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 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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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
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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.
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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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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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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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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
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Copyright © 2010 John Wiley & Sons, Inc.
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
Weygandt, Financial Accounting, 7/e, Solutions Manual
$69,800 (For Instructor Use Only)
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................................
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2,100 6,600 300 $6,300 $12,475
$ 36 1,700
Weygandt, Financial Accounting, 7/e, Solutions Manual
1,736 $14,211
(For Instructor Use Only)
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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