Downloadable Solution Manual for Financial Accounting 7th Edition Weygandt ch0214

CHAPTER 2 The Recording Process ASSIGNMENT CLASSIFICATION TABLE Brief Exercises Study Objectives Questions 1. Explai...

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CHAPTER 2 The Recording Process ASSIGNMENT CLASSIFICATION TABLE Brief Exercises

Study Objectives

Questions

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

Copyright © 2010 John Wiley & Sons, Inc.

Do It!

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

Weygandt, Financial Accounting, 7/e, Solutions Manual

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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

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Weygandt, Financial Accounting, 7/e, Solutions Manual

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WEYGANDT FINANCIAL ACCOUNTING 7E CHAPTER 2 THE RECORDING PROCESS Number

SO

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

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Weygandt, Financial Accounting, 7/e, Solutions Manual

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2-3

THE RECORDING PROCESS (Continued) Number

SO

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

2-4

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

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Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

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.

5.

6.

Broadening Your Perspective

Prepare a trial balance and explain its purposes.

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

4.

7.

Identify the basic steps in the recording process.

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

2.

3.

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

1.

Study Objective

Q2-19 BE2-4 Q2-11 Q2-13 Q2-14

Q2-17

Q2-10 Q2-12

E2-8

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 Exploring the Web

Q2-18 E2-15

Q2-15 Q2-17

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

Comprehension

Q2–21

Q2-1 E2-1

Knowledge

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, Study Objectives and End-of-Chapter Exercises and Problems

BLOOM’S TAXONOMY TABLE

(For Instructor Use Only)

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.

Jeff 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.

Maria 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) (b) (c)

Asset accounts are increased by debits and decreased by credits. Liability accounts are decreased by debits and increased by credits. 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 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) (b) (c)

Debit Supplies and credit Accounts Payable. Debit Cash and credit Notes Payable. Debit Salaries Expense and credit Cash.

9.

(1) (2) (3) (4) (5) (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 Expense—debit entries only. Service Revenue—credit entries only.

10.

2-6

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 © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

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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) (b)

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) (b)

15.

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

16.

(a)

(b)

(c)

(d)

17.

The debit should be entered first. The credit should be indented.

No, debits and credits should not be recorded directly in the ledger. 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.

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

9,000

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

800

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

2,000

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

7,500

9,000

800

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.

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Weygandt, Financial Accounting, 7/e, Solutions Manual

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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, Jim 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) (b)

21.

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

2-8

The trial balance would balance. The trial balance would not balance.

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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.....................................................

5,000

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

900

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

800

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

300

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5,000

900

800

(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 $800. Credits increase revenues: credit Service Revenue $800.

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

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

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BRIEF EXERCISE 2-6 Aug. 1

4

16

27

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

8,000

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

1,800

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

800

Salaries Expense........................................................... Cash..........................................................................

1,000

8,000

1,800

800

1,000

BRIEF EXERCISE 2-7 Cash 5/12 2,400 5/15 3,000 Ending Bal. 5,400

5/5

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

Accounts Receivable 5,000 5/12

2,400

Ending Bal. 2,600

BRIEF EXERCISE 2-8 Cash Date May 12 15

Explanation

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Ref. J1 J1

Debit 2,400 3,000

Weygandt, Financial Accounting, 7/e, Solutions Manual

Credit

Balance 2,400 5,400

(For Instructor Use Only)

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 2,400

Balance 5,000 2,600

Credit 5,000 3,000

Balance 5,000 8,000

Debit $ 8,800 3,000 17,000

Credit

BRIEF EXERCISE 2-9 CLELAND COMPANY Trial Balance June 30, 2011 Cash.......................................................................................... Accounts Receivable .......................................................... Equipment .............................................................................. Accounts Payable ................................................................ Common Stock ..................................................................... Dividends ................................................................................ Service Revenue................................................................... Salaries Expense.................................................................. Rent Expense ........................................................................

2-12

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$ 9,000 20,000 1,200 8,000 6,000 1,000 $37,000

Weygandt, Financial Accounting, 7/e, Solutions Manual

$37,000

(For Instructor Use Only)

BRIEF EXERCISE 2-10 KWUN COMPANY Trial Balance December 31, 2011 Cash ......................................................................................... Prepaid Insurance ............................................................... Accounts Payable................................................................ Unearned Revenue.............................................................. Common Stock..................................................................... Dividends................................................................................ Service Revenue .................................................................. Salaries Expense ................................................................. Rent Expense........................................................................

Debit $14,800 3,500

Credit

$ 3,000 2,200 13,000 4,500 25,600 18,600 2,400 $43,800

$43,800

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

Notes Payable (credit balance) Accounts Payable (credit balance) Common Stock (credit 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

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

1,100

8,000 400 700

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 3,400 4/20 300 4/30 4,100 DO IT! 2-4 BOARDIN’ COMPANY Trial Balance December 31, 2011 Debit Cash.......................................................................................... $ 6,000 Accounts Receivable .......................................................... 8,000 Supplies .................................................................................. 5,000 Equipment .............................................................................. 80,000 Notes Payable ....................................................................... Accounts Payable ................................................................ Salaries Payable ................................................................... Common Stock ..................................................................... Dividends ................................................................................ 8,000 Service Revenue................................................................... Supplies Expense ................................................................ 2,000 Salaries Expense.................................................................. 38,000 $147,000

2-14

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Weygandt, Financial Accounting, 7/e, Solutions Manual

Credit

$ 20,000 11,000 3,000 25,000 88,000

$147,000

(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.

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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.

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Weygandt, Financial Accounting, 7/e, Solutions Manual

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

(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 ...............................

10,000

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

4,000

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 10,000

4,000

500

1,800

200

700

300

1,000

EXERCISE 2-4 Oct. 1

Debits increase assets: debit Cash $15,000. Credits increase stockholders’ equity: credit Common Stock $15,000.

2

No transaction.

3

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

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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 $700. Credits decrease assets: credit Cash $700.

30

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

EXERCISE 2-5

Date Oct. 1

Ref.

Debits 15,000

No entry.

3

Office Furniture ....................................... Accounts Payable ........................

1,900

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

3,200

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

700

Salaries Expense .................................... Cash..................................................

2,500

27

30

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Credit 15,000

2

6

2-18

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

1,900

3,200

700

Weygandt, Financial Accounting, 7/e, Solutions Manual

2,500

(For Instructor Use Only)

EXERCISE 2-6 (a)

1. 2. 3.

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

(b)

1.

Cash ............................................................................. Notes Payable ................................................... Computer.................................................................... Cash ..................................................................... Supplies ...................................................................... Accounts Payable............................................

2. 3.

5,000 5,000 2,500 2,500 700 700

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.............................................. Consulting Revenue ....................................... Dividends.................................................................... Cash .....................................................................

4,000 4,000 1,100 1,100 5,200 5,200 700 700

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.

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2-19

EXERCISE 2-9 (a)

Aug. 1 10 31 Bal.

Cash 5,000 Aug. 12 2,400 900 7,300

1,000

Accounts Receivable Aug. 25 1,600 Aug. 31 Bal. 700

Office Equipment Aug. 12 5,000

(b)

900

Notes Payable Aug. 12

4,000

Common Stock Aug. 1

5,000

Service Revenue Aug. 10 25 Bal.

2,400 1,600 4,000

TERESA GONZALEZ, INVESTMENT BROKER Trial Balance August 31, 2011 Cash ..................................................................................... Accounts Receivable...................................................... Office Equipment ............................................................. Notes Payable ................................................................... Common Stock ................................................................. Service Revenue ..............................................................

Debit $ 7,300 700 5,000

$13,000

2-20

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Weygandt, Financial Accounting, 7/e, Solutions Manual

Credit

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

(For Instructor Use Only)

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 15,000

15,000

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

900

Salaries 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 Revenue ............................. (Received cash for future services)

1,000

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Credit

900

600

1,500

400

1,000

(For Instructor Use Only)

2-21

EXERCISE 2-10 (Continued) (b)

SIMON LANDSCAPING COMPANY Trial Balance April 30, 2011 Cash ....................................................................................... Accounts Receivable........................................................ Supplies ................................................................................ Accounts Payable.............................................................. Unearned Revenue............................................................ Common Stock................................................................... Service Revenue ................................................................ Salaries Expense ...............................................................

Debit $15,200 2,800 1,800

Credit

$

300 1,000 15,000 4,100

600 $20,400

$20,400

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)

4,000

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

500

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

940

2-22

Copyright © 2010 John Wiley & Sons, Inc.

5,000

650

Weygandt, Financial Accounting, 7/e, Solutions Manual

4,000

500

940

(For Instructor Use Only)

EXERCISE 2-11 (Continued) (b)

HEEREY CO. Trial Balance October 31, 2011 Cash................................................................................. Accounts Receivable ................................................. Supplies.......................................................................... Furniture......................................................................... Notes Payable............................................................... Accounts Payable ....................................................... Common Stock ............................................................ Dividends ....................................................................... Service Revenue.......................................................... Store Wages Expense................................................ Rent Expense ...............................................................

Debit $ 9,200 1,240 400 2,000

Credit

$ 4,000 500 7,000 300 2,390 500 250 $13,890

$13,890

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

3,000

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

332 101

500

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

J1 Credit 10,000

5,000 7,000

3,000

500

(For Instructor Use Only)

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

Copyright © 2010 John Wiley & Sons, Inc.

Ref. J1 J1 J1 J1

Ref. J1

Ref. J1 J1

Ref. J1

Ref. J1

Debit 10,000

Credit 5,000 3,000 500

Debit 12,000

Debit

Credit

No. 157 Balance 12,000

Credit 7,000

No. 201 Balance 7,000 4,000

3,000

Debit

Debit 500

No. 101 Balance 10,000 5,000 2,000 1,500

Credit 10,000

Credit

Weygandt, Financial Accounting, 7/e, Solutions Manual

No. 311 Balance 10,000

No. 332 Balance 500

(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 — 18

(c) Larger Column Debit — — Credit — Credit

EXERCISE 2-14 SANFORD DELIVERY SERVICE Trial Balance July 31, 2011 Debit Cash ($82,907 – Debit total without Cash $66,340)............................................................................... Accounts Receivable .......................................................... Prepaid Insurance................................................................ Delivery Equipment ............................................................. Notes Payable ....................................................................... Accounts Payable ................................................................ Salaries Payable ................................................................... Common Stock ..................................................................... Retained Earnings ............................................................... Dividends ................................................................................ Service Revenue................................................................... Salaries Expense.................................................................. Repair Expense..................................................................... Gas and Oil Expense........................................................... Insurance Expense ..............................................................

Credit

$16,567 7,642 1,968 49,360 $18,450 8,396 815 40,000 4,636 700 10,610 4,428 961 758 523 $82,907

$82,907

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 © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/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)

40,000

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

30,000

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

1,800

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

1,500

4

8

11

Debit

40,000

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)

1,000

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

5,700

17

20

2-26

Ref.

Copyright © 2010 John Wiley & Sons, Inc.

J1 Credit

1,500

1,000

Weygandt, Financial Accounting, 7/e, Solutions Manual

5,700

(For Instructor Use Only)

PROBLEM 2-1A (Continued) Date

Account Titles and Explanation

Apr. 25

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

2,500

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

8,900

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

900

30

30

Copyright © 2010 John Wiley & Sons, Inc.

Ref.

Weygandt, Financial Accounting, 7/e, Solutions Manual

Debit

Credit 2,500

8,900

900

(For Instructor Use Only)

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

25,000

No entry—not a transaction.

3

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

126 201

2,500

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

729 101

900

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

112 400

2,100

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

101 209

3,500

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

101 400

1,200

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

726 101

2,000

11

12

17

31

2-28

25,000

2

7

Copyright © 2010 John Wiley & Sons, Inc.

J1 Credit

2,500

900

2,100

3,500

1,200

Weygandt, Financial Accounting, 7/e, Solutions Manual

2,000

(For Instructor Use Only)

PROBLEM 2-2A (Continued) Date

Account Titles and Explanation

Ref.

May 31

Accounts Payable ($2,500 X 40%)............ Cash ...................................................... (Paid creditor on account)

201 101

Debit

Credit

1,000 1,000

(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

Ref. J1 J1 J1 J1 J1 J1

Ref. J1

Ref. J1

Ref. J1 J1

Debit 25,000

Credit 900

3,500 1,200 2,000 1,000

Debit 2,100

Debit 2,500

Debit

No. 101 Balance 25,000 24,100 27,600 28,800 26,800 25,800

Credit

No. 112 Balance 2,100

Credit

No. 126 Balance 2,500

Credit 2,500

No. 201 Balance

1,000

1,500

Debit

No. 209 Balance 3,500

Unearned Revenue Date Explanation May 12

Ref. J1

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

Credit 3,500

(For Instructor Use Only)

2-29

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

Service Revenue Date Explanation May 11 17

Salaries 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 2,100 1,200

No. 400 Balance 2,100 3,300

Credit

No. 726 Balance 2,000

Credit

No. 729 Balance 900

JANE KENT, INC. Trial Balance May 31, 2011 Cash ................................................................................ Accounts Receivable................................................. Supplies ......................................................................... Accounts Payable....................................................... Unearned Revenue..................................................... Common Stock............................................................ Service Revenue ......................................................... Salaries Expense ........................................................ Rent Expense...............................................................

2-30

Credit 25,000

No. 311 Balance 25,000

Copyright © 2010 John Wiley & Sons, Inc.

Debit $25,800 2,100 2,500

Credit

$ 1,500 3,500 25,000 3,300 2,000 900 $33,300

Weygandt, Financial Accounting, 7/e, Solutions Manual

$33,300

(For Instructor Use Only)

PROBLEM 2-3A

(a) & (c) Balance

(4) (7)

Common Stock Balance

Cash 8,000 (1) (3) 14,000 (5) 6,000 (8) (9) 4,000

1,000 2,000 Retained Earnings Balance

15,000 3,000 3,000 (9)

Accounts Receivable Balance 15,000 (4) 14,000 (7) 9,000 10,000

Balance (2)

Balance

Parts Inventory 13,000 4,000 (6) 13,000

4,000

Prepaid Rent 3,000 3,000

Shop Equipment Balance 21,000 21,000

(5)

Accounts Payable Balance (2) 15,000

19,000 4,000

30,000 30,000

11,000 11,000

Dividends 3,000 3,000

Repair Services Revenue (7) 15,000 15,000

(1)

Advertising Expense 1,000 1,000

(3)

Miscellaneous Expense 2,000 2,000

(6)

Repair Parts Expense 4,000 4,000

(8)

Wage Expense 3,000 3,000

8,000 Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

(For Instructor Use Only)

2-31

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

2.

3.

4.

5.

6.

7.

8.

9.

2-32

Account Titles and Explanation

Debit

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

1,000

Parts Inventory................................................ Accounts Payable ...............................

4,000

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

2,000

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

14,000

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

15,000

Repair Parts Expense ................................... Parts Inventory.....................................

4,000

Cash.................................................................... Accounts Receivable .................................... Repair Services Revenue..................

6,000 9,000

Wage Expense ................................................ Cash.........................................................

3,000

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

3,000

Copyright © 2010 John Wiley & Sons, Inc.

Credit 1,000

4,000

2,000

14,000

15,000

4,000

15,000

3,000

Weygandt, Financial Accounting, 7/e, Solutions Manual

3,000

(For Instructor Use Only)

PROBLEM 2-3A (Continued) (d)

BYTE REPAIR SERVICE, INC. Trial Balance January 31, 2011 Cash ................................................................................ Accounts Receivable................................................. Parts Inventory ............................................................ Prepaid Rent................................................................. Shop Equipment ......................................................... Accounts Payable....................................................... Common Stock ............................................................ Retained Earnings ...................................................... Dividends....................................................................... Repair Services Revenue......................................... Advertising Expense ................................................. Miscellaneous Expense............................................ Repair Parts Expense................................................ Wage Expense .............................................................

Copyright © 2010 John Wiley & Sons, Inc.

Debit $ 4,000 10,000 13,000 3,000 21,000

Credit

$ 8,000 30,000 11,000 3,000 15,000 1,000 2,000 4,000 3,000 $64,000

Weygandt, Financial Accounting, 7/e, Solutions Manual

$64,000

(For Instructor Use Only)

2-33

PROBLEM 2-4A

STERLING COMPANY Trial Balance May 31, 2011 Cash ($5,850 + $520 – $405) ............................................... Accounts Receivable ($2,570 – $210).............................. Prepaid Insurance ($700 + $100)....................................... Supplies ($0 + $520) .............................................................. Equipment ($8,000 – $520) .................................................. Accounts Payable ($4,500 – $100 + $520 – $210)........ Property Taxes Payable ....................................................... Common Stock ($11,700 + $1,000) ................................... Dividends ($0 + $1,000) ........................................................ Service Revenue..................................................................... Salaries Expense ($4,200 + $200) ..................................... Advertising Expense ($1,100 + $405) .............................. Property Tax Expense ($800 + $100) ...............................

2-34

Copyright © 2010 John Wiley & Sons, Inc.

Debit $ 5,965 2,360 800 520 7,480

Credit

$ 4,710 560 12,700 1,000 6,960 4,400 1,505 900 $24,930

Weygandt, Financial Accounting, 7/e, Solutions Manual

$24,930

(For Instructor Use Only)

PROBLEM 2-5A

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

Explanation Balance

Accounts Receivable Date Explanation Apr. 30

Prepaid Rentals Date Explanation Apr. 30

Land Date Apr. 1

Explanation Balance

Ref.  J1 J1 J1 J1 J1 J1 J1 J1

Ref. J1

Ref. J1

Ref. 

Debit

Credit 800

2,800 3,000 500 5,200 2,000 85 900

Debit 85

Debit 900

Debit

Buildings Date Explanation Apr. 1 Balance

Ref. 

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

Debit

No. 101 Balance 6,000 5,200 8,000 5,000 4,500 9,700 7,700 7,785 6,885

Credit

No. 112 Balance 85

Credit

No. 136 Balance 900

Credit

No. 140 Balance 10,000

Credit

No. 145 Balance 8,000

(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

Admission Revenue Date Explanation Apr. 9 25

Concession Revenue Date Explanation Apr. 30

2-36

Copyright © 2010 John Wiley & Sons, Inc.

Ref. 

Ref.  J1 J1

Ref.  J1

Ref. 

Ref. J1 J1

Ref. J1

Debit

Debit

Credit

Credit

1,000 1,000

Debit

Debit

Debit

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

Credit

No. 275 Balance 8,000 6,000

Credit

No. 311 Balance 20,000

2,000

Debit

No. 157 Balance 6,000

Credit 2,800 5,200

No. 405 Balance 2,800 8,000

Credit 170

No. 406 Balance 170

Weygandt, Financial Accounting, 7/e, Solutions Manual

(For Instructor Use Only)

PROBLEM 2-5A (Continued) Advertising Expense Date Explanation Apr. 12 Film Rental Expense Date Explanation Apr. 2 20 Salaries Expense Date Explanation Apr. 29

Ref. J1

Ref. J1 J1

Ref. J1

Debit 500

Debit 800 1,000

Debit 2,000

Credit

No. 610 Balance 500

Credit

No. 632 Balance 800 1,800

Credit

No. 726 Balance 2,000

(b) Date Apr. 2

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

Ref. 632 101

Debit 800

800

3

No entry—not a transaction.

9

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

101 405

2,800

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

275 201 101

2,000 1,000

10

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

J1 Credit

2,800

3,000

(For Instructor Use Only)

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

500

Film Rental Expense ................................. Accounts Payable ........................... (Rented film on account)

632 201

1,000

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

101 405

5,200

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

726 101

2,000

Cash................................................................ Accounts Receivable ................................ Concession Revenue ..................... (17% X $1,000) (Received cash and balance on account for concession revenue)

101 112 406

85 85

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

136 101

900

Copyright © 2010 John Wiley & Sons, Inc.

Credit

500

1,000

5,200

Weygandt, Financial Accounting, 7/e, Solutions Manual

2,000

170

900

(For Instructor Use Only)

PROBLEM 2-5A (Continued) (d)

LAKE THEATER Trial Balance April 30, 2011

Cash ................................................................................ Accounts Receivable................................................. Prepaid Rentals ........................................................... Land................................................................................. Buildings........................................................................ Equipment ..................................................................... Accounts Payable....................................................... Mortgage Payable ....................................................... Common Stock ............................................................ Admission Revenue................................................... Concession Revenue................................................. Advertising Expense ................................................. Film Rental Expense.................................................. Salaries Expense ........................................................

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

Debit $ 6,885 85 900 10,000 8,000 6,000

Credit

$ 2,000 6,000 20,000 8,000 170 500 1,800 2,000 $36,170

$36,170

(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 20,000

20,000

Land .................................................................. Buildings ......................................................... Equipment....................................................... Cash ........................................................ (Purchased Heeren’s Golf Land)

12,000 2,000 1,000

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

700

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

600

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

1,050

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

340

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

1,000

Copyright © 2010 John Wiley & Sons, Inc.

J1 Credit

15,000

700

600

1,050

340

Weygandt, Financial Accounting, 7/e, Solutions Manual

1,000

(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

800

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

250

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

1,050

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

200

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

Credit

250

1,050

200

(For Instructor Use Only)

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

1,000

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

126 201

4,000

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

112 400

5,100

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

101 209

1,000

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

101 400

2,100

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

726 101

2,400

10

11

20

30

2-42

40,000

1

3

Copyright © 2010 John Wiley & Sons, Inc.

J1 Credit

1,000

4,000

5,100

1,000

2,100

Weygandt, Financial Accounting, 7/e, Solutions Manual

2,400

(For Instructor Use Only)

PROBLEM 2-2B (Continued) Date

Account Titles and Explanation

Ref.

Debits

Apr. 30

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

201 101

1,600

Credit 1,600

(b) Cash Date Apr.

Explanation 1 2 11 20 30 30

Accounts Receivable Date Explanation Apr. 10 Supplies Date Apr. 3

Explanation

Accounts Payable Date Explanation Apr. 3 30

Ref.

Debit

J1 J1 J1 J1 J1 J1

40,000

Ref. J1

Ref. J1

Ref. J1 J1

Credit 1,000

1,000 2,100 2,400 1,600

Debit 5,100

Debit 4,000

Debit

Ref. J1

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

Debit

40,000 39,000 40,000 42,100 39,700 38,100

Credit

No. 112 Balance 5,100

Credit

No. 126 Balance 4,000

Credit 4,000

No. 201 Balance 4,000 2,400

1,600

Unearned Revenue Date Explanation Apr. 11

No. 101 Balance

Credit 1,000

No. 209 Balance 1,000

(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 Expense Date Explanation Apr. 30

Ref. J1

Rent Expense Date Explanation Apr. 2

(c)

Ref. J1

Debit

Debit

Debit 2,400

Debit 1,000

Credit 5,100 2,100

No. 400 Balance 5,100 7,200

Credit

No. 726 Balance 2,400

Credit

No. 729 Balance 1,000

MARIA JUAREZ, DENTIST Trial Balance April 30, 2011 Cash................................................................................. Accounts Receivable ................................................. Supplies.......................................................................... Accounts Payable ....................................................... Unearned Revenue ..................................................... Common Stock ............................................................ Service Revenue.......................................................... Salaries Expense......................................................... Rent Expense ...............................................................

2-44

Credit 40,000

No. 311 Balance 40,000

Copyright © 2010 John Wiley & Sons, Inc.

Debit $38,100 5,100 4,000

Credit

$ 2,400 1,000 40,000 7,200 2,400 1,000 $50,600

Weygandt, Financial Accounting, 7/e, Solutions Manual

$50,600

(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

Furniture & Equipment ........................ Cash................................................. Accounts Payable .......................

30,000

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

1,800

Office Supplies ....................................... Cash.................................................

500

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

1,500

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

8,000 12,000

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

400

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

3,000

Utility Expense........................................ Accounts Payable .......................

200

4.

5.

6.

7.

8.

9.

10.

11.

Copyright © 2010 John Wiley & Sons, Inc.

Weygandt, Financial Accounting, 7/e, Solutions Manual

Credit

24,000

10,000 20,000

1,800

500

1,500

20,000

400

3,000

200

(For Instructor Use Only)

2-45

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

Account Titles and Explanation Salaries 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) 18,700

(4) 24,000 10,000 1,800 500 400 (9) 5,600

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

Prepaid Rent 24,000 24,000 Copyright © 2010 John Wiley & Sons, Inc.

Accounts Payable (4) 20,000 (7) 1,500 400 (11) 200 21,300

Common Stock (1)

Service Revenue (8)

Office Supplies 500 1,500 2,000

Prepaid Insurance 1,800 1,800

Furniture & Equipment 30,000 30,000

(12)

Salaries Expense 5,600 5,600

(11)

Utility Expense 200 200

Weygandt, Financial Accounting, 7/e, Solutions Manual

50,000 50,000

20,000 20,000

(For Instructor Use Only)

PROBLEM 2-3B (Continued) (c)

SLOWHAND SERVICES Trial Balance May 31, 2011 Cash ............................................................................ Accounts Receivable............................................. Office Supplies ........................................................ Prepaid Insurance .................................................. Prepaid Rent............................................................. Furniture & Equipment.......................................... Accounts Payable................................................... Common Stock ........................................................ Service Revenue ..................................................... Salaries Expense .................................................... Utility Expense.........................................................

Copyright © 2010 John Wiley & Sons, Inc.

Debit $18,700 9,000 2,000 1,800 24,000 30,000

Credit

$21,300 50,000 20,000 5,600 200 $91,300

Weygandt, Financial Accounting, 7/e, Solutions Manual

$91,300

(For Instructor Use Only)

2-47

PROBLEM 2-4B

SYED MOIZ CO. Trial Balance June 30, 2011 Cash ($3,340 + $360) ........................................................... Accounts Receivable ($2,731 – $360)............................ Supplies ($1,200 – $620) .................................................... Equipment ($2,600 + $620)................................................ Accounts Payable ($3,666 – $306 – $360).................... Unearned Revenue .............................................................. Common Stock ..................................................................... Dividends ($800 + $600)..................................................... Service Revenue ($2,480 + $801) .................................... Salaries Expense ($3,200 + $700 – $600) ..................... Office Expense......................................................................

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Debit $ 3,700 2,371 580 3,220

Credit

$ 3,000 1,100 8,000 1,400 3,281 3,300 810 $15,381

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

Explanation Balance

Accounts Receivable Date Explanation Mar. 31

Land Date Mar. 1

Explanation Balance

Buildings Date Explanation Mar. 1 Balance

Equipment Date Explanation Mar. 1 Balance

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Ref.  J1 J1 J1 J1 J1 J1 J1 J1 J1

Ref. J1

Ref. 

Ref. 

Ref. 

450 9,000

No. 101 Balance 9,000 7,500 11,500 7,400 6,950 11,950 9,950 7,450 7,900 16,900

Debit 450

Credit

No. 112 Balance 450

Credit

No. 140 Balance 24,000

Credit

No. 145 Balance 10,000

Credit

No. 157 Balance 10,000

Debit

Credit 1,500

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

Debit

Debit

Debit

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

Common Stock Date Explanation Mar. 1 Balance

Admission Revenue Date Explanation Mar. 9 20 31

Concession Revenue Date Explanation Mar.31

Advertising Expense Date Explanation Mar.12

Film Rental Expense Date Explanation Mar. 2 20

2-50

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Ref.  J1 J1

Ref. 

Ref. J1 J1 J1

Ref. J1

Ref. J1

Ref. J1 J1

Debit

Credit 2,000

4,100

Debit

Debit

Debit

Debit 450

Debit 3,500 2,000

Credit

No. 201 Balance 7,000 9,000 4,900

No. 311 Balance 46,000

Credit 4,000 5,000 9,000

No. 405 Balance 4,000 9,000 18,000

Credit 900

No. 406 Balance 900

Credit

No. 610 Balance 450

Credit

No. 632 Balance 3,500 5,500

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PROBLEM 2-5B (Continued) Salaries Expense Date Explanation Mar. 31

Ref. J1

Debit 2,500

Credit

No. 726 Balance 2,500

(b) J1 Date

Account Titles and Explanation

Ref.

Debit

Mar. 2

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

632 201 101

3,500 2,000 1,500

3

No entry.

9

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

101 405

4,000

Accounts Payable ($2,000 + $2,100)......... Cash...................................................... (Paid creditors on account)

201 101

4,100

10

4,000

4,100

11

No entry.

12

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

610 101

450

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

101 405

5,000

Film Rental Expense .................................. Cash...................................................... (Paid film rental)

632 101

2,000

20

20

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Credit

450

5,000

2,000

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PROBLEM 2-5B (Continued) Date

Account Titles and Explanation

Ref.

Debit

Mar. 31

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

726 101

2,500

Cash ................................................................. Accounts Receivable.................................. Concession Revenue....................... (15% X $6,000) (Received cash and balance on account for concession revenue)

101 112 406

450 450

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

101 405

9,000

31

31

(d)

2,500

900

9,000

JOSIE THEATER Trial Balance March 31, 2011 Cash ............................................................................. Accounts Receivable.............................................. Land.............................................................................. Buildings..................................................................... Equipment .................................................................. Accounts Payable.................................................... Common Stock ......................................................... Admission Revenue ................................................ Concession Revenue.............................................. Advertising Expense............................................... Film Rental Expense ............................................... Salaries Expense ....................................................

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Credit

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Debit $16,900 450 24,000 10,000 10,000

Credit

$ 4,900 46,000 18,000 900 450 5,500 2,500 $69,800

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BYP 2-1

FINANCIAL REPORTING PROBLEM

(a)

(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

Account Accounts Payable

(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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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:

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1.

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

2.

Decrease in 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

EXPLORING THE WEB

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 5 7 14 15 20

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

250

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

300

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

800

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

400

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

184

30

Correct.

31

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

250 300 800 400 184

1,700 1,700

(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).....

$4,500 $ 400 1,700

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

2-56

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2,100 6,600 300 $6,300 $12,475

$ 36 1,700

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1,736 $14,211

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BYP 2-5

COMMUNICATION ACTIVITY

Date:

May 25, 2010

To:

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........................................................................ Service Revenue ....................................................................... (Bill customers for services provided)

6,000 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 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 Expense ............................................................................... Cash .............................................................................................. (Salaries paid)

2,000 2,000

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

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BYP 2-6

ETHICS CASE

(a) The stakeholders in this situation are:   

Mary Jansen, assistant chief accountant. Users of the company’s financial statements. The Casey 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), Mary’s action might not be considered unethical in the preparation of interim financial statements. However, if Mary is violating a company accounting policy by her action, then she is acting unethically. (c) Mary’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 ACTIVITY

(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 followup 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-todate. 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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