Leader: Ammee
Course: Acct 284
Instructor: Whittle
Date:
Group Activity:
Chapter 2
Supplemental Instruction
Iowa State University
1) A listing of accounts for Cyclone Company is listed below. Complete the table by doing the following:
- Indicate (with an X) the type of account.
- Indicate whether a debit or a credit would be used to increase the balance in the account.
- Indicate whether a debit or credit would be used to decrease the balance in the account.
- Indicate whether the account would normally have a debit or credit balance.
Classification on Balance Sheet
Asset
Liability
Stockholders’
Equity
Used to
Increase
Debit
Credit
Used to
Decrease
Debit
Credit
Normal
Balance
Debit
Credit
Cash
Accounts
Payable
Accounts
Receivable
Automobile
Building
Contributed
Capital
Land
Inventory
Notes
Payable
Office
Supplies
2) You are the manager of Stange Sweets, a candy company here in Ames. You are looking
through some old invoices and notice that the company purchased $80,000 of inventory in
December. You also see that the company sold $45,000 of its inventory. You did a physical
count of inventory on December 31st, and there is $66,000 of inventory still in the warehouse.
How much inventory was on hand at the beginning of December?
(You might find it helpful to use a t-account.)
Supplemental Instruction
1060 Hixson-Lied Student Success Center  294-6624  www.si.iastate.edu
3) On August 1, 2010, your company purchased land to be used for the business for $100,000.
On January 1, 2011, several interested parties have approached the company wanting to buy
the land. One party has offered to pay $110,000, while another has offered $116,000. A
commercial real estate broker has appraised the land, and says it is worth $120,000.
Assuming a sale of the land is still pending, at what price should the company report the land
on its January 31, 2011 balance sheet?
(Make sure you are able to explain your rationale behind this!)
4) The following represent transactions that affected Campanile Creations this week. Prepare
journal entries for the transactions. Don’t worry about writing in the “description.”
January 23 – Campanile Creations sold 1,000 shares of stock to investors for $60 per
share in cash.
January 23 – Campanile Creations purchased $5,000 in equipment by paying $750 in
cash and signing a six-month promissory note for the remaining balance.
January 24 – Campanile Creations paid $6,000 toward a one year promissory note the
company signed back on August 1, 2010.
January 26 – Campanile Creations purchased $16,000 of manufacturing equipment on
account with a preferred supplier.
(If you get stuck, check out the examples on page 57 of the textbook.) Don’t be afraid to ask for help! 
Date
Account
Debit
Credit