies is recorded as a debit to an asset account
because they have not yet been used. Assets are economic resources held by the
business. The supplies will remain on the books as an asset until they are used. Once
used, the supplies will become an expense.
Problem 2-7B (25 minutes)
WiCOM SERVICING
Income Statement
For Month Ended November 30, 2014
Revenues:
Service fees earned...........................................
Operating expenses:
Wages expense ..............................................
Utilities expense .............................................
Total operating expenses ...........................
Net loss ..............................................................
$13,600
$19,000
1,650
WiCOM SERVICING
Statement of Changes in Equity
For Month Ended November 30, 2014
Tait Unger, capital, November 1 .......................
Add: Investments by owner .............................
Total .................................................................
Less: Withdrawals by owner ............................
$5,300
Net loss ...................................................
7,050
Tait Unger, capital, November 30 .....................
20,650
$ 7,050
$
0
81,000
81,000
12,350
$68,650
The arrows are
imaginary but
emphasize the link
between
statements.
WiCOM SERVICING
Balance Sheet
November 30, 2014
Assets
Cash ...........................................
Accounts receivable .................
Office supplies ..........................
Prepaid insurance .....................
Prepaid rent ...............................
Office equipment.......................
Total assets .............................
$ 7,850
6,400
3,350
3,750
21,000
28,000
$70,350
Liabilities
Accounts payable……………..
$ 1,700
Equity
Tait Unger, capital ............................ 68,650
Total liabilities and
equity ..............................................$70,350