Downloadable Solution Manual for Financial Accounting 8th Edition Weygandt ch0214

CHAPTER 2 The Recording Process ASSIGNMENT CLASSIFICATION TABLE Brief Exercises Learning Objectives Questions Do It! ...

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CHAPTER 2 The Recording Process ASSIGNMENT CLASSIFICATION TABLE Brief Exercises

Learning Objectives

Questions

Do It!

1.

Explain what an account is and how it helps in the recording process.

1

2.

Define debits and credits and explain their use in recording business transactions.

2, 3, 4, 5, 6, 7, 8, 9, 14, 21

1, 2, 5

3.

Identify the basic steps in the recording process.

10, 19

4

4.

Explain what a journal is and how it helps in the recording process.

11, 12, 13, 14, 16

3, 6

5.

Explain what a ledger is and how it helps in the recording process.

17

6.

Explain what posting is and how it helps in the recording process.

15, 17

7, 8

3

7.

Prepare a trial balance and explain its purposes.

18, 20

9, 10

4

A Exercises Problems

B Problems

1

1

2, 4, 6, 7, 14

1A, 2A, 3A, 5A

1B, 2B, 3B, 5B

1A, 2A, 3A, 5A

1B, 2B, 3B, 5B

9, 12

2A, 3A, 5A

2B, 3B, 5B

9, 10, 11, 13, 14, 15

2A, 3A, 4A, 5A

2B, 3B, 4B, 5B

6, 7

2

3, 5, 6, 7 10, 11, 12

8

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-1

ASSIGNMENT CHARACTERISTICS TABLE Problem Number

2-2

Description

Difficulty Level

Time Allotted (min.)

1A

Journalize a series of transactions.

Simple

20–30

2A

Journalize transactions, post, and prepare a trial balance.

Simple

30–40

3A

Journalize and post transactions and prepare a trial balance.

Moderate

40–50

4A

Prepare a correct trial balance.

Moderate

30–40

5A

Journalize transactions, post, and prepare a trial balance.

Moderate

40–50

1B

Journalize a series of transactions.

Simple

20–30

2B

Journalize transactions, post, and prepare a trial balance.

Simple

30–40

3B

Journalize transactions, post, and prepare a trial balance.

Moderate

40–50

4B

Prepare a correct trial balance.

Moderate

30–40

5B

Journalize transactions, post, and prepare a trial balance.

Moderate

40–50

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

WEYGANDT FINANCIAL ACCOUNTING 8E CHAPTER 2 THE RECORDING PROCESS Number

LO

BT

Difficulty

Time (min.)

BE1

2

C

Simple

6–8

BE2

2

C

Simple

4–6

BE3

4

AP

Simple

4–6

BE4

3

C

Moderate

4–6

BE5

2

C

Simple

6–8

BE6

4

AP

Simple

4–6

BE7

6

AP

Simple

4–6

BE8

6

AP

Simple

4–6

BE9

7

AP

Simple

4–6

BE10

7

AN

Moderate

6–8

DI1

2

C

Simple

3–5

DI2

4

AP

Simple

3–5

DI3

6

AP

Simple

2–4

DI4

7

AP

Simple

6–8

EX1

1

K

Simple

2–4

EX2

2

C

Simple

10–15

EX3

4

AP

Simple

8–10

EX4

2

C

Simple

6–8

EX5

4

AP

Simple

6–8

EX6

2–4

AP

Simple

6–8

EX7

2–4

AP

Simple

8–10

EX8

5

K

Simple

2–4

EX9

6, 7

AP

Simple

10–12

EX10

4, 7

AP

Moderate

10–12

EX11

4, 7

AP

Moderate

12–15

EX12

4, 6

AP

Moderate

12–15

EX13

7

AN

Moderate

6–8

EX14

2, 7

AP

Simple

8–10

EX15

7

C

Simple

4–6

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-3

THE RECORDING PROCESS (Continued) Number

LO

BT

Difficulty

Time (min.)

P1A

2, 4

AP

Simple

20–30

P2A

2, 4, 6, 7

AP

Simple

30–40

P3A

2, 4, 6, 7

AP

Moderate

40–50

P4A

7

AN

Moderate

30–40

P5A

2, 4, 6, 7

AP

Moderate

40–50

P1B

2, 4

AP

Simple

20–30

P2B

2, 4, 6, 7

AP

Simple

30–40

P3B

2, 4, 6, 7

AP

Moderate

40–50

P4B

7

AN

Moderate

30–40

P5B

2, 4, 6, 7

AP

Moderate

40–50

BYP1

2

C

Simple

8–10

BYP2

2, 6

AN

Simple

8–10

BYP3



AP

Simple

15–20

BYP4

6, 7

AP, S

Moderate

20–30

BYP5

3, 6

S

Simple

10–15

BYP6

7

AN, E

Moderate

10–15

BYP7



E

Moderate

15–20

BYP8



E

Moderate

10–15

2-4

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

Explain what a journal is and how it helps in the recording process.

Explain what a ledger is and how it helps in the recording process.

Explain what posting is and how it helps in the recording process.

Prepare a trial balance and explain its purposes.

4.

5.

6.

7.

Broadening Your Perspective

Identify the basic steps in the recording process.

3.

E2-8

Q2-12

Q2-10

Define debits and credits and Q2–21 explain their use in recording business transactions.

2.

Q2-1 E2-1

Explain what an account is and how it helps in the recording process.

Knowledge

1.

Learning Objective

Q2-7 Q2-8 Q2-9 Q2-14 BE2-1

BE2-9 DI2-4 E2-9 E2-10

BE2-7 BE2-8 DI2-3 E2-9

Q2-16 BE2-3 BE2-6 DI2-2 E2-3 E2-5 E2-6

E2-6 E2-7

BE2-2 E2-6 BE2-5 E2-7 DI2-1 E2-14 E2-2 P2-1A E2-4 P2-2A

P2-5A P2-1B P2-2B P2-3B P2-5B

E2-11 E2-14 P2-2A P2-3A

P2-5A P2-2B P2-3B P2-5B

E2-12 P2-2B P2-2A P2-3B P2-3A P2-5B P2-5A

E2-7 E2-10 E2-11 E2-12 P2-1A P2-2A P2-3A

P2-3A P2-5B P2-5A P2-1B P2-2B P2-3B

Application

Financial Reporting Decision–Making Across the Organization Real–World Focus

Q2-18 E2-15

Q2-15 Q2-17

Q2-17

Q2-11 Q2-13 Q2-14

Q2-19 BE2-4

Q2-2 Q2-3 Q2-4 Q2-5 Q2-6

Comprehension

P2-4B

Synthesis

Evaluation

Comparative Analysis Communication All About You Ethics Case Decision Making Ethics Case Across the Organization

Q2-20 BE2-10 E2-13 P2-4A

Analysis

Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems

BLOOM’S TAXONOMY TABLE

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2-5

ANSWERS TO QUESTIONS 1.

A T account has the following parts: (a) the title, (b) the left or debit side, and (c) the right or credit side.

2.

Disagree. The terms debit and credit mean left and right respectively.

3.

Jason is incorrect. The double-entry system merely records the dual effect of a transaction on the accounting equation. A transaction is not recorded twice; it is recorded once, with a dual effect.

4.

Sandra is incorrect. A debit balance only means that debit amounts exceed credit amounts in an account. Conversely, a credit balance only means that credit amounts are greater than debit amounts in an account. Thus, a debit or credit balance is neither favorable nor unfavorable.

5.

(a) Asset accounts are increased by debits and decreased by credits. (b) Liability accounts are decreased by debits and increased by credits. (c) Revenues, common stock, and retained earnings are increased by credits and decreased by debits. Expenses and dividends are increased by debits and decreased by credits.

6.

(a) (b) (c) (d) (e) (f) (g)

Accounts Receivable—debit balance. Cash—debit balance. Dividends—debit balance. Accounts Payable—credit balance. Service Revenue—credit balance. Salaries and Wages Expense—debit balance. Common Stock—credit balance.

7.

(a) (b) (c) (d) (e)

Accounts Receivable—asset—debit balance. Accounts Payable—liability—credit balance Equipment—asset—debit balance. Dividends—stockholders’ equity—debit balance. Supplies—asset—debit balance.

8.

(a) Debit Supplies and credit Accounts Payable. (b) Debit Cash and credit Notes Payable. (c) Debit Salaries and Wages Expense and credit Cash.

9.

(1) (2) (3) (4) (5) (6)

10.

2-6

Cash—both debit and credit entries. Accounts Receivable—both debit and credit entries. Dividends—debit entries only. Accounts Payable—both debit and credit entries. Salaries and Wages Expense—debit entries only. Service Revenue—credit entries only.

The basic steps in the recording process are: 1. Analyze each transaction for its effect on the accounts. 2. Enter the transaction information in a journal. 3. Transfer the journal information to the appropriate accounts in the ledger.

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

Questions Chapter 2 (Continued) 11.

The advantages of using the journal in the recording process are: (a) It discloses in one place the complete effects of a transaction. (b) It provides a chronological record of all transactions. (c) It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared.

12.

(a) The debit should be entered first. (b) The credit should be indented.

13.

When three or more accounts are required in one journal entry, the entry is referred to as a compound entry. An example of a compound entry is the purchase of equipment, part of which is paid for with cash and the remainder is on account.

14.

(a) No, business transaction debits and credits should not be recorded directly in the ledger. (b) The advantages of using the journal are: 1. It discloses in one place the complete effects of a transaction. 2. It provides a chronological record of all transactions. 3. It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared.

15.

The advantage of the last step in the posting process is to indicate that the item has been posted.

16.

(a) Cash .............................................................................................. Common Stock ..................................................................... (Issued shares of stock for cash)

9,000

(b) Prepaid Insurance ......................................................................... Cash ..................................................................................... (Paid one-year insurance policy)

800

(c)

17.

9,000

800

Supplies......................................................................................... Accounts Payable ................................................................. (Purchased supplies on account)

2,000

(d) Cash .............................................................................................. Service Revenue .................................................................. (Received cash for services rendered)

7,500

2,000

7,500

(a) The entire group of accounts maintained by a company, including all the asset, liability, and stockholders’ equity accounts, is referred to collectively as the ledger. (b) A chart of accounts is a list of accounts and the account numbers that identify their location in the ledger. The chart of accounts is important, particularly for a company that has a large number of accounts, because it helps organize the accounts and define the level of detail that a company desires in its accounting system.

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-7

Questions Chapter 2 (Continued) 18.

A trial balance is a list of accounts and their balances at a given time. The primary purpose of a trial balance is to prove (check) that the debits equal the credits after posting. A trial balance also facilitates the discovery of errors in journalizing and posting. In addition, it is useful in preparing financial statements.

19.

No, Joe is not correct. The proper sequence is as follows: (b) Business transaction occurs. (c) Information entered in the journal. (a) Debits and credits posted to the ledger. (e) Trial balance is prepared. (d) Financial statements are prepared.

20.

(a) The trial balance would balance. (b) The trial balance would not balance.

21.

The normal balances are Cash debit, Accounts Payable credit, and Interest Expense debit.

2-8

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 2-1

1. 2. 3. 4. 5. 6.

Accounts Payable Advertising Expense Service Revenue Accounts Receivable Common Stock Dividends

(a) Debit Effect Decrease Increase Decrease Increase Decrease Increase

(b) Credit Effect Increase Decrease Increase Decrease Increase Decrease

(c) Normal Balance Credit Debit Credit Debit Credit Debit

BRIEF EXERCISE 2-2

June 1 2 3 12

Account Debited Cash Equipment Rent Expense Accounts Receivable

Account Credited Common Stock Accounts Payable Cash Service Revenue

BRIEF EXERCISE 2-3 June 1

2

3

12

Cash ...................................................................... Common Stock.............................................

4,000

Equipment ............................................................ Accounts Payable ........................................

900

Rent Expense ....................................................... Cash ..............................................................

800

Accounts Receivable .......................................... Service Revenue ..........................................

300

4,000

900

800

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

300

2-9

BRIEF EXERCISE 2-4 The basic steps in the recording process are: 1.

Analyze each transaction. In this step, business documents are examined to determine the effects of the transaction on the accounts.

2.

Enter each transaction in a journal. This step is called journalizing and it results in making a chronological record of the transactions.

3.

Transfer journal information to ledger accounts. This step is called posting. Posting makes it possible to accumulate the effects of journalized transactions on individual accounts.

BRIEF EXERCISE 2-5 (a) Aug.

2-10

Effect on Accounting Equation

(b)

Debit-Credit Analysis

1 The asset Cash is increased; the stockholders’ equity account Common Stock is increased.

Debits increase assets: debit Cash $8,000. Credits increase stockholders’ equity: credit Common Stock $8,000.

4 The asset Prepaid Insurance is increased; the asset Cash is decreased.

Debits increase assets: debit Prepaid Insurance $1,800. Credits decrease assets: credit Cash $1,800.

16 The asset Cash is increased; the revenue Service Revenue is increased.

Debits increase assets: debit Cash $1,100. Credits increase revenues: credit Service Revenue $1,100.

27 The expense Salaries and Wages Expense is increased; the asset Cash is decreased.

Debits increase expenses: debit Salaries and Wages Expense $1,000. Credits decrease assets: credit Cash $1,000.

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

BRIEF EXERCISE 2-6 Aug. 1

4

16

27

Cash ...................................................................... Common Stock .............................................

5,000

Prepaid Insurance ................................................ Cash ...............................................................

1,800

Cash ...................................................................... Service Revenue ...........................................

1,100

Salaries and Wages Expense .............................. Cash ...............................................................

1,000

5,000

1,800

1,100

1,000

BRIEF EXERCISE 2-7 Cash 5/12 2,100 5/15 3,000 Ending Bal. 5,100

5/5

Accounts Receivable 5,000 5/12

Service Revenue 5/5 5,000 5/15 3,000 Ending Bal. 8,000

2,100

Ending Bal. 2,900

BRIEF EXERCISE 2-8 Cash Date May 12 15

Explanation

Ref. J1 J1

Debit 2,100 3,000

Credit

Balance 2,100 5,100

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2-11

BRIEF EXERCISE 2-8 (Continued) Accounts Receivable Date Explanation May 5 12

Ref. J1 J1

Debit 5,000

Service Revenue Date Explanation May 5 15

Ref. J1 J1

Debit

Credit 2,100

Balance 5,000 2,900

Credit 5,000 3,000

Balance 5,000 8,000

BRIEF EXERCISE 2-9 STARR COMPANY Trial Balance June 30, 2014 Cash ............................................................................. Accounts Receivable .................................................. Equipment ................................................................... Accounts Payable ....................................................... Common Stock............................................................ Dividends ..................................................................... Service Revenue ......................................................... Salaries and Wages Expense .................................... Rent Expense ..............................................................

2-12

Debit $ 6,800 3,000 17,000

Credit

$ 9,000 20,000 1,200 6,000 6,000 1,000 $35,000

$35,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

BRIEF EXERCISE 2-10 CHENG COMPANY Trial Balance December 31, 2014 Cash ............................................................................. Prepaid Insurance ....................................................... Accounts Payable ....................................................... Unearned Service Revenue ........................................ Common Stock ............................................................ Dividends ..................................................................... Service Revenue ......................................................... Salaries and Wages Expense..................................... Rent Expense ..............................................................

Debit $16,800 3,500

Credit

$ 3,000 4,200 13,000 4,500 25,600 18,600 2,400 $45,800

$45,800

SOLUTIONS FOR DO IT! REVIEW EXERCISES DO IT! 2-1 Graham would likely need the following accounts in which to record the transactions necessary to ready his photography studio for opening day: Cash (debit balance) Supplies (debit balance) Equipment (debit balance)

Notes Payable (credit balance) Accounts Payable (credit balance) Common Stock (credit balance) Rent Expense (debit balance)

DO IT! 2-2 Each transaction that is recorded is entered in the general journal. The three activities would be recorded as follows: 1. 2.

3.

Cash .............................................................. Common Stock ....................................

8,000

Supplies ........................................................ Cash ..................................................... Accounts Payable ...............................

1,600

8,000 400 1,200

No entry because no transaction has occurred.

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2-13

DO IT! 2-3 Cash 4/1 1,600 4/16 600 4/3 3,700 4/20 500 4/30 4,200

DO IT! 2-4 CHILLIN’ COMPANY Trial Balance December 31, 2014 Debit Cash ............................................................................. $ 6,000 Accounts Receivable .................................................. 8,000 Supplies ....................................................................... 5,000 Equipment ................................................................... 76,000 Notes Payable ............................................................. Accounts Payable ....................................................... Salaries Wages Payable ............................................. Common Stock............................................................ Dividends ..................................................................... 8,000 Service Revenue ......................................................... Rent Expense .............................................................. 2,000 Salaries and Wages Expense .................................... 38,000 $143,000

2-14

Credit

$ 20,000 9,000 3,000 25,000 86,000

$143,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

SOLUTIONS TO EXERCISES EXERCISE 2-1 1.

False. An account is an accounting record of a specific asset, liability, or stockholders’ equity item.

2.

False. An account shows increases and decreases in the item it relates to.

3.

False. Each asset, liability, and stockholders’ equity item has a separate account.

4.

False. An account has a left, or debit side, and a right, or credit side.

5.

True.

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-15

2-16 (a) Basic Type Asset

Asset Asset

Asset

Stockholders’ Equity Asset

Liability

Stockholders’ Equity

Transaction

2

3

9

11

16

20

23

28

Jan.

Dividends

Accounts Payable

Cash

Advertising Expense

Accounts Receivable

Supplies

Equipment

Cash

(b) Specific Account

(c)

Increase

Decrease

Increase

Increase

Increase

Increase

Increase

Increase

Effect

Account Debited

Debit

Credit

Debit

Debit

Debit

Debit

Debit

Debit

(d) Normal Balance

Asset

Asset

Asset

Asset

Stockholders’ Equity

Liability

Asset

Stockholders’ Equity

(a) Basic Type

Cash

Cash

Accounts Receivable

Cash

Service Revenue

Accounts Payable

Cash

Common Stock

(b) Specific Account Effect

(c)

Decrease

Decrease

Decrease

Decrease

Increase

Increase

Decrease

Increase

Account Credited

Debit

Debit

Debit

Debit

Credit

Credit

Debit

Credit

(d) Normal Balance

EXERCISE 2-2

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

EXERCISE 2-3 General Journal Account Titles and Explanation

Date Jan. 2

3

9

11

16

20

23

28

Ref.

Debit

Cash ................................................... Common Stock .........................

15,000

Equipment ......................................... Cash ...........................................

7,000

Supplies............................................. Accounts Payable .....................

500

Accounts Receivable ....................... Service Revenue .......................

1,800

Advertising Expense ........................ Cash ...........................................

200

Cash ................................................... Accounts Receivable................

700

Accounts Payable............................. Cash ...........................................

300

Dividends .......................................... Cash ...........................................

1,000

J1 Credit 15,000

7,000

500

1,800

200

700

300

1,000

EXERCISE 2-4 Oct. 1

Debits increase assets: debit Cash $20,000. Credits increase stockholders’ equity: credit Common Stock $20,000.

2

No transaction.

3

Debits increase assets: debit Equipment $1,900. Credits increase liabilities: credit Accounts Payable $1,900.

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-17

EXERCISE 2-4 (Continued) Oct. 6

Debits increase assets: debit Accounts Receivable $3,200. Credits increase revenues: credit Service Revenue $3,200.

27

Debits decrease liabilities: debit Accounts Payable $850. Credits decrease assets: credit Cash $850.

30

Debits increase expenses: debit Salaries and Wages Expense $2,500. Credits decrease assets: credit Cash $2,500.

EXERCISE 2-5

Date Oct. 1

Debits 20,000

No entry.

3

Equipment ......................................... Accounts Payable ....................

1,900

Accounts Receivable ........................ Service Revenue .......................

3,200

Accounts Payable ............................. Cash...........................................

850

Salaries and Wages Expense ........... Cash...........................................

2,500

27

30

Credit 20,000

2

6

2-18

General Journal Account Titles and Explanation Ref. Cash.................................................... Common Stock .........................

1,900

3,200

850

2,500

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

EXERCISE 2-6 (a)

1. 2. 3.

Increase the asset Cash, increase the liability Notes Payable. Increase the asset Equipment, decrease the asset Cash. Increase the asset Supplies, increase the liability Accounts Payable.

(b)

1.

Cash .................................................................. Notes Payable ........................................... Equipment ....................................................... Cash ........................................................... Supplies ............................................................ Accounts Payable .....................................

2. 3.

5,000 5,000 2,500 2,500 450 450

EXERCISE 2-7 (a)

Assets = Liabilities + Stockholders’ Equity 1. + + (Issue stock) 2. – – (Expense) 3. + + (Revenue) 4. – – (Dividends)

(b)

1. 2. 3. 4.

Cash .................................................................. Common Stock .......................................... Rent Expense ................................................... Cash ........................................................... Accounts Receivable ....................................... Service Revenue ....................................... Dividends .......................................................... Cash ...........................................................

5,000 5,000 1,100 1,100 4,700 4,700 700 700

EXERCISE 2-8 1. 2. 3.

4. 5.

False. The general ledger contains all the asset, liability, and stockholders’ equity accounts. True. False. The accounts in the general ledger are arranged in financial statement order: first the assets, then the liabilities, common stock, retained earnings, dividends, revenues, and expenses. True. False. The general ledger is not a book of original entry; transactions are first recorded in the general journal, then in the general ledger.

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-19

EXERCISE 2-9 (a)

Aug. 1 10 31 Bal.

Cash 5,000 Aug. 12 2,700 850 7,550

Accounts Receivable Aug. 25 1,600 Aug. 31 Bal. 750

Aug. 12

(b)

Equipment 5,000

1,000

850

Notes Payable Aug. 12

4,000

Common Stock Aug. 1

5,000

Service Revenue Aug. 10 25 Bal.

2,700 1,600 4,300

ROBERTA MENDEZ, INVESTMENT BROKER Trial Balance August 31, 2014 Cash ......................................................................... Accounts Receivable .............................................. Equipment ................................................................ Notes Payable .......................................................... Common Stock ........................................................ Service Revenue .....................................................

Debit $ 7,550 750 5,000

$13,300

2-20

Credit

$ 4,000 5,000 4,300 $13,300

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EXERCISE 2-10 (a) Date Apr. 1

12

15

25

29

30

General Journal Account Titles and Explanation Ref. Cash ..................................................... Common Stock ............................... (Issued shares of stock for cash)

Debit 10,000

Credit 10,000

Cash ..................................................... Service Revenue ............................. (Received cash for services provided)

900

Salaries and Wages Expense............. Cash ................................................. (Paid salaries to date)

600

Accounts Payable ............................... Cash ................................................. (Paid creditors on account)

1,500

Cash ..................................................... Accounts Receivable...................... (Received cash in payment of account)

400

Cash ..................................................... Unearned Service Revenue ........... (Received cash for future services)

1,000

900

720

1,500

400

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

1,000

2-21

EXERCISE 2-10 (Continued) (b)

PADRE LANDSCAPING COMPANY Trial Balance April 30, 2014 Cash .......................................................................... Accounts Receivable ............................................... Supplies .................................................................... Accounts Payable .................................................... Unearned Service Revenue ..................................... Common Stock ......................................................... Service Revenue ...................................................... Salaries and Wages Expense ..................................

Credit

Debit $10,080 2,800 1,800 $

720 $15,400

300 1,000 10,000 4,100

$15,400

EXERCISE 2-11 (a) Oct. 1 Cash ............................................................. Common Stock ..................................... (Issued shares of stock for cash)

5,000

10 Cash ............................................................. Service Revenue .................................. (Received cash for services provided)

650

10 Cash ............................................................. Notes Payable ....................................... (Obtained loan from bank)

3,000

20 Cash ............................................................. Accounts Receivable ........................... (Received cash in payment of account)

500

20 Accounts Receivable .................................. Service Revenue .................................. (Billed clients for services provided)

940

2-22

5,000

650

3,000

500

940

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

EXERCISE 2-11 (Continued) (b)

SPARKS CO. Trial Balance October 31, 2014 Cash...................................................................... Accounts Receivable .......................................... Supplies ............................................................... Equipment ........................................................... Notes Payable ...................................................... Accounts Payable ............................................... Common Stock .................................................... Dividends ............................................................. Service Revenue .................................................. Salaries and Wages Expense ............................. Rent Expense ......................................................

Debit $ 8,170 1,240 400 2,000

Credit

$ 3,000 500 7,000 300 2,390 500 280 $12,890

$12,890

EXERCISE 2-12 (a) Date Sept. 1

5

25

30

General Journal Account Titles and Explanation Cash................................................... Common Stock .........................

Ref. 101 311

Debit 10,000

Equipment ......................................... Cash ........................................... Accounts Payable.....................

157 101 201

12,000

Accounts Payable ............................ Cash ...........................................

201 101

2,400

Dividends .......................................... Cash ...........................................

332 101

500

J1 Credit 10,000

4,000 8,000

2,400

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

500

2-23

EXERCISE 2-12 (Continued) (b) Cash Date Sept. 1 5 25 30

Explanation

Equipment Date Explanation Sept. 5

Accounts Payable Date Explanation Sept. 5 25

Common Stock Date Explanation Sept. 1

Dividends Date Explanation Sept. 30

2-24

Ref. J1 J1 J1 J1

Ref. J1

Ref. J1 J1

Ref. J1

Ref. J1

Debit 10,000

Credit 4,000 2,400 500

Debit 12,000

Debit

Credit

No. 157 Balance 12,000

Credit 8,000

No. 201 Balance 8,000 5,600

2,400

Debit

Debit 500

No. 101 Balance 10,000 6,000 3,600 3,100

Credit 10,000

Credit

No. 311 Balance 10,000

No. 332 Balance 500

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

EXERCISE 2-13

Error 1. 2. 3. 4. 5. 6.

(a) In Balance No Yes Yes No Yes No

(b) Difference $400 — — 300 — 36

(c) Larger Column Debit — — Credit — Credit

EXERCISE 2-14 TEMPUS FUGIT DELIVERY SERVICE Trial Balance July 31, 2014 Credit

Debit Cash ($90,907 – Debit total without Cash $69,340) .................................................................... Accounts Receivable .................................................. Prepaid Insurance ....................................................... Equipment.................................................................... Notes Payable.............................................................. Accounts Payable ....................................................... Salaries and Wages Payable ...................................... Common Stock ............................................................ Retained Earnings....................................................... Dividends ..................................................................... Service Revenue ......................................................... Salaries and Wages Expense..................................... Maintenance and Repairs Expense ........................... Gasoline Expense ....................................................... Utilities Expense .........................................................

$21,567 10,642 1,968 49,360 $26,450 8,396 815 40,000 4,636 700 10,610 4,428 961 758 523 $90,907

$90,907

EXERCISE 2-15 Transactions 4, 5, and 7 are operating activities Transaction 3 is an investing activity Transactions 1, 2 and 6 are financing activities. Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-25

SOLUTIONS TO PROBLEMS PROBLEM 2-1A

Date

Account Titles and Explanation

Apr. 1

Cash ........................................................ Common Stock .............................. (Issued shares of stock for cash)

50,000

Land ........................................................ Cash ................................................ (Purchased land for cash)

30,000

Advertising Expense ............................. Accounts Payable .......................... (Incurred advertising expense on account)

1,800

Salaries and Wages Expense ............... Cash ................................................ (Paid salaries)

1,500

4

8

11

Debit

50,000

30,000

1,800

1,500

12

No entry—Not a transaction.

13

Prepaid Insurance .................................. Cash ................................................ (Paid for one-year insurance policy)

1,500

Dividends ................................................ Cash ................................................ (Declared and paid cash dividends)

1,400

Cash ........................................................ Service Revenue ............................ (Received cash for services provided)

5,700

17

20

2-26

Ref.

J1 Credit

1,500

1,400

5,700

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-1A (Continued) Date

Account Titles and Explanation

Apr. 25

Cash ...................................................... Unearned Service Revenue ............. (Received cash for future services)

3,000

Cash ...................................................... Service Revenue ........................... (Received cash for services provided)

8,900

Accounts Payable ................................ Cash ............................................... (Paid creditor on account)

900

30

30

Ref.

Debit

Credit 3,000

8,900

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

900

2-27

PROBLEM 2-2A

(a) Date

Account Titles and Explanation

Ref.

Debit

May 1

Cash ........................................................ Common Stock .............................. (Issued shares of stock for cash)

101 311

20,000

No entry—not a transaction.

3

Supplies .................................................. Accounts Payable .......................... (Purchased supplies on account)

126 201

1,500

Rent Expense ......................................... Cash ................................................ (Paid office rent)

729 101

900

Accounts Receivable ............................. Service Revenue ............................ (Billed client for services provided)

112 400

2,800

Cash ........................................................ Unearned Service Revenue .......... (Received cash for future services)

101 209

3,500

Cash ........................................................ Service Revenue ............................ (Received cash for services provided)

101 400

1,200

Salaries and Wages Expense ............... Cash ................................................ (Paid salaries)

726 101

2,000

11

12

17

31

2-28

20,000

2

7

J1 Credit

1,500

900

2,800

3,500

1,200

2,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-2A (Continued) Date

Account Titles and Explanation

Ref.

Debit

May 31

Accounts Payable ($1,500 X 40%) ......... Cash .............................................. (Paid creditor on account)

201 101

600

Credit 600

(b) Cash Date May 1 7 12 17 31 31

Explanation

Accounts Receivable Date Explanation May 11

Supplies Date Explanation May 3

Accounts Payable Date Explanation May 3 31

Unearned Service Revenue Date Explanation May 12

Ref. J1 J1 J1 J1 J1 J1

Ref. J1

Ref. J1

Ref. J1 J1

Ref. J1

Debit 20,000

Credit 900

3,500 1,200 2,000 600

Debit 2,800

Debit 1,500

Debit

No. 101 Balance 20,000 19,100 22,600 23,800 21,800 21,200

Credit

No. 112 Balance 2,800

Credit

No. 126 Balance 1,500

Credit 1,500

No. 201 Balance

600

900

Debit

No. 209 Balance 3,500

Credit 3,500

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-29

PROBLEM 2-2A (Continued) Common Stock Date Explanation May 1

Service Revenue Date Explanation May 11 17

Salaries and Wages Expense Date Explanation May 31

Rent Expense Date Explanation May 7

(c)

Ref. J1

Ref. J1 J1

Ref. J1

Ref. J1

Debit

Debit

Debit 2,000

Debit 900

Credit 20,000

No. 311 Balance 20,000

Credit 2,800 1,200

No. 400 Balance 2,800 4,000

Credit

No. 726 Balance 2,000

Credit

No. 729 Balance 900

KARA SHIN, INC. Trial Balance May 31, 2014 Debit Cash ..................................................................... $21,200 Accounts Receivable .......................................... 2,800 Supplies ............................................................... 1,500 Accounts Payable ............................................... Unearned Service Revenue ................................ Common Stock .................................................... Service Revenue ................................................. Salaries and Wages Expense ............................. 2,000 Rent Expense ...................................................... 900 $28,400

2-30

Credit

$ 900 3,500 20,000 4,000

$28,400

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-3A

(a) & (c) Balance

(4) (6)

Cash 8,000 (1) (3) 13,000 (5) 5,000 (7) (8) 3,300

Common Stock Balance 1,000 1,700 Retained Earnings Balance

15,000 3,000 2,000 (8)

Accounts Receivable Balance 15,000 (4) 13,000 (6) 9,000 11,000

Balance (2)

Balance

Balance

(5)

Supplies 13,000 4,000 17,000 Prepaid Rent 3,000 3,000 Equipment 21,000 21,000 Accounts Payable Balance (2) 15,000

30,000 30,000

11,000 11,000

Dividends 2,000 2,000

Service Revenue (6)

(1)

Advertising Expense 1,000 1,000

(3)

Miscellaneous Expense 1,700 1,700

14,000 14,000

Salaries and Wages Expense (7) 3,000 3,000 19,000 4,000 8,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-31

PROBLEM 2-3A (Continued) (b) Trans. 1.

2.

3.

4.

5.

6.

7.

8.

2-32

Account Titles and Explanation

Debit

Advertising Expense .............................. Cash ................................................

1,000

Supplies ................................................... Accounts Payable .........................

4,000

Miscellaneous Expense ......................... Cash ................................................

1,700

Cash ......................................................... Accounts Receivable ....................

13,000

Accounts Payable ................................... Cash ................................................

15,000

Cash ......................................................... Accounts Receivable ............................. Service Revenue ............................

5,000 9,000

Salaries and Wages Expense ................ Cash ................................................

3,000

Dividends ................................................ Cash ................................................

2,000

Credit 1,000

4,000

1,700

13,000

15,000

14,000

3,000

2,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-3A (Continued) (d)

BYTE REPAIR SERVICE, INC. Trial Balance January 31, 2014 Cash...................................................................... Accounts Receivable .......................................... Supplies ............................................................... Prepaid Rent ........................................................ Equipment ............................................................ Accounts Payable ............................................... Common Stock .................................................... Retained Earnings ............................................... Dividends ............................................................. Service Revenue .................................................. Advertising Expense ........................................... Miscellaneous Expense ...................................... Salaries and Wages Expense .............................

Credit

Debit $ 3,300 11,000 17,000 3,000 21,000

$ 8,000 30,000 11,000 2,000 14,000 1,000 1,700 3,000 $63,000

$63,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-33

PROBLEM 2-4A

GARLAND COMPANY Trial Balance May 31, 2014 Cash ($3,850 + $520 – $405) ......................................... Accounts Receivable ($2,570 – $420) ......................... Prepaid Insurance ($700 + $100) ................................. Supplies ($0 + $520) ..................................................... Equipment ($12,000 – $520) ......................................... Accounts Payable ($4,500 – $100 + $520 – $420)....... Unearned Service Revenue .......................................... Common Stock ($11,700 + $1,000) .............................. Dividends ($0 + $1,000) ................................................ Service Revenue ........................................................... Salaries and Wages Expense ($4,200 + $200) ............ Advertising Expense ($1,100 + $405) .......................... Utilities Expense ($800 + $100) ....................................

2-34

Debit $ 3,965 2,150 800 520 11,480

Credit

$ 4,500 560 12,700 1,000 8,960 4,400 1,505 900 $26,720

$26,720

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-5A

(a) & (c) Cash Date Apr. 1 2 9 10 12 25 29 30 30

Explanation Balance

J1 J1 J1 J1 J1 J1 J1 J1

Accounts Receivable Date Explanation Apr. 30

Prepaid Rent Date Explanation Apr. 30

Land Date Apr. 1

Ref.

Explanation Balance

Buildings Date Explanation Apr. 1 Balance

Ref. J1

Ref. J1

Ref.

Ref.

Debit

Credit 800

1,800 3,000 300 5,200 1,600 90 900

Debit 90

Debit 900

Debit

Debit

No. 101 Balance 6,000 5,200 7,000 4,000 3,700 8,900 7,300 7,390 6,490

Credit

No. 112 Balance 90

Credit

No. 136 Balance 900

Credit

No. 140 Balance 10,000

Credit

No. 145 Balance 8,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-35

PROBLEM 2-5A (Continued) Equipment Date Explanation Apr. 1 Balance

Accounts Payable Date Explanation Apr. 1 Balance 10 20

Mortgage Payable Date Explanation Apr. 1 Balance 10

Common Stock Date Explanation Apr. 1 Balance

Service Revenue Date Explanation Apr. 9 25

Rent Revenue Date Explanation Apr. 30

2-36

Ref.

Debit

Ref.

Debit

J1 J1

1,000

Debit

J1

2,000

Ref. J1 J1

Ref. J1

Credit

1,000

Ref.

Ref.

Credit

Debit

Debit

Debit

No. 157 Balance 6,000

No. 201 Balance 2,000 1,000 2,000

Credit

No. 275 Balance 8,000 6,000

Credit

No. 311 Balance 20,000

Credit 1,800 5,200

No. 400 Balance 1,800 7,000

Credit 180

No. 429 Balance 180

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-5A (Continued) Advertising Expense Date Explanation Apr. 12 Rent Expense Date Explanation Apr. 2 20 Salaries and Wages Expense Date Explanation Apr. 29

Ref. J1

Ref. J1 J1

Ref. J1

Debit 300

Debit 800 1,000

Debit 1,600

Credit

No. 610 Balance 300

Credit

No. 729 Balance 800 1,800

Credit

No. 726 Balance 1,600

(b) Date Apr. 2

Account Titles and Explanation Rent Expense ..................................... Cash ........................................... (Paid film rental)

Ref. 729 101

Debit 800

800

3

No entry—not a transaction.

9

Cash .................................................... Service Revenue ....................... (Received cash for services provided)

101 400

1,800

Mortgage Payable .............................. Accounts Payable .............................. Cash ........................................... (Made payments on mortgage and accounts payable)

275 201 101

2,000 1,000

10

J1 Credit

1,800

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

3,000

2-37

PROBLEM 2-5A (Continued) Date

Account Titles and Explanation

Apr. 11

No entry—not a transaction.

12

20

25

29

30

30

2-38

Ref.

Debit

Advertising Expense ............................ Cash .............................................. (Paid advertising expenses)

610 101

300

Rent Expense ........................................ Accounts Payable........................ (Rented film on account)

729 201

1,000

Cash ....................................................... Service Revenue .......................... (Received cash for services provided)

101 400

5,200

Salaries and Wages Expense .............. Cash .............................................. (Paid salaries expense)

726 101

1,600

Cash ....................................................... Accounts Receivable ........................... Rent Revenue............................... (18% X $1,000) (Received cash and balance on account for concession revenue)

101 112 429

90 90

Prepaid Rent ......................................... Cash .............................................. (Paid cash for future film rentals)

136 101

900

Credit

300

1,000

5,200

1,600

180

900

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-5A (Continued) (d)

CLASSIC THEATER Trial Balance April 30, 2014

Cash...................................................................... Accounts Receivable .......................................... Prepaid Rent ........................................................ Land ...................................................................... Buildings .............................................................. Equipment ............................................................ Accounts Payable ............................................... Mortgage Payable ................................................ Common Stock .................................................... Service Revenue .................................................. Rent Revenue ...................................................... Advertising Expense ........................................... Rent Expense ....................................................... Salaries and Wages Expense .............................

Debit $ 6,490 90 900 10,000 8,000 6,000

Credit

$ 2,000 6,000 20,000 7,000 180 300 1,800 1,600 $35,180

$35,180

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-39

PROBLEM 2-1B

Date Mar. 1

3

5

6

10

18

19

2-40

Account Titles and Explanation Cash ......................................................... Common Stock ............................... (Issued shares of stock for cash)

Ref.

Debit 60,000

J1 Credit 60,000

Land ......................................................... Buildings .................................................. Equipment ............................................... Cash ................................................. (Purchased Lee's Golf Land)

23,000 9,000 6,000

Advertising Expense .............................. Cash ................................................. (Paid for advertising)

1,600

Prepaid Insurance ................................... Cash ................................................. (Paid for one-year insurance policy)

2,400

Equipment ............................................... Accounts Payable ........................... (Purchased equipment on account)

1,050

Cash ......................................................... Service Revenue ............................. (Received cash for services provided)

340

Cash ......................................................... Unearned Service Revenue ........... (Received cash for coupon books sold)

1,800

38,000

1,600

2,400

1,050

340

1,800

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-1B (Continued) Date Mar. 25

30

30

31

Account Titles and Explanation Dividends ............................................ Cash ............................................. (Declared and paid cash dividend)

Ref.

Debit 800

Credit 800

Salaries and Wages Expense ............ Cash ............................................. (Paid salaries)

250

Accounts Payable .............................. Cash ............................................. (Paid creditor on account)

1,050

Cash..................................................... Service Revenue ......................... (Received cash for services provided)

200

250

1,050

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

200

2-41

PROBLEM 2-2B (a) Date

Account Titles and Explanation

Ref.

Debit

Apr. 1

Cash ........................................................ Common Stock .............................. (Issued shares of stock for cash)

101 311

40,000

No entry—not a transaction.

2

Rent Expense ......................................... Cash ................................................ (Paid monthly office rent)

729 101

1,400

Supplies .................................................. Accounts Payable .......................... (Purchased supplies on account from Halo Company)

126 201

5,200

Accounts Receivable ............................. Service Revenue ............................ (Billed clients for services provided)

112 400

6,600

Cash ........................................................ Unearned Service Revenue .......... (Received cash for future service)

101 209

1,000

Cash ........................................................ Service Revenue ............................ (Received cash for services provided)

101 400

2,100

Salaries and Wages Expense................ Cash ................................................ (Paid monthly salary)

726 101

2,400

10

11

20

30

2-42

40,000

1

3

J1 Credit

1,400

5,200

6,600

1,000

2,100

2,400

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-2B (Continued) Date

Account Titles and Explanation

Ref.

Debits

Apr. 30

Accounts Payable ............................... Cash ............................................. (Paid Halo Company on account)

201 101

1,900

Credit 1,900

(b) Cash Date Apr. 1 2 11 20 30 30

Explanation

Accounts Receivable Date Explanation Apr. 10 Supplies Date Explanation Apr. 3 Accounts Payable Date Explanation Apr. 3 30 Unearned Service Revenue Date Explanation Apr. 11

Ref. J1 J1 J1 J1 J1 J1

Ref. J1

Ref. J1

Ref. J1 J1

Ref. J1

Debit 40,000

Credit 1,400

1,000 2,100 2,400 1,900

Debit 6,600

Debit 5,200

Debit

Credit

No. 112 Balance 6,600

Credit

No. 126 Balance 5,200

Credit 5,200

No. 201 Balance 5,200 3,300

1,900

Debit

No. 101 Balance 40,000 38,600 39,600 41,700 39,300 37,400

Credit 1,000

No. 209 Balance 1,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-43

PROBLEM 2-2B (Continued) Common Stock Date Explanation Apr. 1

Ref. J1

Service Revenue Date Explanation Apr. 10 20

Ref. J1 J1

Salaries and Wages Expense Date Explanation Apr. 30

Rent Expense Date Explanation Apr. 2

(c)

Ref. J1

Ref. J1

Debit

Debit

Debit 2,400

Debit 1,400

Credit 6,600 2,100

No. 400 Balance 6,600 8,700

Credit

No. 726 Balance 2,400

Credit

No. 729 Balance 1,400

JUDI DENCH, DENTIST Trial Balance April 30, 2014 Cash ..................................................................... Accounts Receivable .......................................... Supplies ............................................................... Accounts Payable ............................................... Unearned Service Revenue ................................ Common Stock .................................................... Service Revenue ................................................. Salaries and Wages Expense ............................. Rent Expense ......................................................

2-44

Credit 40,000

No. 311 Balance 40,000

Debit $37,400 6,600 5,200

Credit

$ 3,300 1,000 40,000 8,700 2,400 1,400 $53,000

$53,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-3B (a) Trans. 1.

Account Titles and Explanation

Debit

Cash ................................................... Common Stock ........................

50,000 50,000

2.

No entry—Not a transaction.

3.

Prepaid Rent...................................... Cash ..........................................

24,000

Equipment ......................................... Cash .......................................... Accounts Payable ....................

30,000

Prepaid Insurance ............................. Cash ..........................................

1,800

Supplies ............................................. Cash ..........................................

750

Supplies ............................................. Accounts Payable ....................

1,300

Cash ................................................... Accounts Receivable ........................ Service Revenue ......................

8,000 12,000

Accounts Payable ............................. Cash ..........................................

400

Cash ................................................... Accounts Receivable...............

3,000

Utilities Expense ............................... Accounts Payable ....................

260

4.

5.

6.

7.

8.

9.

10.

11.

Credit

24,000

8,000 22,000

1,800

750

1,300

20,000

400

3,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

260 2-45

PROBLEM 2-3B (Continued) Trans. 12.

Account Titles and Explanation Salaries and Wages Expense ......... Cash ..........................................

Debit

Credit

5,600 5,600

(b) (1)

(8) (10)

(8)

(6) (7)

(5)

(3)

2-46

Cash 50,000 (3) (4) (5) (6) 8,000 (9) 3,000 (12) 20,450

(4) 24,000 8,000 1,800 750 400 (9) 5,600

Accounts Receivable 12,000 (10) 3,000 9,000

Prepaid Rent 24,000 24,000

Accounts Payable (4) 22,000 (7) 1,300 400 (11) 260 23,160

Common Stock (1)

50,000 50,000

Service Revenue (8) 20,000 20,000

Supplies 750 1,300 2,050

Prepaid Insurance 1,800 1,800

Equipment 30,000 30,000

Salaries and Wages Expense (12) 5,600 5,600

(11)

Utilities Expense 260 260

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-3B (Continued) (c)

CHAMBERLAIN SERVICES Trial Balance May 31, 2014 Cash.................................................................. Accounts Receivable ...................................... Supplies ........................................................... Prepaid Insurance ........................................... Prepaid Rent .................................................... Equipment ........................................................ Accounts Payable ........................................... Common Stock ................................................ Service Revenue .............................................. Salaries and Wages Expense ......................... Utilities Expense ..............................................

Debit $20,450 9,000 2,050 1,800 24,000 30,000

Credit

$23,160 50,000 20,000 5,600 260 $93,160

$93,160

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

2-47

PROBLEM 2-4B

RON SALEM CO. Trial Balance June 30, 2014 Cash ($3,840 + $180) ................................................... Accounts Receivable ($2,898 – $180) ....................... Supplies ($800 – $620)................................................ Equipment ($3,000 + $620) ......................................... Accounts Payable ($2,666 – $309 – $390) ................. Unearned Service Revenue........................................ Common Stock............................................................ Dividends ($800 + $600) ............................................. Service Revenue ($2,380 + $801) ............................... Salaries and Wages Expense ($3,400 + $700 – $600) Utilities Expense .........................................................

2-48

Debit $ 4,020 2,718 180 3,620

Credit

$ 1,967 2,200 9,000 1,400 3,181 3,500 910 $16,348

$16,348

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PROBLEM 2-5B (a) & (c) Cash Date Mar. 1 2 9 10 12 20 20 31 31 31

Explanation Balance

J1 J1 J1 J1 J1 J1 J1 J1 J1

Accounts Receivable Explanation Date Mar. 31

Land Date Mar. 1

Ref.

Explanation Balance

Buildings Date Explanation Mar. 1 Balance

Equipment Date Explanation Mar. 1 Balance

Ref. J1

Ref.

Ref.

Ref.

375 9,000

No. 101 Balance 8,000 7,000 11,000 6,900 6,450 11,450 9,050 6,550 6,925 15,925

Debit 375

Credit

No. 112 Balance 375

Credit

No. 140 Balance 21,000

Credit

No. 145 Balance 10,000

Credit

No. 157 Balance 8,000

Debit

Credit 1,000

4,000 4,100 450 5,000 2,400 2,500

Debit

Debit

Debit

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2-49

PROBLEM 2-5B (Continued) Accounts Payable Date Explanation Mar. 1 Balance 2 10

Common Stock Date Explanation Mar. 1 Balance

Service Revenue Date Explanation Mar. 9 20 31

Rent Revenue Date Explanation Mar. 31

Advertising Expense Date Explanation Mar. 12

2-50

Ref. J1 J1

Ref.

Ref. J1 J1 J1

Ref. J1

Ref. J1

Debit

Credit 2,500

4,100

Debit

Debit

Debit

Debit 450

Credit

No. 201 Balance 7,000 9,500 5,400

No. 311 Balance 40,000

Credit 4,000 5,000 9,000

No. 400 Balance 4,000 9,000 18,000

Credit 750

No. 429 Balance 750

Credit

No. 610 Balance 450

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PROBLEM 2-5B (Continued) Salaries and Wages Expense Date Explanation Mar. 31 Rent Expense Date Explanation Mar. 2 20

Ref. J1

Ref. J1 J1

Debit 2,500

Debit 3,500 2,400

Credit

No. 726 Balance 2,500

Credit

No. 729 Balance 3,500 5,900

(b) J1 Date

Account Titles and Explanation

Ref.

Debit

Mar. 2

Rent Expense ........................................ Accounts Payable ........................ Cash .............................................. (Rented films for cash and on account)

729 201 101

3,500 2,500 1,000

3

No entry.

9

Cash ....................................................... Service Revenue .......................... (Received cash for services provided)

101 400

4,000

Accounts Payable ($2,500 + $1,600) ...... Cash .............................................. (Paid creditors on account)

201 101

4,100

610 101

450

10

11

No entry.

12

Advertising Expense ............................ Cash .............................................. (Paid advertising expense)

Credit

4,000

4,100

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450

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PROBLEM 2-5B (Continued) Date 20

20

Mar. 31

31

31

2-52

Account Titles and Explanation Cash ....................................................... Service Revenue .......................... (Received cash for services provided)

Ref. 101 400

Debit 5,000

Rent Expense ........................................ Cash .............................................. (Paid film rental)

729 101

2,400

Salaries and Wages Expense............... Cash .............................................. (Paid salaries expense)

726 101

2,500

Cash ....................................................... Accounts Receivable ............................ Rent Revenue ............................... (15% X $5,000) (Received cash and balance on account for concession revenue)

101 112 429

375 375

Cash ....................................................... Service Revenue .......................... (Received cash for services provided)

101 400

9,000

Credit 5,000

2,400

2,500

750

9,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

PROBLEM 2-5B (Continued) (d)

RUSSO THEATER Trial Balance March 31, 2014 Cash .................................................................. Accounts Receivable ....................................... Land .................................................................. Buildings ........................................................... Equipment ........................................................ Accounts Payable ............................................ Common Stock ................................................. Service Revenue .............................................. Rent Revenue ................................................... Advertising Expense........................................ Rent Expense ................................................... Salaries and Wages Expense.........................

Debit $15,925 375 21,000 10,000 8,000

Credit

$ 5,400 40,000 18,000 750 450 5,900 2,500 $64,150

$64,150

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2-53

CCC2

(a)

Nov.

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CONTINUING COOKIE CHRONICLE

GENERAL JOURNAL Account Titles and Explanation

Debit

J1 Credit

8 No entry required for cashing U.S. Savings Bonds—this is a personal transaction. 8 Cash ........................................................... Common Stock .....................................

500

11 Advertising Expense ................................ Cash ......................................................

65

13 Supplies ..................................................... Cash ......................................................

125

14 Equipment ................................................. Common Stock .....................................

300

16 Cash ........................................................... Notes Payable ......................................

2,000

17 Equipment ................................................. Cash ......................................................

900

20 Cash ........................................................... Service Revenue ..................................

125

25 Cash ........................................................... Unearned Service Revenue .................

30

30 Prepaid Insurance .................................... Cash ......................................................

1,320

500

65

125

300

2,000

900

125

30

1,320

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

CCC2 (Continued) (b)

Date Nov.

Explanation 8 11 13 16 17 20 25 30

Date

J1 J1 J1 J1 J1 J1 J1 J1

Explanation

Nov. 13

Date

Explanation

Explanation

Nov. 14 17

Date Nov. 25

Explanation

900 125 30 1,320

Credits

Balance

125

125

Credits

Balance

1,320

1,320

Credits

Balance

300 900

300 1,200

Unearned Service Revenue Ref. Debits Credits J1

500 435 310 2,310 1,410 1,535 1,565 245

2,000

Equipment Ref. Debits J1 J1

Balance

65 125

Prepaid Insurance Ref. Debits J1

Credits

500

Supplies Ref. Debits J1

Nov. 30

Date

Cash Ref. Debits

Balance

30

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30

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CCC2 (Continued) (b) (Continued)

Date

Explanation

Nov. 16

Date Nov.

J1

Explanation 8 14

Date

Explanation

Nov. 11

2-56

Common Stock Ref. Debits

Credits 500 300

Service Revenue Ref. Debits J1

Explanation

Credits 2,000

J1 J1

Nov. 20

Date

Notes Payable Ref. Debits

Credits 125

Advertising Expense Ref. Debits Credits J1

65

Balance 2,000

Balance 500 800

Balance 125

Balance 65

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

CCC2 (Continued) (c) COOKIE CREATIONS Trial Balance November 30, 2014 Cash ............................................................................ Supplies ...................................................................... Prepaid Insurance ...................................................... Equipment .................................................................. Unearned Service Revenue ....................................... Notes Payable ............................................................ Common Stock ........................................................... Advertising Expense ................................................. Service Revenue ........................................................

Debit $ 245 125 1,320 1,200

Credit

$

30 2,000 800

65 $2,955

125 $2,955

Note to instructors: Because the notes payable is not due for 24 months, it follows Unearned Service Revenue in the accounts and the trial balance.

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2-57

BYP 2-1

FINANCIAL REPORTING PROBLEM

(a) Account Accounts Payable

(1) Increase Side Credit

(1) Decrease Side Debit

Accounts Receivable

Debit

Credit

Debit

Property, Plant, and Equipment

Debit

Credit

Debit

Income Taxes Payable

Credit

Debit

Credit

Interest Expense

Debit

Credit

Debit

Inventory

Debit

Credit

Debit

(2) Normal Balance Credit

(b) 1. 2. 3.

Cash is increased. Cash is decreased. Cash is decreased or Accounts Payable is increased.

(c) 1. 2.

Cash is decreased. Cash is decreased or Notes or Mortgage Payable is increased.

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Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

BYP 2-2

(a) 1.

COMPARATIVE ANALYSIS PROBLEM

PepsiCo Inventory:

debit

Coca-Cola 1. Accounts Receivable:

debit

2. Property, Plant, and Equipment:

debit

2. Cash and Cash Equivalents:

debit

3.

Accounts Payable:

credit

3. Cost of Goods Sold:

debit

4.

Interest Expense:

debit

4. Sales (revenue)

credit

(b) The following other accounts are ordinarily involved: 1.

Increase in Accounts Receivable: Service Revenue or Sales Revenue is increased (credited).

2.

Decrease in Salaries and Wages Payable: Cash is decreased (credited).

3.

Increase in Property, Plant, and Equipment: Notes Payable is increased (credited) or Cash is decreased (credited).

4.

Increase in Interest Expense: Cash is decreased (credited).

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BYP 2-3

REAL–WORLD FOCUS

The answer is dependent upon the company selected by the student.

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BYP 2-4

DECISION–MAKING ACROSS THE ORGANIZATION

(a) May 1 Correct. 5 7 14 15 20

Cash ......................................................... Lesson Revenue ..............................

250

Cash ......................................................... Unearned Boarding Revenue .........

500

Office Equipment .................................... Cash ..................................................

800

Dividends................................................. Cash ..................................................

440

Cash ......................................................... Riding Revenue ................................

184

30

Correct.

31

Hay and Feed Supplies .......................... Accounts Payable ............................

250 500 800 440 184

1,500 1,500

(b) The errors in the entries of May 14 and 20 would prevent the trial balance from balancing. (c) Net income as reported Add: 5/15, Salaries expense (Dividends paid) ..... 5/31, Hay and feed expense (still on hand) ...

$4,600 $ 440 1,500

Less: 5/7, Boarding revenue unearned.................. Correct net income ................................................... (d) Cash as reported Add: 5/20, Transposition error .............................. 5/31, Purchase on account ...........................

1,940 6,540 500 $6,040 $12,475

$

36 1,500

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1,536 $14,011

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BYP 2-5

Date: To:

COMMUNICATION ACTIVITY

May 25, 2014 Accounting Instructor

From: Student

In the first transaction, bills totaling $6,000 were sent to customers for services rendered. Therefore, the asset Accounts Receivable is increased $6,000 and the revenue Service Revenue is increased $6,000. Debits increase assets and credits increase revenues, so the journal entry is: Accounts Receivable 6,000 Service Revenue ............................................................. (Bill customers for services provided)

6,000

The $6,000 amount is then posted to the debit side of the general ledger account Accounts Receivable and to the credit side of the general ledger account Service Revenue. In the second transaction, $2,000 was paid in salaries to employees. Therefore, the expense Salaries and Wages Expense is increased $2,000 and the asset Cash is decreased $2,000. Debits increase expenses and credits decrease assets, so the journal entry is: Salaries and Wages Expense 2,000 Cash ................................................................................. (Salaries paid)

2,000

The $2,000 amount is then posted to the debit side of the general ledger account Salaries and Wages Expense and to the credit side of the general ledger account Cash.

2-62

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

BYP 2-6

ETHICS CASE

(a) The stakeholders in this situation are: f Sara Rankin, assistant chief accountant. f Users of the company’s financial statements. f The Hokey Company.

(b) By adding $1,000 to the Equipment account, that account total is intentionally misstated. By not locating the error causing the imbalance, some other account may also be misstated by $1,000. If the amount of $1,000 is determined to be immaterial, and the intent is not to commit fraud (cover up an embezzlement or other misappropriation of assets), Sara’s action might not be considered unethical in the preparation of interim financial statements. However, if Sara is violating a company accounting policy by her action, then she is acting unethically. (c) Sara’s alternatives are: 1. Miss the deadline but find the error causing the imbalance. 2. Tell her supervisor of the imbalance and suffer the consequences. 3. Do as she did and locate the error later, making the adjustment in the next quarter.

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BYP 2-7

ALL ABOUT YOU

(a) Students’ responses to this question will vary. It is important that the steps that they identify be as specific as possible, and clearly directed toward achieving their goal. You may wish to ask a follow-up question asking them to explain how each step will assist them in achieving their goal. (b) There are many sites on the Internet that provide information about preparing a résumé. For example, you can find extensive resources at: http://www.rileyguide.com/resprep.html. Many schools also have resources in their placement centers or writing labs. The Writing Center at Rensselaer Polytechnic Institute provides useful, concise information on its website at http://www.rpi.edu/web/writingcenter/resume.html. A wide variety of sample résumés can be found. For example, Monster.com provides samples for a wide variety of professions and situations at http://content.monster.com/experts/resume/library/. (c) As noted in the All About You feature in the chapter, overstating accomplishments on a résumé can result in many problems. It is important to provide accurate and complete documentation of all relevant training, education, and employment experiences so as to provide assurance to the potential employer, and also to enable that employer to do follow-up work. If you say you have certain skills, such as computer skills, try to substantiate the claim with recognized proof of proficiency. Make sure that all addresses and phone numbers are accurate and up-to-date. Also, ensure that the people you use as references have a copy of your résumé and cover letter, and that they are informed that you are interviewing so they know to expect a call. (d) See the sample résumés provided in the websites above for various format options. You might also mention to students that there are electronic résumé templates available on the Internet.

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Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only)

BYP 2-8

ALL ABOUT YOU

The decision whether to fire Mr. Edmondson was the responsibility of Radio Shack’s board of directors, which is elected by the company’s shareholders to oversee management. The board initially announced its support for the CEO. After further investigation, the board encouraged Mr. Edmondson to resign, which he did. In contrast, when Bausch & Lomb’s CEO offered to resign in a similar situation, the company’s board refused to accept his resignation. Board members stated that they felt he was still the best person for the position. Radio Shack says that although it did a reference check at the time of Mr. Edmondson’s hiring, it did not check his educational credentials. Under the Sarbanes-Oxley Act, companies must now perform thorough background checks as part of a check of internal controls. The bottom line: Your ré sumé must be a fair and accurate depiction of your past.

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2-65

IFRS EXERCISE

IFRS 2-1 In deciding whether the U.S. should adopt IFRS, the SEC should consider the following. • • • • • •

Whether IFRS is sufficiently developed and consistent in application Whether the IASB is sufficiently independent Whether IFRS is established for the benefit to investors The issues involved in educating investors about IFRS The impact of a switch to IFRS on U.S. laws and regulations The impact on companies including changes to their accounting systems, contractual arrangements, corporate governance, and litigation • The issues involved in educating accountants, so they can prepare statements under IFRS

2-66

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IFRS 2-2

INTERNATIONAL FINANCIAL REPORTING PROBLEM

Account

Financial Statement

Other administrative expenses Cash at bank

Consolidated Income statement

Borrowings and overdrafts Finance costs

Consolidated Balance Sheet Consolidated Balance Sheet Consolidated Income Statement

Position in Financial Statement After gross profit and before operating profit Current assets Current and Non-current liabilities After Operating profit and before Profit from continuing operations before taxations.

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