Chapter 2 Homework Answer

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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
       
       
  1.  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. ____________

                          _________________

_______________

                              _______________________

 

  1.  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.
  1.  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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Chapter 2 Homework

This question is taken from Accounting 001 – Introduction ot Accounting 1 » Winter 2022 » Homeworks