Horngren'S Accounting - Tenth Edition: Chapter 2: Recording Business Transactions Page 1 of 111

HORNGREN'S ACCOUNTING - Tenth Edition
1.
2.
3.
4.
Identify the three categories of the accounting equation and list at least four
accounts associated with each category.
What is the purpose of the chart of accounts? Explain the numbering typically
associated with the accounts.
What does a ledger show? Whats the difference between a ledger and the chart
of accounts?
Accounting uses a double-entry system. Explain what this sentence means.
Chapter 2: Recording Business Transactions Page 1 of 111
5.
6.
7.
8.
9. What are source documents? Provide examples of source documents that a
business might use.
When are credits increases? When are credits decreases?
Identify which types of accounts have a normal debit balance and which types
of accounts have a normal credit balance.
What is a T-account? On which side is the debit? On which side is the credit?
Where does the account name go on a T-account?
When are debits increases? When are debits decreases?
10.
11.
12.
Where are transactions initially recorded?
Explain the five steps in journalizing and posting transactions.
What are the four parts of a journal entry?
13.
14.
15.
16.
What is involved in the posting process?
What is the purpose of the trial balance?
What is the difference between the trial balance and the balance sheet?
If total debits equal total credits on the trial balance, is the trial balance error-free?
Explain your answer.
17. What is the calculation for the debt ratio? Explain what the debt ratio evaluates.
S2-1
Identify each account as an asset (A), liability (L), or equity (E).
Solution:
a.
b.
c.
d.
e.
f.
g.
h.
i
j.
S2-2
Solution:
a.
b.
c.
d.
e.
f.
g.
h.
i
j.
For each account, identify whether the changes would be recorded as a debit (DR)
or credit (CR).
S2-3
For each account, identify whether the normal balance is a debit (DR) or credit (CR).
Solution:
a.
b.
c.
d.
e.
f.
g.
h.
i
j.
S2-4
Solution:
Date Debit Credit
Journalize the transactions of Ned Brown, M.D. Include an explanation with
each entry.
Accounts and Explanation
S2-5
Solution:
Date Debit Credit
Journalize the transactions of Texas Sales Consultants. Include an
explanation with each journal entry.
S2-6
Calculate the Accounts Payable balance.
Solution:
Accounts Payable
S2-7
Requirements
1.
2.
Solution:
Requirement 1
Debit Credit
Requirement 2
Office Supllies
Cash Accounts Payable
Journalize the transactions of Kenneth Dolkart Optical Dispensary. Include
an explanation with each journal entry.
Open the following accounts (use T-account format): Cash (Beginning
Balance of $14,000), Office Supplies, and Accounts Payable. Post the
journal entries from Requirement 1 to the accounts and compute the
balance in each account.
Accounts and Explanation Date
S2-8
Prepare the trial balance of Oakland Floor Coverings at December 31, 2014.
Solution:
Debit Credit
OAKLAND FLOOR COVERINGS
Trial Balance
December 31, 2014
Account Title Balance
S2-9
What is Professional Carpet Cares debt ratio as of October 31?
Solution:
E2-10
Match the accounting terms with the corresponding definitions.
Solution:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
E2-11
Solution:

Expenses
Equity
Create a chart of accounts for Richard Autobody Shop using the standard system.
Assets
Liabilities
Revenues
E2-12
Requirements
1. Identify each account as asset (A), liability (L), or equity (E).
2. Identify whether the account is increased with a debit (DR) or credit (CR).
3. Identify whether the normal balance is a debit (DR) or credit (CR).
Solution:
Requirement 1 Requirement 2 Requirement 3
Account Name
a. Interest Revenue
b. Accounts Payable
c. Chapman, Capital
d. Office Supplies
e. Advertising Expense
f. Unearned Revenue
g. Prepaid Rent
h. Utilities Expense
i. Chapman, Withdrawals
j. Service Revenue
Normal Balance
with Debit/Credit
Increase with
Debit/Credit
Type of Account
E2-13
Solution:
a.
b.
c.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.

Insert the missing information into the accounting equation. Signify increases as
Incr. and decreases as Decr.
E2-14
For each transaction, identify a possible source document.
Solution:
a.
b.
c.
E2-15
Solution:
a.
b.
c.
d.
e.
f.
g.
As the manager of Mighty Fine Mexican Restaurant, you must deal with a
variety
E2-16
Solution:
Date Debit Credit
Journalize the transactions of London Engineering. Include an

E2-17
Requirements
1. Open the following T-accounts for London Engineering: Cash; Accounts
Receivable; Office Supplies; Equipment; Accounts Payable; Notes Payable;
London, Capital; London, Withdrawals; Service Revenue; Utilities Expense.
2.
3. Compute the July 31 balance for each account.
Solution:
Requirements 1, 2, and 3
Office Supplies London, Capital
Post the journal entries to the T-accounts. Also transfer the dates to the T-accounts.
Accounts Receivable Notes Payable
Service Revenue Utilities Expense
Equipment London, Withdrawals
E2-18
Solution:
Date Debit Credit
Journalize the transactions of Ward Technology Solutions. Include an
E2-19
Requirements
1. Open four-column accounts using the following account numbers: Cash, 110;
Accounts Receivable, 120; Office Supplies, 130; Prepaid Advertising, 140;
Building, 150; Land, 160; Accounts Payable, 210; Unearned Revenue, 220; Ward,
Capital, 310; Service Revenue, 410; Rent Expense, 510; Salaries Expense, 520.
2.
Solution:
Requirement 2
Debit Credit
Post the journal entries to the four-column accounts and determine the
balance in the account after each transaction. Assume that the journal
entries were recorded on page 10 of the journal. Make sure to complete the
Post. Ref. columns in the journal and ledger.
Accounts and Explanation Date
Debit Credit
Requirements 1 and 2
Debit Credit
Post.
Ref. Debit Credit
Balance
Item Date
Account No. 110
Date Accounts and Explanation
CASH
ACCOUNTS RECEIVABLE
Debit Credit
OFFICE SUPPLIES
Debit Credit
PREPAID ADVERTISING
Debit Credit
BUILDING
Debit Credit
LAND
Debit Credit
ACCOUNTS PAYABLE
Debit Credit
Account No. 210
Account No. 160
Credit
Balance
Date
Credit
Balance
Date Item
Post.
Ref. Debit
Post.
Ref. Debit Item
Debit
Account No. 150
Credit
Balance
Date Item
Post.
Ref.
Account No. 140
Credit
Balance
Date Item
Post.
Ref. Debit
Credit
Balance
Date Item
Post.
Ref. Debit
Account No. 130
Item
Account No. 120
Post.
Ref. Debit Credit
Balance
Date
UNEARNED REVENUE
Debit Credit
WARD, CAPITAL
Debit Credit
SERVICE REVENUE
Debit Credit
RENT EXPENSE
Debit Credit
SALARIES EXPENSE
Debit Credit
Account No. 510
Credit
Balance Post.
Ref. Debit Date Item
Balance
Credit Date Item
Account No. 520
Account No. 220
Post.
Ref. Debit
Post.
Ref. Debit
Date
Post.
Ref. Debit
Credit
Balance
Date Item
Item
Account No. 410
Credit
Balance
Account No. 310
Credit
Balance
Date Item
Post.
Ref. Debit
E2-20
Solution:
1.
2.
3.
4.
5.
6.
7.
8.
9.
The first nine transactions of North-West Airplane Repair have been posted to
the T-accounts. Provide an explanation for each of the nine transactions.
E2-21
Solution:
Date Debit Credit
Posting
Ref. Accounts and Explanation
Prepare the journal entries that served as the sources for the five
transactions. Include an explanation for each entry.
E2-22
Prepare Atkins trial balance as of August 31, 2015.
Solution:
Debit Credit
Balance Account Name
ATKINS MOVING COMPANY
Trial Balance
August 31, 2015
E2-23
Prepare McDonald Farm Equipment Repairs trial balance as of May 31, 2015.
Solution:
Debit Credit
MCDONALD FARM EQUIPMENT REPAIR
Trial Balance
May 31, 2015
Account Name Balance
E2-24
Requirements
1. Open the following four-column accounts of Teresa Parker, CPA: Cash, 110;
Accounts Receivable, 120; Office Supplies, 130; Office Furniture, 140; Accounts
Payable, 210; Utilities Payable, 220; Parker, Capital, 310; Parker, Withdrawals,
320; Service Revenue, 410; Salaries Expense, 510; Rent Expense, 520; Utilities
Expense, 530.
2.
3. Prepare the trial balance as of June 30, 2015.
Solution:
Requirement 2
Debit Credit
Journalize the transactions and then post the journal entries to
the four-column accounts. Keep a running balance in each
account. Assume the journal entries are recorded on page 10 of
Posting
Ref. Date Accounts and Explanation
Requirements 1 & 2
Debit Credit
ACCOUNTS RECEIVABLE
Debit Credit
OFFICE SUPPLIES
Debit Credit
OFFICE FURNITURE
Debit Credit
ACCOUNTS PAYABLE
Debit Credit
UTILITIES PAYABLE
Debit Credit
Account No. 220
Post.
Ref.
Balance
Date Item Debit
Credit
Account No. 210
Post.
Ref.
Balance
Date
Credit
Post.
Ref.
Item Debit
Balance
Balance
Item
Account No. 140
Credit
Account No. 130
Post.
Ref.
Date
Balance
Date Item Debit Credit
Credit
Credit
Debit
Post.
Ref. Date Item
Post.
Ref.
Date
Item Debit
CASH
Account No. 120
Debit
Account No. 110
Balance
PARKER, CAPITAL
Debit Credit
SERVICE REVENUE
Debit Credit
SALARIES EXPENSE
Debit Credit
RENT EXPENSE
Debit Credit
UTILITIES EXPENSE
Debit Credit
Balance
Date Item Credit
Account No. 520
Post.
Ref.
Balance
Date Item Credit
Account No. 410
Post.
Ref.
Balance
Date Item Debit
Account No. 510
Account No. 310
Post.
Ref.
Balance
Date Item Debit
Debit
Credit
Post.
Ref.
Item
Account No. 530
Post.
Ref. Debit Credit
Balance
Date
Debit
Credit
Requirement 3
Debit Credit
TERESA PARKER, CPA
Acct. No. Account Name
Trial Balance
June 30, 2015
E2-25
Requirements
1.
2.
Solution:
a.
b.
c.
d.
e.
For each of these errors, state whether total debits equal total credits on the
trial
Identify each account that has an incorrect balance, and the amount and
direction of the error (such as Accounts Receivable $500 too high).
Debits equal Credits,
Yes or No Accounts Amount High or Low
E2-26
Solution:
Debit Credit
November 30, 2015
Account Name
Prepare the corrected trial balance as of November 30, 2015. Assume all amounts
are correct and all accounts have normal balances.
METRO PAINTING SPECIALISTS
Trial Balance
Balance
E2-27
Solution:
Debit Credit
Explanation:
a.
b.
c.
d.
Prepare the corrected trial balance as of May 31, 2015, complete with a heading;
journal entries are not required.
Balance
METRO PAINTING SPECIALISTS
Trial Balance
May 31, 2015
Account Name
E2-28
Calculate the debt ratio for John Hill, M.D.
Solution:
Assets:
Liabilities:
P2-29A
Requirements
1. Journalize each transaction. Explanations are not required.
2.
3. Prepare the trial balance of Vernon Yung, M.D. as of July 31, 2015.
Solution:
Requirement 1
Post the journal entries to the T-accounts, using transaction dates as
posting references in the ledger accounts. Label the balance of each
Posting
Ref. Date Accounts and Explanation Debit Credit
Requirement 2
Accounts Receivable Advertising Payable
Unearned Revenue
Notes Payable
Office Supplies
Yung, Capital
Land Yung, Withdrawals
Requirement 3
Debit Credit
Service Revenue Utilities Expense
Salaries Expense Rent Expense
VERNON YUNG, MD
Trial Balance
July 31, 2015
P2-30A
Requirements
1. Record each transaction in the journal using the following account titles: Cash;
Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Land;
Accounts Payable; Utilities Payable; Unearned Revenue; Stewart, Capital;
Stewart, Withdrawals; Service Revenue; Salaries Expense; Rent Expense;
Utilities Expense. Explanations are not required.
2.
3.
4. Prepare the trial balance of Doris Stewart, Designer, as of September 30, 2015.
Solution:
Requirement 1
Date Accounts and Explanation Debit
Open a T-account for each of the accounts.
Post the journal entries to the T-accounts, using transaction dates as posting
references in the ledger accounts. Label the balance of each account Bal.
Posting
Ref. Credit
Posting
Ref. Debit Credit Date Accounts and Explanation
Utilities Payable
Accounts Receivable Unearned Revenue
Office Supplies Capital
Prepaid Insurance Stewart, Withdrawals
Land Service Revenue
Furniture Utilities Expense
Requirement 4
Debit Credit
DORIS STEWART, DESIGNER
Trial Balance
September 30, 2015.
P2-31A
Requirements
1. Record each transaction in the journal, using the following account titles: Cash;
Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Building;
Land; Accounts Payable; Utilities Payable; Notes Payable; Moore, Capital;
Moore, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; and
Utilities Expense. Explanations are not required.
2. Open the following four-column accounts including account numbers:
Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid
Insurance, 131; Furniture, 141; Building, 151; Land, 161; Accounts
Payable, 201; Utilities Payable, 211; Notes Payable, 221; Moore, Capital, 301;
Moore, Withdrawals, 311; Service Revenue, 411; Salaries Expense, 511;
Rent Expense, 521; and Utilities Expense, 531.
3.
4. Prepare the trial balance of Trevor Moore, Attorney, at January 31, 2015.
Solution:
Requirement 1 and 3
Date Accounts and Explanation
Post the journal entries to four-column accounts in the ledger using dates,
account numbers, journal references, and posting references. Assume the journal
entries were recorded on page 1 of the journal.
Posting
Ref. Credit Debit
Debit Credit
Posting
CASH Account No. 101
Debit Credit
ACCOUNTS RECEIVABLE
Debit Credit
OFFICE SUPPLIES
Debit Credit
PREPAID INSURANCE
Debit Credit
FURNITURE
Debit Credit
Post.
Ref. Debit Credit
Balance
Date Item
Account No. 131
Account No. 141
Date Item
Balance
Date Item Debit
Post.
Ref.
Account No. 121
Debit Credit
Balance Post.
Ref.
Credit
Account No. 111
Post.
Ref. Debit Credit
Balance
Date Item
Post.
Ref. Debit Credit
Balance
Date Item
BUILDING
Debit Credit
LAND
Debit Credit
ACCOUNTS PAYABLE
Debit Credit
UTILITIES PAYABLE
Debit Credit
NOTES PAYABLE
Debit Credit
MOORE, CAPITAL
Debit Credit
MOORE, WITHDRAWALS
Debit Credit
Balance
Date Item
Post.
Ref. Debit
Account No. 311
Credit
Balance
Date Item
Post.
Ref.
Credit
Debit
Item
Account No. 301
Post.
Ref. Debit Credit
Balance
Date Item
Account No. 221
Account No. 211
Post.
Ref. Debit Credit
Balance
Date
Account No. 161
Post.
Ref. Debit
Account No. 201
Post.
Ref. Debit Credit
Balance
Date Item
Credit
Balance
Account No. 151
Post.
Ref. Debit Credit
Balance
Date
Date Item
Item
SERVICE REVENUE
Debit Credit
SALARIES EXPENSE
Debit Credit
RENT EXPENSE
Debit Credit
UTILITIES EXPENSE
Debit Credit
Balance
Date Item
Item
Debit Credit
Post.
Ref.
Credit
Balance
Date
Item
Account No. 531
Account No. 521
Post.
Ref. Debit
Account No. 511
Post.
Ref. Debit Credit
Balance
Date
Balance Post.
Ref. Debit
Account No. 411
Credit Date Item
Requirement 4
Debit Credit
TREVOR MOORE, ATTORNEY
Trial Balance
January 31, 2015
P2-32A
Requirements
1. Record the February transactions in the journal.
2.
3.
4. Prepare the trial balance of Sam Mitchell, CPA, at February 28, 2015.
Solution:
Requirement 1
Open the four-column ledger accounts listed in the trial balance, together with
their balances as of January 31.
Post the journal entries to four-column accounts in the ledger using dates, account
numbers, journal references, and posting references. Assume the journal
Posting
Ref. Credit Date Accounts and Explanation Debit
Credit Date Accounts and Explanation
Posting
Ref. Debit
CASH Account No. 11
Debit Credit
ACCOUNTS RECEIVABLE
Debit Credit
OFFICE SUPPLIES
Debit Credit
FURNITURE
Debit Credit
AUTOMOBILE
Debit Credit
Account No. 15
Post.
Ref. Debit Credit
Balance
Date Item
Date Item
Post.
Ref.
Item
Debit Credit
Balance
Account No. 14
Account No. 13
Post.
Ref.
Account No. 12
Post.
Ref. Debit Credit Item
Debit
Balance
Credit Date
Balance
Date
Balance
Date Item
Post.
Ref. Debit Credit
LAND
Debit Credit
ACCOUNTS PAYABLE
Debit Credit
UNEARNED REVENUE
Debit Credit
MITCHELL, CAPITAL
Debit Credit
MITCHELL, WITHDRAWALS
Debit Credit
SERVICE REVENUE
Debit Credit Debit Credit
Balance
Date Item
Account No. 41
Post.
Ref.
Balance
Date Item
Item
Post.
Ref.
Account No. 32
Post.
Ref. Debit Credit
Balance
Date Item
Account No. 31
Account No. 22
Post.
Ref. Debit
Debit Credit
Credit
Balance
Date
Account No. 21
Post.
Ref. Debit Credit
Balance
Account No. 16
Post.
Ref. Debit Credit
Balance
Date Item
Date Item
SALARIES EXPENSE
Debit Credit
RENT EXPENSE
Debit Credit
Post.
Ref. Debit Credit
Account No. 52
Balance
Date Item
Post.
Ref. Debit Credit
Account No. 51
Balance
Date Item
Requirement 4
Debit Credit
SAM MITCHELL, CPA
Trial Balance
February 28, 2015
P2-33A
Solution:
Debit Credit
Prepare the corrected trial balance as of August 31, 2015. Journal entries are
not required.
Account Title
August 31, 2015
Balance
SMART TOTS CHILD CARE
Trial Balance
P2-34A
Solution:
Debit Credit
Prepare the corrected trial balance at February 28, 2015. Journal entries are not
required.
Account Title
February 28, 2015
Balance
TREASURE HUNT EXPLORATION COMPANY
Trial Balance
P2-35A
Requirements
1. Prepare the income statement for the month ended July 31, 2015.
2.
3. Prepare the balance sheet as of July 31, 2015.
4. Calculate the debt ratio as of July 31, 2015.
Solution:
Requirement 1
Prepare the statement of owners equity for the month ended July 31, 2015.
The beginning balance of capital was $0 and the owner contributed $23,150
during the month.
SHARON SILVER, REGISTERED DIETICIAN
Income Statement
Month Ended July 31, 2015
Requirement 2
Requirements 3
Requirements 4
Owner's Equity
Balance Sheet
July 31, 2015
Assets Liabilities
Statement of Owner's Equity
P2-36B
Requirements
1. Journalize each transaction. Explanations are not required.
2.
3. Prepare the trial balance of Vince Rockford, M.D. as of March 31, 2015.
Solution:
Requirement 1
Debit Credit
references
Posting
Requirement 2
Accounts Receivable Advertising Payable
Office Supplies
Rockford, Capital Notes Payable
Land Rockford, Withdrawals
Unearned Revenue
Advertising Expense
Utilities Expense
Service Revenue
Requirement 3
Debit Credit
Balance
VINCE ROCKFORD, MD
Trial Balance
March 31, 2015
Account Title
P2-37B
Requirements
1. Record each transaction in the journal using the following account titles: Cash;
Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Land;
Accounts Payable; Utilities Payable; Unearned Revenue; Nelson, Capital;
Nelson, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; Utilities
Expense. Explanations are not required.
2.
3.
4. Prepare the trial balance of Beth Nelson, Designer, as of November 30, 2015.
Solution:
Requirement 1
Open a T-account for each of the accounts.
references in the ledger accounts. Label the balance of each account Bal.
Debit Credit
Posting
Posting
Ref. Debit Credit Date Accounts and Explanation
Prepaid Insurance Nelson, Withdrawals
Accounts Receivable Unearned Revenue
Utilities Payable
Office Supplies Nelson, Capital
Salaries Expense
Utilities Expense
Rent Expense
Furniture
Land Service Revenue
Requirement 4
Debit Credit
November 30, 2015
Trial Balance
BETH NELSON, DESIGNER
P2-38B
Requirements
1. Record each transaction in the journal, using the following account titles: Cash;
Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Building;
Land; Accounts Payable; Utilities Payable; Notes Payable; Perez, Capital; Perez,
Withdrawals; Service Revenue; Salaries Expense; Rent Expense; and Utilities
Expense. Explanations are not required.
2. Open the following four-column accounts including account numbers:
Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid
Insurance, 131; Furniture, 141; Building, 151; Land, 161; Accounts
Payable, 201; Utilities Payable, 211; Notes Payable, 221; Perez, Capital, 301;
Perez, Withdrawals, 311; Service Revenue, 411; Salaries Expense, 511;
Rent Expense, 521; and Utilities Expense, 531.
3.
4. Prepare the trial balance of Vince Perez, Attorney, at April 30, 2015.
Solution:
Requirement 1 and 3
Post the journal entries to four-column accounts in the ledger using dates,
account numbers, journal references, and posting references. Assume the journal
Debit Credit
Posting
Posting
Ref. Debit Credit Date
CASH Account No. 101
Debit Credit
ACCOUNTS RECEIVABLE
Debit Credit
OFFICE SUPPLIES
Debit Credit
PREPAID INSURANCE
Debit Credit
FURNITURE
Debit Credit
Debit
Balance
Date Item Credit Debit
Post.
Ref.
Post.
Ref. Date Item Debit Credit
Balance
Post.
Ref. Credit
Balance
Account No. 141
Item Credit
Balance
Debit
Post.
Ref.
Account No. 121
Date
Post.
Ref. Date Item
Account No. 111
Date Item
Balance
Account No. 131
Debit Credit
BUILDING
Debit Credit
LAND
Debit Credit
ACCOUNTS PAYABLE
Debit Credit
UTILITIES PAYABLE
Debit Credit
NOTES PAYABLE
Debit Credit
PEREZ, CAPITAL
Debit Credit
PEREZ, WITHDRAWALS
Debit Credit
Account No. 311
Post.
Ref. Debit Credit
Balance
Date Item
Balance
Date Item
Account No. 301
Post.
Ref. Debit Credit
Post.
Ref. Debit
Account No. 221
Post.
Ref. Debit Credit
Balance
Date Item
Date Item
Account No. 201
Post.
Ref. Debit Credit
Date Item
Balance
Account No. 211
Credit
Balance
Balance
Debit Credit Date
Account No. 151
Account No. 161
Item
Credit
Balance
Date Item
Post.
Ref. Debit
Post.
Ref.
SERVICE REVENUE
Debit Credit
SALARIES EXPENSE
Debit Credit
RENT EXPENSE
Debit Credit
UTILITIES EXPENSE
Debit Credit Date
Item
Account No. 531
Balance
Date Item
Item
Post.
Ref. Debit Credit
Balance
Balance
Date
Credit
Account No. 521
Debit Credit
Post.
Ref.
Account No. 511
Post.
Ref. Debit Credit
Post.
Ref. Debit
Balance
Date Item
Account No. 411
Requirement 4
Debit Credit
April 30, 2015
Trial Balance
VINCE PEREZ, ATTORNEY
P2-39B
Requirements
1. Record the April transactions in the journal.
2.
3.
4. Prepare the trial balance of John Hilton, CPA, at April 30, 2015.
Solution:
Requirement 1
Posting
Post the journal entries to four-column accounts in the ledger, using dates, account
numbers, journal references, and posting references. Assume the journal
Debit Credit
Open the four-column ledger accounts listed in the trial balance, together with
their balances as of March 31.
Credit Date Accounts and Explanation
Posting
Ref. Debit
CASH Account No. 11
Debit Credit
ACCOUNTS RECEIVABLE
Debit Credit
OFFICE SUPPLIES
Debit Credit
FURNITURE
Debit Credit
Account No. 12
Item Credit
Debit
Balance
Credit
Balance
Account No. 13
Post.
Ref.
Post.
Ref. Debit
Balance
Credit
Balance
Account No. 14
Date Item
Post.
Ref. Debit Item
Date
Date Item Credit Debit
Post.
Ref.
Date
AUTOMOBILE
Debit Credit
LAND
Debit Credit
ACCOUNTS PAYABLE
Debit Credit
UNEARNED REVENUE
Debit Credit
HILTON, CAPITAL
Debit Credit
HILTON, WITHDRAWALS
Debit Credit
Credit
Post.
Ref. Item Debit Date
Date Item
Account No. 15
Account No. 16
Credit
Balance Post.
Ref. Debit
Balance
Credit
Balance
Credit
Balance
Date Item
Post.
Ref. Debit
Balance
Account No. 31
Account No. 21
Date
Post.
Ref. Debit Credit
Debit Credit
Balance
Item
Date Item
Account No. 22
Post.
Ref. Debit
Account No. 32
Post.
Ref. Date Item
SERVICE REVENUE
Debit Credit
SALARIES EXPENSE
Debit Credit
RENT EXPENSE
Debit Credit
Account No. 41
Credit
Balance
Date Item
Post.
Ref. Debit
Account No. 51
Credit
Balance
Date Item
Post.
Ref. Debit
Item
Account No. 52
Post.
Ref. Debit Credit
Balance
Date
Requirement 4
Debit Credit
JOHN HILTON, CPA
Trial Balance
April 30, 2015
P2-40B
Solution:
Debit Credit
Prepare the corrected trial balance as of May 31, 2015. Journal entries
are not required.
BUILDING BLOCKS CHILD CARE
Trial Balance
May 31, 2015
P2-41B
Solution:
Debit Credit
Account Name Balance
Prepare the corrected trial balance at July 31, 2015. Journal entries
are not required.
OCEAN DIVERS EXPLORATION COMPANY
Trial Balance
July 31, 2015
P2-42B
Requirements
1. Prepare the income statement for the month ended July 31, 2015.
2.
3. Prepare the balance sheet as of July 31, 2015.
4. Calculate the debt ratio as of July 31, 2015.
Solution:
Requirement 1
Prepare the statement of owners equity for the month ended July 31, 2015.
The beginning balance of capital was $0 and the owner contributed $21,700
during the month.
SHERMANA PETERS, REGISTERED DIETICIAN
Income Statement
Requirement 2
Requirements 3
Requirements 4
Assets Liabilities
Balance Sheet
July 31, 2015
Owner's Equity
P2-43
Requirements
1. Journalize the transactions.
2. Open a T-account for each of the accounts.
3.
4. Prepare a trial balance as of December 31, 2014.
5.
6.
7. Prepare the balance sheet as of December 31, 2014.
8. Calculate the debt ratio for Davis Consulting.
Post the journal entries to the T-accounts and calculate account balances.
Formal posting references are not required.
Prepare the income statement for Davis Consulting for the month ended
December 31, 2014.
Prepare the statement of owners equity for the month ended December 31,
2014.
Solution:
Requirement 1
Date Accounts and Explanation Debit Credit
Posting
Ref.
Furniture
Davis, Withdrawals
Service Revenue
Equipment
Cash
Office Supplies
Accounts Payable
Unearned Revenue
Davis, Capital
Accounts Receivable
Requirement 4
Account Title
Debit Credit
DAVIS CONSULTING
Trial Balance
December 31, 2014
Balance
Utilities Expense Rent Expense
Requirement 5
Requirement 6
Month Ended December 31, 2014
Income Statement
DAVIS CONSULTING
DAVIS CONSULTING
Requirement 7
Requirement 8
Owner's Equity
Assets Liabilities
Balance Sheet
DAVIS CONSULTING
P2-44
Requirements
1. Journalize the transactions.
2. Open a T-account for each account.
3.
4. Prepare a trial balance as of November 30, 2015.
Solution:
Requirement 1
Post the journal entries to the T-accounts and calculate account balances.
Formal posting references are not required.
Posting
Ref. Date Accounts and Explanation Debit Credit
Unearned Revenue Accounts Receivable
Accounts Payable Cash
Posting
Ref. Debit Credit Date
Salaries Expense Truck
Prepaid Rent
Service Revenue
Hudson, Withdrawals
Equipment
Prepaid Insurance
Hudson, Capital
Cleaning Supplies Notes Payable
Requirement 4
Account Title
Debit Credit
Balance
SHINE KING CLEANING
Advertising Expense Utilities Expense
Trial Balance
November 30, 2015
Decision Case 2-1
Requirements
1. Open the following T-accounts: Cash; Accounts Receivable; Office Supplies;
Accounts Payable; McChesney, Capital; Service Revenue; Salaries Expense; Rent
Expense; and Advertising Expense.
2.
3. Prepare a trial balance at June 30, 2016.
4.
Solution:
McChesney, Capital Accounts Receivable
Office Supplies Service Revenue
Post the transactions directly to the accounts without using a journal. Record
each transaction by letter. Calculate account balances.
Compute the amount of net income or net loss for this first month of operations.
Would you recommend that McChesney continue in business?
Requirement 3
A-PLUS TRAVEL PLANNERS
June 30, 2016
Trial Balance
Advertising Expense
Requirement 4
Decision Case 2-2
Requirements
1.
2.
Solution:
Requirement 1
Requirement 2
Explain the advantages of double-entry bookkeeping instead of recording
transactions in terms of the accounting equation to a friend who is opening a used
When you deposit money in your bank account, the bank credits your account.
Is the bank misusing the word credit in this context? Why does the bank use the
term credit to refer to your deposit, instead of debit?
Ethical Issue 2-1
Solution:
What is the ethical issue in this situation, if any? State why you approve or
disapprove of Hensons management of Better Days Aheads funds.
Fraud Case 2-1
Requirements
1.
2. Who gained and who lost as a result of these actions?
Solution:
Requirement 1
Requirement 2
How did the change in the journal entries affect the net income of the
company at year-end?
Financial Statement Case 2-1
Requirement
1. Calculate the debt ratio for Starbucks Corporation as of October 2, 2011.
2.
Solution:
Requirement 1
Requirement 2
How did the debt ratio for Starbucks Corporation compare to the debt ratio for Green
Mountain Coffee Roasters, Inc.? Discuss.
Team Project 2-1
Requirements
1. Obtain a copy of the business chart of accounts.
2. Prepare the companys financial statements for the most recent month, quarter,
or year.
Solution:
Communication Activity 2-1
Solution:
In 35 words or fewer, explain the difference between a debit and a credit, and
explain what the normal balance of the six account types is.

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