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2.16: Exercises

  • Page ID
    48923
  • Exercise A A diagram of the various types of accounts follows. Show where pluses (+) or minuses (-) should be inserted to indicate the effect debits and credits have on each account.

    Asset

    Accounts =

    Liability Accounts

    +              Stockholders' Equity Accounts

    Debit

    Credit

    Debit  

      Credit

    Debit

    Credit

     

     

     

     

    Expense and Dividends

    Accounts Account

    Revenue

    Accounts

     

     

     

     

    Debit*    

        Credit

    Debit     

        Credit*

     

     

     

     

     

     

     

     

    Exercise B Prepare the journal entry required for each of the following transactions:

    a. Cash was received for services performed for customers, USD 1,200.

    b. Services were performed for customers on account, USD 4,200.

    Exercise C Prepare the journal entry required for each of the following transactions:

    a. Capital stock was issued for USD 100,000.

    b. Purchased machinery for cash, USD 30,000.

    Exercise D Prepare the journal entry required for each of the following transactions:

    a. Capital stock was issued for USD 200,000 cash.

    b. A USD 30,000 loan was arranged with a bank. The bank increased the company's checking account by USD 30,000 after management of the company signed a written promise to return the USD 30,000 in 30 days.

    c. Cash was received for services performed for customers, USD 700.

    d. Services were performed for customers on account, USD 1,200.

    Exercise E For each of the following unrelated transactions, give the journal entry to record the transaction. Then show how the journal entry would be posted to T-accounts. You need not include explanations or account numbers.

    a. Capital stock was issued for USD 100,000 cash.

    b. Salaries for a period were paid to employees, USD 24,000.

    c. Services were performed for customers on account, USD 40,000.

    Exercise F Explain each of the sets of debits and credits in these accounts for Tuxedos, Inc., a company that rents wedding clothing and accessories. There are 10 transactions to be explained. Each set is designated by the small letters to the left of the amount. For example, the first transaction is the issuance of capital stock for cash and is denoted by the letter (a).

     

    Cash

     

     

    Dividends

     

    (a)

    200,000

    (b)

    150,000

    (e)

    1,000

     

     

    (d)

    1,800

    (e)

    1,000

     

     

     

     

     

     

     

     

     

     

     

    (f)

    600

     

     

     

     

     

     

    (g)

    2,000

     

     

     

     

     

     

    (i)

    30,000

     

     

     

     

     

     

     

     

    Bal.

    '    18,200

     

     

     

     

     

     

     

    Accounts Receivable

     

     

    Service Revenue

     

    (c)

    1,800

    (d)

    1,800

     

     

    (c)

    1,800

    (J)

    12,000

     

     

     

     

     

     

     

     

    (J)

    12,000

    Bal.

    12,000

     

     

     

     

    Bal.

    13,80C

     

    Supplies

    on Hand

     

     

    Rent Expense

     

    (b)

    150,000

     

     

    (f)

    600

     

     

    (i)

    30,000

     

     

     

     

     

     

     

     

     

     

     

     

    Bal.

    180,000

     

     

     

     

     

     

     

    Accounts Payable

     

     

    Delivery

    Expense

     

     

     

    (h)

    800

    (h)

    800

     

     

     

    Capital Stock

     

     

    Salaries Expense

     

     

    (a)

    200,000

    (g)

    2,000

     

    Exercise G Assume the ledger accounts given in the previous problem are those of Tuxedos, Inc., as they appear at 2010 December 31. Prepare the trial balance as of that date.

    Exercise H Prepare journal entries to record each of the following transactions for Sanchez Company. Use the letter of the transaction in place of the date. Include an explanation for each entry.

    a. Capital stock was issued for cash, USD 300,000.

    b. Purchased trucks by signing a note bearing no interest, USD 210,000.

    c. Earned service revenue on account, USD 4,800.

    d. Collected the account receivable resulting from transaction (c), USD 4,800.

    e. Paid the note payable for the trucks purchased, USD 210,000.

    f. Paid utilities for the month in the amount of USD 1,800.

    g. Paid salaries for the month in the amount of USD 7,500.

    h. Incurred supplies expenses on account in the amount of USD 1,920.

    i. Purchased another truck for cash, USD 48,000.

    j. Performed delivery services on account, USD 24,000.

    Exercise I Using the data in the previous problem, post the entries to T-accounts. Write the letter of the transaction in the account before the dollar amount. Determine a balance for each account.

     

    Cash

     

     

    Dividends

     

    (a)

    200,000

    (b)

    150,000

    (e)

    1,000

     

     

    (d)

    1,800

    (e)

    1,000

     

     

     

     

     

     

     

     

     

     

     

    (f)

    600

     

     

     

     

     

     

    (g)

    2,000

     

     

     

     

     

     

    (i)

    30,000

     

     

     

     

     

     

     

     

    Bal.

    '    18,200

     

     

     

     

     

     

     

    Accounts Receivable

     

     

    Service Revenue

     

    (c)

    1,800

    (d)

    1,800

     

     

    (c)

    1,800

    (J)

    12,000

     

     

     

     

     

     

     

     

    (J)

    12,000

    Bal.

    12,000

     

     

     

     

    Bal.

    13,80C

     

    Supplies

    on Hand

     

     

    Rent Expense

     

    (b)

    150,000

     

     

    (f)

    600

     

     

    (i)

    30,000

     

     

     

     

     

     

     

     

     

     

     

     

    Bal.

    180,000

     

     

     

     

     

     

     

    Accounts Payable

     

     

    Delivery

    Expense

     

     

     

    (h)

    800

    (h)

    800

     

     

     

    Capital Stock

     

     

    Salaries Expense

     

     

    (a)

    200,000

    (g)

    2,000

     

    Exercise G Assume the ledger accounts given in the previous problem are those of Tuxedos, Inc., as they appear at 2010 December 31. Prepare the trial balance as of that date.

    Exercise H Prepare journal entries to record each of the following transactions for Sanchez Company. Use the letter of the transaction in place of the date. Include an explanation for each entry.

    a. Capital stock was issued for cash, USD 300,000.

    b. Purchased trucks by signing a note bearing no interest, USD 210,000.

    c. Earned service revenue on account, USD 4,800.

    d. Collected the account receivable resulting from transaction (c), USD 4,800.

    e. Paid the note payable for the trucks purchased, USD 210,000.

    f. Paid utilities for the month in the amount of USD 1,800.

    g. Paid salaries for the month in the amount of USD 7,500.

    h. Incurred supplies expenses on account in the amount of USD 1,920.

    i. Purchased another truck for cash, USD 48,000.

    j. Performed delivery services on account, USD 24,000.

    Exercise I Using the data in the previous problem, post the entries to T-accounts. Write the letter of the transaction in the account before the dollar amount. Determine a balance for each account.