Chapter 2 Homework

 

1.  Normal Balances of Accounts

Identify each of the following accounts of Kaiser Services Co. as asset, liability, stockholders’ equity, revenue, or expense, and state in each case whether the normal balance is a debit or a credit.

Item	Type of Account	Debit or Credit
a. Accounts Payable
b. Accounts Receivable
c. Cash
d. Common Stock
e. Dividends
f. Fees Earned
g. Office Equipment
h. Rent Expense
i. Supplies
j. Wage Expense

 

2.  Zenith Consulting Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Common Stock; Retained Earnings; Dividends; Fees Earned; Rent Expense; Advertising Expense; Utilities Expense; Miscellaneous Expense.

Transactions
Mar.	1	Paid rent for the month, $4,000.
	3	Paid advertising expense, $1,350.
	5	Paid cash for supplies, $1,800.
	6	Purchased office equipment on account, $11,500.
	10	Received cash from customers on account, $8,600.
	15	Paid creditor on account, $3,180.
	27	Paid cash for miscellaneous expenses, $700.
	30	Paid telephone bill for the month, $550.
	31	Fees earned and billed to customers for the month, $37,200.
	31	Paid electricity bill for the month, $830.
	31	Paid dividends, $2,000.

Journalize the preceding selected transactions for March 2018 in a two-column journal. Refer to the Chart of Accounts for exact wording of account titles.

 

3.  

Print Item

Identifying Transactions

Napa Tours Co. is a travel agency. The nine transactions recorded by Napa Tours during April 2018, its first month of operations, are indicated in the following T accounts:

Cash (1) 50,000  (2) 3,400 (7) 8,700  (3) 5,000     (4) 4,850     (6) 2,500     (9) 1,000		Equipment (3) 15,000		Dividends (9) 1,000
Accounts Receivable (5) 18,200  (7) 8,700		Accounts Payable (6) 2,500  (3) 10,000		Service Revenue     (5) 18,200
Supplies (2) 3,400  (8) 1,100		Common Stock     (1) 50,000		Operating Expenses (4) 4,850      (8) 1,100

 

Indicate for each debit and each credit: whether an asset, liability, stockholders’ equity, dividend, revenue, or expense account was affected and whether the account was increased or decreased.

	Account Debited		Account Credited
Transaction	Type	Effect	Type	Effect
1
2
3
4
5
6
7
8
9

 

4.   The following selected transactions were completed during March of the current year:

March	1	Billed customers for fees earned, $74,140.
	4	Purchased supplies on account, $2,150.
	8	Received cash from customers on account, $63,430.
	11	Paid creditors on account, $890.
	Required:
A.	Journalize these transactions in a two-column journal. Refer to the list of accounts in the T accounts for exact wording of account titles.
B.	Post the entries prepared in (A) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, select the appropriate date.
C.	Assume that the unadjusted trial balance on March 31 shows a credit balance for Accounts Receivable. Does this credit balance mean an error has occurred?

 

5.  Journal Entries

Napa Tours Co. is a travel agency. The nine transactions recorded by Napa Tours during April 2018, its first month of operations, are indicated in the following T accounts:

Cash			Equipment			Dividends
(1) 43,500	(2) 3,050		(3) 31,300			(9) 4,400
(7) 17,400	(3) 5,650
	(4) 4,800
	(6) 13,050
	(9) 4,400

 

Accounts Receivable			Accounts Payable			Service Revenue
(5) 23,500	(7) 17,400		(6) 13,050	(3) 25,650			(5) 23,500

 

Supplies			Common Stock			Operating Expenses
(2) 3,050	(8) 1,750			(1) 43,500		(4) 4,800
						(8) 1,750

Prepare the nine journal entries from which the postings were made. If an amount box does not require an entry, leave it blank.

 

1. ____________                           _________________	_______________                               _______________________
2. ____________                          __________________	________________                               _______________________
3. ____________                         ___________________	________________                               _______________________
4. ____________                           _________________	_______________                               _______________________
5. ____________                           _________________	_______________                               _______________________
6. ____________                           _________________	_______________                               _______________________
7. ____________                          _________________	_______________                               _______________________
8. ____________                           _________________	_______________                               _______________________
9. ____________                           _________________	_______________                               _______________________

 

6.  Napa Tours Co. is a travel agency. The nine transactions recorded by Napa Tours during April 2018, its first month of operations, are indicated in the following T accounts:

Cash
(1)	45,000	(2)	2,500
(7)	7,700	(3)	4,800
		(4)	4,600
		(6)	5,300
		(9)	3,400

 

Accounts Receivable
(5)	12,400	(7)	7,700

 

Supplies
(2)	2,500	(8)	1,400

 

Equipment
(3)	13,900

 

Accounts Payable
(6)	5,300	(3)	9,100

 

Common Stock
		(1)	45,000

 

Dividends
(9)	3,400

 

Service Revenue
		(5)	12,400

 

Operating Expenses
(4)	4,600
(8)	1,400
	Required:
A.	Prepare an unadjusted trial balance.
B.	Based upon the unadjusted trial balance, determine the net income or net loss.

 

 

7. 

The accounts in the ledger of Atlantic Furniture Company as of July 2018, are listed in alphabetical order as follows. All accounts have normal balances. The balance of the cash account has been intentionally omitted.

Accounts Payable	$ 42,880		Notes Payable	$ 41,000
Accounts Receivable	115,430		Prepaid Insurance	20,400
Cash	?		Rent Expense	45,000
Common Stock	15,000		Retained Earnings	51,000
Dividends	22,500		Supplies	4,940
Fees Earned	746,050		Supplies Expense	6,070
Insurance Expense	3,100		Unearned Rent	13,200
Land	41,000		Utilities Expense	26,840
Miscellaneous Expense	9,900		Wages Expense	572,100

Prepare an unadjusted trial balance and insert the missing figure for cash.

 

 

8.

 

The following preliminary unadjusted trial balance of Ranger Co., a sports ticket agency, does not balance:

Ranger Co.

UNADJUSTED TRIAL BALANCE

August 31, 2018

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	78,900.00
2	Accounts Receivable	36,550.00
3	Prepaid insurance		11,700.00
4	Equipment	18,000.00
5	Accounts Payable		29,900.00
6	Unearned Rent		11,000.00
7	Common Stock	40,000.00
8	Retained Earnings	70,000.00
9	Dividends	13,000.00
10	Service Revenue		371,750.00
11	Wages Expense		214,800.00
12	Advertising Expense	16,050.00
13	Miscellaneous Expense		18,450.00
14	Totals	272,500.00	657,600.00

When the ledger and other records are reviewed, you discover the following: (1) the debits and credits in the cash account total $78,900 and $64,400, respectively; (2) a billing of $7,000 to a customer on account was not posted to the accounts receivable account; (3) a payment of $5,000 made to a creditor on account was not posted to the accounts payable account; (4) the balance of the unearned rent account is $5,400; (5) the correct balance of the equipment account is $180,000; and (6) each account has a normal balance.

Prepare a corrected unadjusted trial balance.

 

 

9.  Entries into T Accounts and Trial Balance

Marjorie Knaus, an architect, organized Knaus Architects on January 1, 2018. During the month, Knaus Architects completed the following transactions:

1. Issued common stock to Marjorie Knaus in exchange for $32,300.
2. Paid January rent for office and workroom, $3,200.
3. Purchased used automobile for $21,000, paying $4,800 cash and giving a note payable for the remainder.
4. Purchased office and computer equipment on account, $6,500.
5. Paid cash for supplies, $1,550.
6. Paid cash for annual insurance policies, $2,200.
7. Received cash from client for plans delivered, $8,100.
8. Paid cash for miscellaneous expenses, $880.
9. Paid cash to creditors on account, $1,870.
10. Paid installment due on note payable, $260.
11. Received invoice for blueprint service, due in August, $1,100.
12. Recorded fees earned on plans delivered, payment to be received in August, $5,600.
13. Paid salary of assistants, $1,700.
14. Paid gas, oil, and repairs on automobile for July, $420.

Required:

1.  Record the above transactions (in chronological order) directly in the following T accounts, without journalizing. Cash, Accounts Receivable, Supplies, Prepaid Insurance, Automobiles, Equipment, Notes Payable, Accounts Payable, Common Stock, Professional Fees, Rent Expense, Salary Expense, Blueprint Expense, Automobile Expense, Miscellaneous Expense. To the left of each amount entered in the accounts, select the appropriate letter to identify the transaction.
2.  Determine the balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance.

 

Cash
Bal.
Accounts Receivable
Supplies
Prepaid Insurance
Automobiles
Equipment
Notes Payable
Accounts Payable
Common Stock
Professional Fees
Rent Expense
Salary Expense
Blueprint Expense
Automobile Expense
Miscellaneous Expense

3.  Prepare an unadjusted trial balancefor Knaus Architects as of January 31, 2018. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. For those boxes in which no entry is required, leave the box blank.

 

Knaus Architects Unadjusted Trial Balance January 31, 2018
	Debit Balances	Credit Balances

 

4.  Determine the net income or net loss for January.

 

 

10.  Journal Entries and Trial Balance

On August 1, 2018, Rafael Masey established Planet Realty, which completed the following transactions during the month:

1. Rafael Masey transferred cash from a personal bank accountto an account to be used for the business in exchange for Common Stock, $17,500.
2. Purchased supplies on account, $2,300.
3. Earned sales commissions, receiving cash, $13,300.
4. Paid rent on office and equipment for the month, $3,000.
5. Paid creditor on account, $1,150.
6. Paid dividends, $1,800.
7. Paid automobile expenses (including rental charge) for month, $1,500, and miscellaneous expenses, $400.
8. Paid office salaries, $2,800.
9. Determined that the cost of supplies used was $1,050.

Required:

1.  Journalizeentries for transactions (a) through (i), using the following account titles: Cash, Supplies, Accounts Payable, Common Stock, Dividends, Sales Commissions, Rent Expense, Office Salaries Expense, Automobile Expense, Supplies Expense, Miscellaneous Expense. For a compound transaction, if an amount box does not require an entry, leave it blank.

 

 

 

1. ____________                           _________________	_______________                               _______________________
2. ____________                          __________________	________________                               _______________________
3. ____________                         ___________________	________________                               _______________________
4. ____________                           _________________	_______________                               _______________________
5. ____________                           _________________	_______________                               _______________________
6. ____________                           _________________	_______________                               _______________________
7. ____________                          _________________	_______________                               _______________________
8. ____________                           _________________	_______________                               _______________________
9. ____________                           _________________	_______________                               _______________________

 

2.  Prepare T accounts, using the account titles in (1). Post (in chronological order) the journal entries to these accounts, selecting the appropriate letter to the left of each amount to identify the transactions. Determine the account balances, after all postingis complete. Accounts containing only a single entry do not need a balance.

3.  Prepare an unadjusted trial balanceas of August 31, 2018. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. For those boxes in which no entry is required, leave the box blank.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 2 Homework