SOLUTIONS MANUAL for College Accounting: A Practical Approach Canadian Twelfth Edition. Jeffrey Slat by digitaldownload87

SOLUTIONS MANUAL for College Accounting: A Practical Approach Canadian Twelfth Edition. Jeffrey Slater Brian Zwicker

Contents

Chapter 1

Review of Arithmetic ..............................................................1

Chapter 2

Review of Basic Algebra .......................................................14

Chapter 3

Ratio, Proportion, and Percent ..............................................28

Chapter 4

Linear Systems ......................................................................41

Chapter 5

Cost-Volume-Profit Analysis and Break-Even .....................51

Chapter 6 Trade Discounts, Cash Discounts, Markup, and Markdown .62 Chapter 7

Simple Interest .......................................................................74

Chapter 8

Simple Interest Applications .................................................87

Chapter 9

Compound Interest—Future Value and Present Value ....... 99

Chapter 10 Compound Interest—Further Topics................................... 112 Chapter 11 Ordinary Simple Annuities .................................................. 124 Chapter 12 Ordinary General Annuities ................................................ 138 Chapter 13 Annuities Due, Deferred Annuities, and Perpetuities ......... 151 Chapter 14 Amortization of Loans, Including Residential Mortgages .. 168 Chapter 15 Bond Valuation and Sinking Funds..................................... 183 Chapter 16 Investment Decision Applications....................................... 199

1 Accounting Concepts and Procedures: An Introduction

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. 2.

3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

The functions of accounting are to analyze, record, classify, summarize, report and interpret information. Sole proprietorship—1 owner, unlimited liability; easy to form Partnership—2 or more owners; unlimited liability, easy to form Corporation—1 or many shareholders; limited liability; more difficult to form Service, merchandising, or manufacturing Bookkeeping is the recording function of the accounting process. Accounting is the reporting and interpreting of that information. The three elements of the basic accounting equation are assets, liabilities, owner’s equity. Capital is the owner’s current investment or equity in the assets of a business. It is one subdivision of owner’s equity. True. The sum of the left side of the equation must equal the sum of the right side of the equation. False. It is the income statement which tells how well the company has performed. False. Revenue is a subdivision of owner’s equity. Owner’s equity is subdivided into Capital, Withdrawals, Revenue, and Expenses. False. It is a non-business expense; a subdivision of owner’s equity. Reject. As expenses increase, owner’s equity decreases. Revenue less Expenses; an income statement shows performance—profit or loss for the period. False. It calculates ending capital. The question in this case is whether Paul should be allowed to “pad” his expense account with an additional $100 of expenses. I feel that Paul should only be allowed to charge those items that are business related. Paul’s argument that he is entitled to an additional $100 is not a valid assumption. However, he should be allocated money for any business expenses during the weekend.

1-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES 1.

a. b. c. d. e. f.

A A L A OE A

$16,000 ($4,000 + $12,000)

b. d. f. g.

J. Penny, Capital J. Penny, Withdrawals Advertising Expense Taxi Fees Earned

a. b. c.

Equities Assets Accounts Payable

c. d.

Accounts Payable Grooming Fees Earned

a. b.

I S

a. b. d.

a. b. c. d. e. f. g. h.

IS BS BS BS IS IS OE BS

a. b. c. d.

OE BS BS IS

SOLUTIONS TO EXERCISES—SET A EXERCISE 1-1A. a.

$15,000

($19,000 - $4,000)

$15,000

($ 6,000 + $9,000)

$ 6,000

($10,000 - $4,000)

EXERCISE 1-2A. Cash

Assets + Equipment

a. + $8,000 b. - $600 c.

Liabilities

Owner’s Equity

+ $8,000 + $600 + $900

+ $900

EXERCISE 1-3A. RANGE CO. CLEANERS BALANCE SHEET NOVEMBER 30, 2016 ASSETS Cash Equipment

Total Assets

1-2A

LIABILITIES AND OWNER’S EQUITY $5 0 0 0 0 0 0 Liabilities 7 0 0 0 00 Accounts Payable Owner’s Equity B. Range, Capital Total Liabilities and $5 7 0 0 0 0 0 Owner’s Equity

$1 4 0 0 0 0 0 43 0 0 0 0 0 $5 7 0 0 0 0 0

EXERCISE 1-4A.

BELL’S COMPUTER COMPANY Assets

Cash a.

Accounts + Receivable

Computer Equipment

Liabilities +

Accounts Payable +

+ $60,000 + $7,000 - $200

+ $14,000

B. Bell, Capital

B. Bell, Withdrawals +

Revenue

Expenses

+ $60,000

b. c.

Owner’s Equity

+ $7,000 + $200 + $14,000

+ $30,000

- $4,000

+ $4,000

- $1,500

+ $1,500

ENDING BALANCE

$68,300

+ $30,000

+ $7,000

+ $105,300

$105,300

+ $60,000

- $200

+ $44,000

- $5,500

Remember, as withdrawals or expenses increase, the end result is to reduce owner’s equity.

EXERCISE 1-5A. (a) FRENCH REALTY INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 2016 Revenue: Professional Fees Operating Expenses: Salaries Expense Utilities Expense Rent Expense Total Operating Expenses Net Income

$2 9 0 0 0 0 $ 5 0 0 00 3 6 0 00 5 0 0 00 1 3 6 0 00 $1 5 4 0 0 0

(b) FRENCH REALTY STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 2016 S. French, Capital, June 1, 2016 Net Income for June Less: Withdrawals for June Increase in Capital S. French, Capital, June 30, 2016

$8 0 0 0 0 0 $1 5 4 0 0 0 4 0 00 1 5 0 0 00 $9 5 0 0 0 0

1-3A

SOLUTIONS TO EXERCISES—SET A, Cont. (c) FRENCH REALTY BALANCE SHEET JUNE 30, 2016 ASSETS

LIABILITIES AND OWNER’S EQUITY

Cash Accounts Receivable Office Equipment

$3 3 1 0 0 0 Liabilities 1 4 9 0 00 Accounts Payable 6 7 0 0 0 0 Owner’s Equity S. French, Capital Total Liabilities $11 5 0 0 0 0 and Owner’s Equity

Total Assets

$2 0 0 0 0 0 9 5 0 0 00 $11 5 0 0 0 0

SOLUTIONS TO EXERCISES—SET B EXERCISE 1-1B. a.

$9,000

($15,000 - $6,000)

$19,000

($8,000 + $11,000)

$9,000

($14,000 - $5,000)

EXERCISE 1-2B. Cash

Assets + Equipment

a. + $12,000 b. - $2,000 + $2,000 c. + $3,500

Liabilities

Owner’s Equity

+ $12,000 + $3,500

EXERCISE 1-3B. RANGE CO. CLEANERS BALANCE SHEET NOVEMBER 30, 2016 ASSETS Cash Equipment

Total Assets

1-4B

LIABILITIES AND OWNER’S EQUITY $2 0 0 0 0 0 0 Liabilities 16 0 0 0 0 0 Accounts Payable Owner’s Equity B. Range, Capital Total Liabilities and $3 6 0 0 0 0 0 Owner’s Equity

$1 2 0 0 0 0 0 24 0 0 0 0 0 $3 6 0 0 0 0 0

EXERCISE 1-4B.

BELL’S COMPUTER COMPANY Assets

Cash a.

Accounts + Receivable

Computer Equipment

Liabilities +

Accounts Payable +

+ $40,000 + $8,000 - $150

+ $12,000

B. Bell, Capital

B. Bell, Withdrawals +

Revenue

Expenses

+ $40,000

b. c.

Owner’s Equity

+ $8,000 + $150 + $12,000

+ $25,000

- $3,000

+ $3,000

- $900

+ $900

ENDING BALANCE

$47,950

+ $25,000

+ $8,000

+ $80,950

$80,950

+ $40,000

- $150

+ $37,000

- $3,900

Remember, as withdrawals or expenses increase, the end result is to reduce owner’s equity.

EXERCISE 1-5B. (a)

FRENCH REALTY INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 2016 Revenue: Professional Fees Operating Expenses: Salaries Expense Utilities Expense Rent Expense Total Operating Expenses Net Income

$5 6 0 0 0 0 $ 8 0 0 00 7 6 0 00 6 5 0 00 2 2 1 0 00 $3 3 9 0 0 0

$9 0 0 0 0 0 $3 3 9 0 0 0 6 4 0 00 2 7 5 0 00 $11 7 5 0 0 0

1-5B

SOLUTIONS TO EXERCISES—SET B, Cont. (c) FRENCH REALTY BALANCE SHEET JUNE 30, 2016 ASSETS Cash Accounts Receivable Office Equipment

LIABILITIES AND OWNER’S EQUITY $4 6 5 0 0 0 Liabilities 2 6 0 0 00 Accounts Payable 8 5 0 0 0 0 Owner’s Equity S. French, Capital Total Liabilities $15 7 5 0 0 0 and Owner’s Equity

Total Assets

$4 0 0 0 0 0 11 7 5 0 0 0 $15 7 5 0 0 0

PROBLEM 1A-1. MIA’S NAIL SPA Assets

Cash

Transaction a BALANCE Transaction b BALANCE Transaction c BALANCE Transaction d ENDING BALANCE

Equipment

Liabilities

Owner’s Equity

Accounts Payable

Mia Annabelle, Capital

+ $20,000

20,000

-4,000 16,000

4,000

+6,000 16,000

10,000

20,000 +$6,000

-1,000 $15,000

20,000

+$4,000

6,000

20,000

$20,000

-1,000 +

$10,000

$5,000

$25,000

PROBLEM 1A-2. SEE’S INTERNET SERVICE BALANCE SHEET SEPTEMBER 30, 2017 ASSETS Assets: Cash Equipment Building

Total Assets

1-6B

LIABILITIES AND OWNER’S EQUITY Liabilities: $18 0 0 0 0 0 Accounts Payable 14 0 0 0 0 0 2 0 0 0 0 0 0 Owner’s Equity: B. See, Capital

$52 0 0 0 0 0

Total Liabilities and Owner’s Equity

$15 0 0 0 0 0

37 0 0 0 0 0

$52 0 0 0 0 0

PROBLEM 1A-3. RICK FOX DESKTOP PUBLISHING SERVICE Assets

Cash

a BALANCE b BALANCE c BALANCE d BALANCE e BALANCE f BALANCE g BALANCE h ENDING BALANCE

Accounts + Receivable

Office Equipment

Liabilities +

Accounts Payable +

+$12,000

Owner’s Equity R. Fox, Capital

R. Fox, Withdrawals +

Expenses

+$12,000

12,000

= + $4,000

12,000

12,000 + $4,000

4,000

12,000

4,000

12,000

+500

+ $500

12,500 + $2,100 12,500

Revenue

500 +2,100

2,100

4,000

12,000

2,600

2,100

4,000

12,000

2,600

11,640

2,100

4,000

12,000

2,600

860

11,640

2,100

4,000

4,900

12,000

2,600

1,760

$2,600

$1,760

- 650 11,850

+$650

- 210

+210

+900

- 400 $11,240

650

$400 +

$2,100

$4,000

$4,900

$17,340

$12,000

$400

PROBLEM 1A-4. (a) WEST’S STENCILLING SERVICE INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 2017 Revenue: Stenciling Fees Operating Expenses: Advertising Expense Repair Expense Travel Expense Supplies Expense Rent Expense Total Operating Expenses Net Income

$3 0 0 0 0 0

$ 1 1 0 00 2 5 00 2 5 0 00 1 9 0 00 2 5 0 00 8 2 5 00 $2 1 7 5 0 0

1-7

PROBLEM 1A-4., Cont. (b) WEST’S STENCILLING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 2017 J. West, Capital, June 1, 2017 Net Income for June Less: Withdrawals for June Increase in Capital J. West, Capital, June 30, 2017

$1 2 0 0 0 0 $2 1 7 5 0 0 3 0 0 00 1 8 7 5 00 $3 0 7 5 0 0

Total Assets

1-8

LIABILITIES AND OWNER’S EQUITY Liabilities: $2 3 0 0 0 0 Accounts Payable 4 0 0 00 6 8 5 0 0 Owner’s Equity J. West, Capital

3 0 7 5 00

Total Liabilities and Owner’s Equity

$3 3 8 5 0 0

$ 3 1 0 00

PROBLEM 1A-5. MARTIN’S CATERING SERVICE Assets

Cash

10/28 BALANCE 10/29 BALANCE 10/30 BALANCE 10/31 BALANCE 11/1 BALANCE 11/4 BALANCE 11/8 BALANCE 11/11 BALANCE 11/15 BALANCE 11/18 BALANCE 11/19 BALANCE 11/25 BALANCE 11/28 BALANCE 11/29 ENDING BALANCE

Accounts + Receivable

Equipment

Liabilities +

Accounts Jill Martin, Payable + Capital

+$8,000

Owner’s Equity

Jill Martin, Withdrawals +

Catering Revenue

+$8,000

8,000 - 900

8,000

+$900

7,100

900

2,700

+1,800

+$1,800 +

8,000

800

8,000

800

8,000

2,900

2,700

800

8,000

2,900

2,700

800

8,000

-1,000

1,800 - 1,000

6,100 +2,900

+$2,900

9,000 -720

+$720

8,280 +$300 8,280

+100 8,380

Expenses

300

720

3,200

720

+300

- 100 +

200

2,700

800

8,000

3,200

200

2,700

800

8,000

3,200

795

200

2,700

800

8,000

3,200

795

10,015

200

2,700

800

8,000

5,000

795

10,015

200

3,100

1,200

8,000

5,000

795

10,015

200

3,100

1,800

8,000

5,000

1,395

- 75 8,305

+75

- 90 8,215

+90

+1,800

+400

+600

- 400 $9,615

+400 +

$200

$3,100

$1,800

$12,915

$8,000

$90

$5,000

$1,795

1-9

PROBLEM 1A-5., Cont. MARTIN’S CATERING SERVICE BALANCE SHEET OCTOBER 31, 2016 ASSETS Assets: Cash Equipment

Total Assets

LIABILITIES AND OWNER’S EQUITY

$6 1 0 0 0 0 2 7 0 0 00

$8 8 0 0 0 0

Liabilities: Accounts Payable

$ 8 0 0 00

Owner’s Equity: Jill Martin, Capital

8 0 0 0 00

Total Liabilities and Owner’s Equity

$8 8 0 0 0 0

MARTIN’S CATERING SERVICE INCOME STATEMENT FOR THE MONTH ENDING NOVEMBER 30, 2016 Revenue: Catering Fees Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense Total Operating Expenses Net Income

1-10

$5 0 0 0 0 0

$ 7 2 0 00 7 5 00 6 0 0 00 4 0 0 00 1 7 9 5 00 $3 2 0 5 0 0

PROBLEM 1A-5., Cont. MARTIN’S CATERING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED NOVEMBER 30, 2016 Jill Martin, Capital, November 1, 2016 Net Income for November Less: Withdrawals for November Increase in Capital Jill Martin, Capital, November 30, 2016

$8 0 0 0 0 0 $3 2 0 5 0 0 9 0 00 3 1 1 5 00 $11 1 1 5 0 0

MARTIN’S CATERING SERVICE BALANCE SHEET NOVEMBER 30, 2016 ASSETS Assets: Cash Accounts Receivable Equipment

Total Assets

LIABILITIES AND OWNER’S EQUITY Liabilities: $9 6 1 5 0 0 Accounts Payable 2 0 0 00 3 1 0 0 0 0 Owner’s Equity: Jill Martin, Capital

11 1 1 5 0 0

Total Liabilities and $1 2 9 1 5 0 0 Owner’s Equity

$1 2 9 1 5 0 0

$1 8 0 0 0 0

1-11

PROBLEM 1B-1. MIA’S NAIL SPA Assets

Cash

Transaction a BALANCE Transaction b BALANCE Transaction c BALANCE Transaction d ENDING BALANCE

Equipment

Liabilities

Owner’s Equity

Accounts Payable

Mia Annabelle, Capital

+ $16,000

+$16,000

16,000

= +$1,500

16,000

16,000 + $1,500

1,500

16,000

1,500

700

16,000

$4,500

$700

$16,000

$16,700

- 800 15,200

- 800

-3,000 $12,200

1,500

+3,000 +

PROBLEM 1B-2. SEE’S INTERNET SERVICE BALANCE SHEET SEPTEMBER 30, 2017 ASSETS Assets: Cash Building Equipment

Total Assets

1-12

LIABILITIES AND OWNER’S EQUITY Liabilities: $1 6 0 0 0 0 0 Accounts Payable 28 0 0 0 0 0 4 0 0 0 0 0 0 Owner’s Equity: B. See, Capital

$8 4 0 0 0 0 0

Total Liabilities and Owner’s Equity

$6 0 0 0 0 0 0

24 0 0 0 0 0

$8 4 0 0 0 0 0

PROBLEM 1B-3. RICK FOX DESKTOP PUBLISHING SERVICE Assets

Cash

a BALANCE b BALANCE c BALANCE d BALANCE e BALANCE f BALANCE g BALANCE h ENDING BALANCE

Accounts + Receivable

Office Equipment

Liabilities +

Accounts Payable

+$9,000

Owner’s Equity R. Fox, Capital

R. Fox, Withdrawals +

Revenue

+$9,000

9,000

= + $3,000

9,000

9,000 + $3,000

3,000

9,000

3,000

9,000

1,290

3,000

9,000

1,290

+1,290

+ $1,290

10,290 - 625

+$625

9,665 +$2,690 9,665

625

+2,690

2,690

3,000

9,000

3,980

625

2,690

3,000

9,000

3,980

1,125

2,690

3,000

9,000

3,980

1,125

- 500 9,165

+500

- 350 8,815

+$350 -

350

+100 $8,815

Expenses

$2,690

$3,000

$3,100

$14,505

+100 +

$9,000

$350

$3,980

$1,225

PROBLEM 1B-4. (a) WEST’S STENCILLING SERVICE INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 2017 Revenue: Stencilling Fees Operating Expenses: Advertising Expense Repair Expense Travel Expense Supplies Expense Rent Expense Total Operating Expenses Net Income

$1 0 9 8 0 0

$ 1 3 5 00 4 5 00 9 0 00 2 7 0 00 2 4 0 00 7 8 0 00 $ 3 1 8 00

1-13

PROBLEM 1B-4. Cont. (b) WEST’S STENCILLING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 2017 J. West, Capital, June 1, 2017 Net Income for June Less: Withdrawals for June Decrease in Capital J. West, June 30, 2017

$3 7 2 0 0 0 $ 3 1 8 00 3 6 0 00 4 2 00 $3 6 7 8 0 0

Total Assets

1-14

LIABILITIES AND OWNER’S EQUITY Liabilities: $2 0 4 3 0 0 Accounts Payable 1 1 4 0 00 5 4 0 0 0 Owner’s Equity J. West, Capital Total Liabilities and $3 7 2 3 0 0 Owner’s Equity

4 5 00

3 6 7 8 00

$3 7 2 3 0 0

PROBLEM 1B-5. 1. MARTIN’S CATERING SERVICE Assets

Cash

10/28 BALANCE 10/29 BALANCE 10/30 BALANCE 10/31 BALANCE 11/1 BALANCE 11/4 BALANCE 11/8 BALANCE 11/11 BALANCE 11/15 BALANCE 11/18 BALANCE 11/19 BALANCE 11/25 BALANCE 11/28 BALANCE 11/29 ENDING BALANCE

Accounts + Receivable

Equipment

Liabilities +

Accounts Jill Martin, Payable + Capital

+$9,500

Owner’s Equity

Jill Martin, Withdrawals +

Catering Revenue

9,500

= +$1,200

9,500

- 1,500

1,200

9,500 +$1,200

1,200

9,500

1,200

9,500

+1,500

8,000

2,700

-600

- 600

7,400

2,700

600

+2,400

+$2,400

9,800

2,700

600

9,500

2,400

- 580

+$580

9,220

2,700

600

9,500

+$4,500 9,220

+2,000 11,220

4,500

2,400

580

+4,500 +

2,700

600

9,500

6,900

2,700

600

9,500

6,900

- 2,000 +

2,500

- 95 11,125

2,500

2,700

600

9,500

2,500

2,700

600

9,500

825

6,900

675

2,500

2,700

2,500

3,200

600

675

9,500

825

8,700

9,500

825

8,700

+500 =

1,100 +750

12,100

2,500

3,200

1,850

675 +750

9,500

825

8,700

- 600 $11,500

675

+1,800

+500 12,100

6,900

+825

+1,800 12,100

580 +95

-825 10,300

Expenses

+$9,500

1,425 +600

$2,500

$3,200

$1,850

$17,200

$9,500

$825

$8,700

$2,025

1-15

PROBLEM 1B-5., Cont. 2. MARTIN’S CATERING SERVICE BALANCE SHEET OCTOBER 31, 2016 ASSETS Assets: Cash Equipment

Total Assets

LIABILITIES AND OWNER’S EQUITY

$7 4 0 0 0 0 2 7 0 0 00

$10 1 0 0 0 0

Liabilities: Accounts Payable

$ 6 0 0 00

Owner’s Equity: Jill Martin, Capital

9 5 0 0 00

Total Liabilities and Owner’s Equity

$10 1 0 0 0 0

3. MARTIN’S CATERING SERVICE INCOME STATEMENT FOR THE MONTH ENDING NOVEMBER 30, 2016 Revenue: Catering Fees Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense Total Operating Expenses Net Income

1-16

$8 7 0 0 0 0

$ 5 8 0 00 9 5 00 7 5 0 00 6 0 0 00 2 0 2 5 00 $6 6 7 5 0 0

PROBLEM 1B-5., Cont. 4. MARTIN’S CATERING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED NOVEMBER 30, 2016 Jill Martin, Capital, November 1, 2016 Net Income for November Less: Withdrawals for November Increase in Capital Jill Martin, Capital, November 30, 2016

$9 5 0 0 0 0 $6 6 7 5 0 0 8 2 5 00 5 8 5 0 00 $1 5 3 5 0 0 0

5. MARTIN’S CATERING SERVICE BALANCE SHEET NOVEMBER 30, 2016 ASSETS Assets: Cash Accounts Receivable Equipment

Total Assets

LIABILITIES AND OWNER’S EQUITY Liabilities: $11 5 0 0 0 0 Accounts Payable 2 5 0 0 00 3 2 0 0 0 0 Owner’s Equity: Jill Martin, Capital

$17 2 0 0 0 0

Total Liabilities and Owner’s Equity

$1 8 5 0 0 0

15 3 5 0 0 0

$1 7 2 0 0 0 0

1-17

PROBLEM 1C-1. RJ GRAPHICS Assets

Cash

TRANSACTION A BALANCE TRANSACTION B BALANCE TRANSACTION C BALANCE TRANSACTION D ENDING BALANCE

Computer Equipment

Software

Liabilities

Owner’s Equity

Accounts Payable

Ruth Jones Capital

+ $10,500

$10,500

= + $4,500

10,500

4,500

-2,500 8,000

4,500

10,500

-2,500 +

4,500

-3,800 $4,200

$10,500 + $4,500

2,000

10,500

+ $3,800

$2,000

$10,500

$12,500

+ $3,800 +

$4,500

PROBLEM 1C-2. LOH’S DATABASE SERVICE BALANCE SHEET APRIL 30, 2016 ASSETS Assets: Cash Equipment Building

Total Assets

1-18

LIABILITIES AND OWNER’S EQUITY Liabilities: $2 3 0 0 0 0 0 Accounts Payable 26 0 0 0 0 0 3 4 0 0 0 0 0 Owner’s Equity: Lewis Loh, Capital

$8 3 0 0 0 0 0

Total Liabilities and Owner’s Equity

$34 0 0 0 0 0

49 0 0 0 0 0

$8 3 0 0 0 0 0

PROBLEM 1C-3. LEROY’S TRAINING SERVICES Assets

Cash

A BALANCE B BALANCE C BALANCE D BALANCE E BALANCE F BALANCE G BALANCE H BALANCE I ENDING BALANCE

Accounts + Receivable

Office Equipment

Liabilities +

Accounts L. Greene, Payable + Capital

+$9,000

Owner’s Equity

L. Greene, Withdrawals +

Revenue

+$9,000

9,000

= +$4,250

9,000

9,000 $4,250

4,250

9,000

4,250

9,000

2,350

4,250

9,000

2,350

+2,350

+$2,350

11,350 - 800

+$800

10,550 +$3,650 10,550

Expenses

800

+3,650

3,650

4,250

9,000

6,000

800

3,650

4,250

9,000

6,000

1,400

8,950

3,650

4,250

9,000

1,000

6,000

1,400

8,950

3,650

4,250

4,650

9,000

1,000

6,000

1,800

- 600 9,950

+600

- 1,000

+ $1,000

+400

- 192 $8,758

192 +

$3,650

$4,250

$4,650

$16,658

$9,000

$1,000

$6,000

$1,992

PROBLEM 1C-4. (a) JENNIFER’S FASHION SERVICE INCOME STATEMENT FOR THE MONTH ENDED JULY 31, 2016 Revenue: Consulting Fees Operating Expenses: Advertising Expense Repair Expense Travel Expense Supplies Expense Rent Expense Office Expense Total Operating Expenses Net Income

$4 8 1 5 0 0 $ 6 3 5 00 3 8 7 00 1 6 9 0 00 2 6 2 00 4 4 0 00 1 7 5 00 3 5 8 9 00 $1 2 2 6 0 0

1-19

PROBLEM 1C-4., Cont. (b) JENNIFER’S FASHION SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JULY 31, 2016 Jennifer Pace, Capital, July 1, 2016 Net Income for July Less: Withdrawals for July Increase in Capital Jennifer Pace, Capital, July 31, 2016

$6 4 3 0 0 0 $1 2 2 6 0 0 7 1 0 00 5 1 6 00 $6 9 4 6 0 0

Total Assets

1-20

LIABILITIES AND OWNER’S EQUITY Liabilities: $1 5 2 4 0 0 Accounts Payable 3 6 7 2 00 3 5 8 0 0 0 Owner’s Equity Jennifer Pace, Capital

$8 7 7 6 0 0

Total Liabilities and Owner’s Equity

$1 8 3 0 0 0

6 9 4 6 00

$8 7 7 6 0 0

PROBLEM 1C-5. 1. FIRST CITY SURVEYING SERVICE Assets

Cash

04/23 BALANCE 04/26 BALANCE 04/29 BALANCE 04/30 BALANCE 05/02 BALANCE 05/03 BALANCE 05/10 BALANCE 05/13 BALANCE 05/14 BALANCE 05/17 BALANCE 05/21 BALANCE 05/24 BALANCE 05/27 BALANCE 05/28 BALANCE 05/31 ENDING BALANCE

Accounts + Receivable

Surveying Equipment

Liabilities +

Accounts H. McGraw Payable + Capital -

$17,000

Owner’s Equity H. McGraw, Withdrawals +

Surveying Revenue

$17,000

17,000

= +$4,750

17,000

- 2,895

4,750

17,000 +$4,750

4,750

17,000

4,750

17,000

+2,895

14,105

7,645

2,375

17,000

7,645

2,375

17,000

2,350

7,645

2,375

17,000

2,350

7,645

2,375

17,000

-2,375

11,730 +2,350

+$2,350

14,080 -975

+$975

13,105 +$4,950 13,105

+2,500 15,605

Expenses

4,950

975

7,300

975

+4,950

- 2,500 +

2,450

7,645

2,375

17,000

7,300

975

2,450

7,645

2,375

17,000

7,300

1,079

2,450

7,645

2,375

17,000

1,043

7,300

1,079

16,283

2,450

7,645

2,375

17,000

1,043

9,125

1,079

16,283

2,450

10,060

4,790

17,000

1,043

9,125

1,079

2,450

10,060

4,790

17,000

1,043

9,125

1,904

2,450

10,060

4,790

17,000

1,043

9,125

2,150

- 104 15,501

+104

- 1,043 14,458

+$1,043

+1,825

+2,415

-825 15,458

+825

- 246 15,212

+246

+410 $15,212

$2,450

$10,060

$5,200

$27,722

+410 +

$17,000

$1,043

$9,125

$2,560

1-21

PROBLEM 1C-5., Cont. 2. FIRST CITY SURVEYING SERVICE BALANCE SHEET APRIL 30, 2016 ASSETS Assets: Cash Surveying Equipment

Total Assets

LIABILITIES AND OWNER’S EQUITY $11 7 3 0 0 0 7 6 4 5 00

$19 3 7 5 0 0

Liabilities: Accounts Payable

$2 3 7 5 0 0

Owner’s Equity: Howard McGraw, Capital

17 0 0 0 0 0

Total Liabilities and Owner’s Equity

$1 9 3 7 5 0 0

3. FIRST CITY SURVEYING SERVICE INCOME STATEMENT FOR THE MONTH ENDING MAY 31, 2016 Revenue: Surveying Revenue Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense Advertising Expense Total Operating Expenses Net Income

1-22

$9 1 2 5 0 0

$ 9 7 5 00 1 0 4 00 8 2 5 00 2 4 6 00 4 1 0 00 2 5 6 0 00 $6 5 6 5 0 0

PROBLEM 1C-5., Cont. 4. FIRST CITY SURVEYING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 2016 Howard McGraw, Capital, May 1, 2016 Net Income for May Less: Withdrawals for May Increase in Capital Howard McGraw, Capital, May 31, 2016

$17 0 0 0 0 0 $6 5 6 5 0 0 1 0 4 3 00 5 5 2 2 00 $22 5 2 2 0 0

5. FIRST CITY SURVEYING SERVICE BALANCE SHEET MAY 31, 2016 ASSETS Assets: Cash Accounts Receivable Equipment

Total Assets

LIABILITIES AND OWNER’S EQUITY Liabilities: $15 2 1 2 0 0 Accounts Payable 2 4 5 0 00 1 0 0 6 0 0 0 Owner’s Equity: Howard McGraw, Capital

$27 7 2 2 0 0

Total Liabilities and Owner’s Equity

$5 2 0 0 0 0

22 5 2 2 0 0

$2 7 7 2 2 0 0

1-23

SOLUTION TO ON-THE-JOB TRAINING, # T-1. Roger’s Window Washing Company Income Statement For The Year Ended December 31, 2015 Revenue: Window Cleaning Operating Expenses: Salaries Expense Supplies Expense Interest Expense Advertising Expense Total Operating Expenses Net Income

Insights $11 3 7 6 0 0 +2 9 0 0 0 0 $14 2 7 6 0 0

$14 2 7 6 0 0 $6 8 8 0 0 0 1 4 0 0 00 3 0 0 00 9 5 00

$5 0 8 0 0 0 +1 8 0 0 0 0 $6 8 8 0 0 0

8 6 7 5 00 $5 6 0 1 0 0

Advice to Roger: In the long run, a formal bookkeeping and accounting system may prove less costly than creating statements from informal records—and provide more reliance for Canada Revenue Agency as well.

SOLUTION TO ON-THE-JOB TRAINING, #T-2. 1.

LUNE CO. BALANCE SHEET DECEMBER 31, 2016 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Land Building Desks Auto

Liabilities: $10 0 1 6 0 0 Notes Payable 104 3 3 7 0 0 Accounts Payable 72 9 3 5 0 0 Total Liabilities 44 6 0 0 0 0 6 8 2 5 0 0 Owner’s Equity: 14 2 6 8 0 0 J. Lune, Capital

Total Assets

$252 9 8 1 0 0

Total Liabilities and Owner’s Equity

$75 3 2 8 0 0 127 6 0 4 0 0 $202 9 3 2 0 0

50 0 4 9 0 0

$252 9 8 1 0 0

2. Slowe does not seem to understand the basic accounting equation, the classification of accounts, or the double entry accounting system which would keep all of the accounts in balance (including the Capital account). If she stays in the position of bookkeeper, it is likely that the accounting records will not be accurate.

1-24

LUNE CO. BALANCE SHEET REVISED JANUARY 4, 2017 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Land Building Desks Auto

Liabilities: $28 0 1 6 0 0 Notes Payable 104 3 3 7 0 0 Accounts Payable 72 9 3 5 0 0 Total Liabilities 44 6 0 0 0 0 1 4 8 2 5 0 0 Owner’s Equity: 20 2 6 8 0 0 J. Lune, Capital

Total Assets

$284 9 8 1 0 0

$79 3 2 8 0 0 127 6 0 4 0 0 $2 0 6 9 3 2 0 0

78 0 4 9 0 0

Total Liabilities and Owner’s Equity

$284 9 8 1 0 0

Insight Cash 10,016 20,000

2,000

Desks

Auto

J. Lune

Notes Payable

6,825

14,268

50,049

75,328

8,000

6,000

28,000

4,000

1-25

CONTINUING PROBLEM 1., 2. PRECISION COMPUTER CENTRE Assets

Cash

a BALANCE b BALANCE c BALANCE d BALANCE

Supplies +

Liabilities +

Computer Shop Office Accounts T. Freedman, T. Freedman, Service Equipment + Equipment = Payable + Capital - Withdrawals + Revenue

+$4,500 4,500

4,500

+1,200

3,300

1,200

-600

+600

2,700

1,200

600

+250 2,700 + -400

BALANCE f BALANCE g BALANCE

2,300 +

250 +

4,500 + 250

1,200

600

250

4,500 +400 Rent

250 +

1,200

600

250

4,500

250 +

1,200

600

250

4,500

250 +

1,200

600

250

4,500

+250 2,550 +

400

+250

+200 2,750 +

- Expenses

+$4,500

-1,200

250 +200

450

+85 Utilities

+ 85

BALANCE i BALANCE j ENDING BALANCE

1-26

Owner’s Equity

2,750 +

250 +

1,200

600

335

4,500

1,200 3,950 +

250 +

1,200

600

335

4,500

-100 $3,850 +

450

485

1,200 +

1,650

485

$1,650

$485

+100 $250 +

$1,200

$600

$335

$5,900

$4,500

$100

CONTINUING PROBLEM, Cont. 3. PRECISION COMPUTER CENTRE INCOME STATEMENT FOR THE MONTH ENDED MAY 31, 2016 Revenue: Service Revenue

$1 6 5 0 0 0

Operating Expenses: Rent Expense Utilities Expense Total Operating Expenses

$ 4 0 0 00 8 5 00 4 8 5 00

Net Income

$1 1 6 5 0 0

PRECISION COMPUTER CENTRE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 2016 T. Freedman, Capital Contribution, May 1, 2016 Plus: Net Income for May Less: Withdrawals for May Increase in Capital T. Freedman, Capital, May 31, 2016

$4 5 0 0 0 0 $1 1 6 5 0 0 1 0 0 00 1 0 6 5 00 $5 5 6 5 0 0

1-27

CONTINUING PROBLEM, Cont. 3. PRECISION COMPUTER CENTRE BALANCE SHEET MAY 31, 2016 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Supplies Computer Shop Equipment Office Equipment

Liabilities: $3 8 5 0 0 0 Accounts Payable 2 5 0 00 1 2 0 0 0 0 Owner’s Equity 6 0 0 00 T. Freedman, Capital

Total Assets

$5 9 0 0 0 0

1-28

Total Liabilities and Owner’s Equity

$ 3 3 5 00

5 5 6 5 00

$5 9 0 0 0 0

2 Debits and Credits: Analyzing and Recording Business Transactions

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. 2. 3. 4. 5. 6. 7. 8. 9.

10.

11.

A ledger is a group of accounts that records in monetary value data from business transactions. Because that is always the debit side. It is an arbitrary rule. False. Accounts with one entry will not need footings. The end product of the accounting process is preparing financial reports. The transaction analysis chart is a teaching device that is not used in the regular accounting process. Accounts affected, category, , rules, update of T accounts. The analysis of transactions results in the total of debits being equal to total of credits. A double-entry system provides a system of checks and balances. False. Informal report; does not have the same status as financial reports. The financial reports are prepared from the ending balances of the accounts (debit or credit) in the ledger. These ending balances are then used on financial reports. The inside columns on financial reports are for sub totaling. It is easier to prepare the reports from the trial balance, because a list of all accounts and their balances is provided. The columns for revenue, expenses, etc., on the expanded accounting equation do not list specific titles and their balances. The question in this case is whether Audrey should be allowed to put fictitious figures into the trial balance. Although Audrey has good intentions, this type of behavior cannot be tolerated. Her actions are extremely unprofessional and go against all accounting standards (not to mention ethics!).Instead of putting in fictitious figures, Audrey should stay late and correct the trial balance (or perhaps engage an assistant to help her so she could catch the plane).

2-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES 1. 2.

Cash

$17 ,200

Debit Balance

C. Clark, Capital

$11,000

Credit Balance

Liability

Cr.

Dr.

Cr.

Revenue

Cr.

Dr.

Cr.

Asset

Dr.

Cr.

Dr.

Capital

Cr.

Dr.

Cr.

Withdrawals

Dr.

Cr.

Dr.

Asset

Dr.

Cr.

Dr.

Expense

Dr.

Cr.

Dr.

3. Cash Cash Accounts Receivable Bookkeeping Services

2-2

Cash

Asset Asset Revenue

Dr.

600

Dr.

Accounts Receivable 1,900

Cr.

Bookkeeping Fees 2,500

Accounts Receivable

Office Equipment

Accounts Payable

J. Joy, Capital

J. Joy, Withdrawals

Hair Salon Fees Earned

Advertising Expense

Salary Expense

Utility Expense

SOLUTIONS TO EXERCISES—SET A EXERCISE 2-1A. EXERCISE 2-4A.

Balance Sheet Accounts Assets 111 Cash 112 Accounts Receivable 121 Office Equipment Liabilities 211 Accounts Payable Owner’s Equity 311 L. Jones, Capital 312 L. Jones, Withdrawals Income Statement Accounts Revenue 411 Legal Fees Expenses 511 Advertising Expense 512 Repair Expense 513 Salary Expense

A. B. C. D. E. F. G. H.

Dr. 8 6 9 1 10 3 2 1

Cr. 1 1 4 7 1 5 7 2

EXERCISE 2-2A. 1.

Accounts Affected

Category

Rules

T-Account Update

Computer Equipment

Asset

Dr.

Accounts Payable

Liability

Cr.

Computer Equipment

19,000 Accounts Payable 16,000 Cash

Cash

Asset

Cr.

3,000

EXERCISE 2-3A. ACCOUNT Supplies Legal Fees Earned P. Rey, Withdrawals Accounts Payable Salaries Expense Auto

CATEGORY Asset Revenue Owner’s Equity (Withdrawals) Liability Expense Asset

Dr. Cr. Dr.

Cr. Dr. Cr.

FINANCIAL Balance Sheet Income Statement Statement of Owner’s Equity

Cr. Dr. Dr.

Dr. Cr. Cr.

Balance Sheet Income Statement Balance Sheet

2-3A

SOLUTIONS TO EXERCISES—SET A Cont. EXERCISE 2-5A. HALL’S CLEANERS INCOME STATEMENT FOR THE MONTH ENDED JULY 31, 2016 Revenue: Cleaning Fees Operating Expenses: Salaries Expense Utilities Expense Total Operating Expenses Net Income

$ 4 5 8 00 $ 1 6 0 00 1 1 3 00 2 7 3 00 $ 1 8 5 00

HALL’S CLEANERS STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JULY 31, 2016 J. Hall, Capital, July 1, 2016 Net Income for July Less: Withdrawals for July Decrease in Capital J. Hall, Capital, July 31, 2016

$ 8 0 0 00 $ 1 8 5 00 1 9 8 00 1 3 00 $ 7 8 7 00

HALL’S CLEANERS BALANCE SHEET JULY 31, 2016 ASSETS Cash Equipment

Total Assets

2-4 2-4A

LIABILITIES AND OWNER’S EQUITY $ 5 5 0 0 0 Liabilities: 6 9 2 00 Accounts Payable Owner’s Equity J. Hall, Capital Total Liabilities and $1 2 4 2 0 0 Owner’s Equity

$ 4 5 5 00 7 8 7 00 $1 2 4 2 0 0

SOLUTIONS TO EXERCISES—SET B EXERCISE 2-1B. EXERCISE 2-4B.

Balance Sheet Accounts Assets 111 Cash 112 Accounts Receivable 121 Office Equipment Liabilities 211 Accounts Payable Owner’s Equity 311 L. Jones, Capital 312 L. Jones, Withdrawals Income Statement Accounts Revenue 411 Legal Fees Expenses 511 Cleaning Expense 512 Office Assistance Expense 513 Rent Expense

A. B. C. D. E. F. G. H.

Dr. 8 6 9 1 2 3 10 1

Cr. 1 1 4 7 7 4 4 2

EXERCISE 2-2B. 1.

Accounts Affected

Category

Rules

T-Account Update

Computer Equipment

Asset

Dr.

Accounts Payable

Liability

Cr.

Computer Equipment

21,000 Accounts Payable 16,000 Cash

Cash

Asset

Cr.

5,000

EXERCISE 2-3B. ACCOUNT Supplies Legal Fees Earned P. Rey, Withdrawals Cash Accounts Receivable Rent Expense

CATEGORY Asset Revenue Owner’s Equity (Withdrawals) Asset Asset Expense

Dr. Cr. Dr.

Cr. Dr. Cr.

FINANCIAL Balance Sheet Income Statement Statement of Owner’s Equity

Dr. Dr. Dr.

Cr. Cr. Cr.

Balance Sheet Balance Sheet Income Statement

2-5A

SOLUTIONS TO EXERCISES—SET B Cont. EXERCISE 2-5B. HALL’S CLEANERS INCOME STATEMENT FOR THE MONTH ENDED JULY 31, 2016 Revenue: Cleaning Fees Operating Expenses: Salaries Expense Utilities Expense Total Operating Expenses Net Income

$ 7 4 8 00 $ 2 5 0 00 8 3 00 3 3 3 00 $ 4 1 5 00

HALL’S CLEANERS STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JULY 31, 2016 J. Hall, Capital, July 1, 2016 Net Income for July Less: Withdrawals for July Increase in Capital J. Hall, Capital, July 31, 2016

$ 7 0 0 00 $ 4 1 5 00 2 4 5 00 1 7 0 00 $ 8 7 0 00

HALL’S CLEANERS BALANCE SHEET JULY 31, 2016 ASSETS Cash Equipment

Total Assets

2-6 2-6B

LIABILITIES AND OWNER’S EQUITY $ 7 5 0 0 0 Liabilities: 6 4 5 00 Accounts Payable Owner’s Equity J. Hall, Capital Total Liabilities and $1 3 9 5 0 0 Owner’s Equity

$ 5 2 5 00 8 7 0 00 $1 3 9 5 0 0

PROBLEM 2A-1. Accounts Affected

Category

A. Cash

Asset

Inc.

Dec.

Rules

T-Account Update

Dr.

Bill O’Brien, Capital

Cash

Bill O’Brien, Capital

Owner’s Equity

Cr.

Asset

Dr.

Delivery Trucks

Liability

Cr.

9,000

Expense

Dr.

Liability

Cr.

Rent Expense 900

Asset

Dr.

Fees Earned

Revenue

Cr.

E. Accounts Receivable

Asset

Dr.

Fees Earned

Revenue

Cr.

F. Bill O’Brien, Withdrawals

Owner’s Equity (Withdrawals)

Dr.

Asset

Cr.

B. Delivery Trucks Accounts Payable C. Rent Expense Accounts Payable D. Cash

Cash

21,000

21,000 Accounts Payable 9,000 Accounts Payable 9,000 900

Cash 21,000 1,400

Fees Earned

Accounts Receivable 150

Fees Earned

1,400

Bill O’Brien, Withdrawals 400

1,400 150

Cash 21,000 1,400

400

PROBLEM 2A-2. Cash (A) 20,000 (C) 900

Bernie Pillows, Withdrawals (D) 90

312

121

Consulting Fees Earned

411

90 (D) 400 (E) 1,000 (G)

Office Equipment (B) 5,000

Accounts Payable (G) 1,000

111

900 (C)

211

Advertising Expense (E) 400

511

311

Rent Expense (F) 1,400

512

5,000 (B) 1,400 (F)

Bernie Pillows, Capital 20,000 (A)

2-7

PROBLEM 2A-3. (a) Cash (A) 7,000 (G) 3,500

10,500

111 200 (D) 200 (E) 400 (F) 200 (H) 900 (I)

Accounts Payable (D) 200

211

Fees Earned

411

1,300 (C)

8,000 (B)

1,100

1,900 8,600

Accounts Receivable 112 (B) 8,000 3,500 (G)

Barry Joy, Capital

311

Rent Expense (F) 400

511

312

Utilities Expense (E) 200

512

7,000 (A)

4,500

Office Equipment (C) 1,300 (H) 200

121

Barry Joy, Withdrawals (I) 900

1,500

(b) BARRY’S CLEANING SERVICE TRIAL BALANCE MAY 31, 2016 Dr. Cash Accounts Receivable Office Equipment Accounts Payable Barry Joy, Capital Barry Joy, Withdrawals Fees Earned Rent Expense Utilities Expense Totals

2-8

Cr.

8 6 0 0 00 4 5 0 0 00 1 5 0 0 00 1 1 0 0 00 7 0 0 00 9 0 0 00 8 0 0 0 00 4 0 0 00 2 0 0 00 16 1 0 0 0 0 16 1 0 0 0 0

PROBLEM 2A-4. (a) GRACE LANTZ BARRISTER AND SOLICITOR INCOME STATEMENT FOR THE MONTH ENDED MAY 31, 2017 Revenue: Revenue from Legal Fees

$ 2 3 5 0 00

Operating Expenses: Utilities Expense Rent Expense Salaries Expense Total Operating Expenses Net Income

$ 3 0 0 00 4 5 0 00 1 1 5 0 00 1 9 0 0 00 $ 4 5 0 00

(b) GRACE LANTZ BARRISTER AND SOLICITOR STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 2017 Grace Lantz, Capital, May 1, 2017 Net Income for May Less: Withdrawals for May Increase in Capital Grace Lantz, Capital, May 31, 2017

$1 2 7 5 0 0 $ 4 5 0 00 3 0 0 00 1 5 0 00 $1 4 2 5 0 0

2-9

PROBLEM 2A-4., Cont. (c) GRACE LANTZ BARRISTER AND SOLICITOR BALANCE SHEET MAY 31, 2017 ASSETS Assets: Cash Accounts Receivable Office Equipment

Total Assets

2-10

LIABILITIES AND OWNER’S EQUITY

$5 0 0 0 0 0 6 5 0 00 7 5 0 00

$6 4 0 0 0 0

Liabilities: Accounts Payable Salaries Payable Total Liabilities

$4 3 0 0 0 0 6 7 5 00 $ 4 9 7 5 00

Owner’s Equity Grace Lantz, Capital

1 4 2 5 00

Total Liabilities and Owner’s Equity

$6 4 0 0 0 0

PROBLEM 2A-5. 1., 2., 3. Cash (A) 16,000 (E) 2,600 (J) 300

18,900

111 600 (C) 250 (D) 900 (F) 1,200 (G) 300 (K) 3,250

Accounts Payable

211

Advertising Expense (D) 250

511

Alice Angel, Capital 311 16,000 (A)

Gas Expense (G) 1,200

512

Alice Angel, Withdrawals (K) 300

Salaries Expense (F) 900

513

Telephone Expense (I) 700

514

18,000 (B) 700 (I) 18,700

15,650

Accounts Receivable 112 (H) 800 300 (J) 500

Office Equipment (C) 600

121

Delivery Trucks (B) 18,000

122

312

Delivery Fees Earned 411 2,600 (E) 800 (H) 3,400

ANGEL’S DELIVERY SERVICE TRIAL BALANCE MARCH 31, 2016 Dr.

Cash Accounts Receivable Office Equipment Delivery Trucks Accounts Payable Alice Angel, Capital Alice Angel, Withdrawals Delivery Fees Earned Advertising Expense Gas Expense Salaries Expense Telephone Expense Totals

Cr.

1 5 6 5 0 00 5 0 0 00 6 0 0 00 1 8 0 0 0 00 1 8 7 0 0 00 1 6 0 0 0 00 3 0 0 00 3 4 0 0 00 2 5 0 00 1 2 0 0 00 9 0 0 00 7 0 0 00 3 8 1 0 0 00 3 8 1 0 0 00

2-11

PROBLEM 2A-5, Cont. 5.(a) ANGEL’S DELIVERY SERVICE INCOME STATEMENT FOR THE MONTH ENDED MARCH 31, 2016 Revenue: Delivery Fees Earned

$3 4 0 0 0 0

Operating Expenses: Advertising Expense Gas Expense Salaries Expense Telephone Expense Total Operating Exenses Net Income

$ 2 5 0 00 1 2 0 0 00 9 0 0 00 7 0 0 00 3 0 5 0 00 $ 3 5 0 00

5.(b) ANGEL’S DELIVERY SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MARCH 31, 2016 A. Angel, Capital, March 1, 2016 Net Income for March Less: Withdrawals for March Increase in Capital A. Angel, Capital, March 31, 2016

$16 0 0 0 0 0 $ 3 5 0 00 3 0 0 00 5 0 00 $16 0 5 0 0 0

5.(c) ANGEL’S DELIVERY SERVICE BALANCE SHEET MARCH 31, 2016 ASSETS Assets: Cash Accounts Receivable Office Equipment Delivery Trucks

Total Assets

2-12

LIABILITIES AND OWNER’S EQUITY Liabilities: Accounts Payable

$1 8 7 0 0 0 0

6 0 0 0 0 Owner’s Equity: 18 0 0 0 00 A. Angel, Capital

16 0 5 0 00

Total Liabilities and $3 4 7 5 0 0 0 Owner’s Equity

$3 4 7 5 0 0 0

$1 5 6 5 0 0 0 5 0 0 00

PROBLEM 2B-1. Accounts Affected

Category

A. Cash

Asset

Inc.

Dec.

Rules Dr.

Bill O’Brien, Capital B. Delivery Trucks

Owner’s Equity Asset

Cr. Dr.

Accounts Payable C. Rent Expense

Liability Expense

Cr. Dr.

Accounts Payable

Liability

Cr.

D. Cash

Asset

Dr.

Fees Earned E. Accounts Receivable

Revenue Asset

Cr. Dr.

Revenue Owner’s Equity (Withdrawals)

Cr. Dr.

Asset

Cr.

Fees Earned F. Bill O’Brien, Withdrawals Cash

T-Account Update

Cash 2,500

Bill O’Brien, Capital 2,500

Delivery Trucks 900

Accounts Payable

Rent Expense 250

Accounts Payable

Cash 2,500 1,200 Accounts Receivable 700 Bill O’Brien, Withdrawals 275

900

900 250 Fees Earned 1,200 Fees Earned 1,200 700 Cash 2,500 1,200

275

PROBLEM 2B-2. Cash (A) 20,000 (C) 1,200

Bernie Pillows, Withdrawals (D) 200

312

121

Consulting Fees Earned

411

200 (D) 600 (E) 400 (G)

Office Equipment (B) 6,000

Accounts Payable (G) 400

111

1,200 (C)

211

Advertising Expense (E) 600

511

311

Rent Expense (F) 500

512

6,000 (B) 500 (F)

Bernie Pillows, Capital 20,000 (A)

2-13

PROBLEM 2B-3. (a) Cash (A) 10,000 (F) 4,000 (G) 2,000 16,000

111

Accounts Payable

4,000 (C) 310 (D) 50 (E) 600 (H)

211

Fees Earned

411

2,000 (B)

4,000 (F) 4,000 (G) 8,000

4,960

11,040

Accounts Receivable (G) 2,000

112

Office Equipment (B) 2,000 (C) 4,000

121

Barry Joy, Capital

311

Rent Expense (D) 310

511

312

Utilities Expense (E) 50

512

10,000 (A)

Barry Joy, Withdrawals (H) 600

6,000

2-14

Cr.

11 0 4 0 0 0 2 0 0 0 00 6 0 0 0 00 2 0 0 0 00 10 0 0 0 0 0 6 0 0 00 8 0 0 0 00 3 1 0 00 5 0 00 20 0 0 0 0 0 20 0 0 0 0 0

PROBLEM 2B-4. (a) GRACE LANTZ BARRISTER AND SOLICITOR INCOME STATEMENT FOR THE MONTH ENDED MAY 31, 2017 Revenue: Revenue from Legal Fees

$9 8 0 0 0 0

Operating Expenses: Utilities Expense Rent Expense Salaries Expense Total Operating Expenses Net Income

$ 1 0 0 00 3 0 0 00 1 4 0 0 00 1 8 0 0 00 $8 0 0 0 0 0

$4 0 0 0 0 0 $8 0 0 0 0 0 2 0 0 0 00 6 0 0 0 00 $10 0 0 0 0 0

2-15

PROBLEM 2B-4., Cont. (c) GRACE LANTZ BARRISTER AND SOLICITOR BALANCE SHEET MAY 31, 2017 ASSETS Assets: Cash Accounts Receivable Office Equipment

LIABILITIES AND OWNER’S EQUITY Liabilities: $6 0 0 0 0 0 Accounts Payable 2 4 0 0 00 Salaries Payable 2 4 0 0 00 Total Liabilities Owner’s Equity Grace Lantz, Capital

Total Assets

2-16

Total Liabilities and $10 8 0 0 0 0 Owner’s Equity

$ 2 0 0 00 6 0 0 00 $ 8 0 0 00

10 0 0 0 0 0

$10 8 0 0 0 0

PROBLEM 2B-5. 1., 2., 3. Cash (A) 40,000 (E) 13,000 (J) 1,600

54,600

111 2,500 (D) 1,850 (F) 750 (G) 400 (I) 88 (K)

Accounts Payable

211

Advertising Expense (C) 800

511

Alice Angel, Capital 311 40,000 (A)

Gas Expense (G) 750

512

Alice Angel, Withdrawals (K) 88

Salaries Expense (F) 1,850

513

Telephone Expense (I) 400

514

25,000 (B) 800 (I) 25,000

5,588

49,012

Accounts Receivable 112 (H) 5,500 1,600 (J) 3,900

Office Equipment (C) 2,500

121

Delivery Trucks (B) 25,000

122

312

Delivery Fees Earned 411 13,000 (E) 5,500 (H) 18,500

4. ANGEL’S DELIVERY SERVICE TRIAL BALANCE MARCH 31, 2016

Dr. 49 0 1 2 0 0 3 9 0 0 00 2 5 0 0 00 25 0 0 0 0 0

Cr.

25 8 0 0 0 0 40 0 0 0 0 0 8 8 00 18 5 0 0 0 0 8 0 0 00 7 5 0 00 1 8 5 0 00 4 0 0 00 84 3 0 0 0 0 84 3 0 0 0 0

2-17

PROBLEM 2B-5., Cont. 5.(a) ANGEL’S DELIVERY SERVICE INCOME STATEMENT FOR THE MONTH ENDED MARCH 31, 2016 Revenue: Delivery Fees Earned

$18 5 0 0 0 0

Operating Expenses: Advertising Expense Gas Expense Salaries Expense Telephone Expense Total Operating Exenses Net Income

$ 8 0 0 00 7 5 0 00 1 8 5 0 00 4 0 0 00 3 8 0 0 00 $14 7 0 0 0 0

$40 0 0 0 0 0 $14 7 0 0 0 0 8 8 00 14 6 1 2 0 0 $54 6 1 2 0 0

5.(c) ANGEL’S DELIVERY SERVICE BALANCE SHEET MARCH 31, 2016 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Office Equipment Delivery Trucks

Liabilities: $49 0 1 2 0 0 Accounts Payable 3 9 0 0 00 2 5 0 0 0 0 Owner’s Equity: 2 5 0 0 0 00 A. Angel, Capital

Total Assets

$80 4 1 2 0 0

2-18

Total Liabilities and Owner’s Equity

$25 8 0 0 0 0

54 6 1 2 0 0

$80 4 1 2 0 0

PROBLEM 2C-1. Accounts Affected

Category

A. Cash

Asset

Inc.

Dec.

Rules Dr.

Jack James, Capital B. Office Equipment

Owner’s Equity Asset

Cr. Dr.

Accounts Payable C. Rent Expense

Liability Expense

Cr. Dr.

Accounts Payable

Liability

Cr.

D. Cash

Asset

Dr.

Editing Fees Earned E. Accounts Receivable

Revenue Asset

Cr. Dr.

Revenue Owner’s Equity (Withdrawals)

Cr. Dr.

Editing Fees Earned F. Jack James, Withdrawals

T-Account Update

Cash 3,500 Office Equipment 1,875

Accounts Payable 1,875

Rent Expense 425

Accounts Payable 1,875 425

Cash 3,500 2,100

Editing Fees Earned 2,100

Accounts Receivable 1,499

Asset

Fees Earned 2,100 1,490

Jack James, Withdrawals Cash 3,500 175 2,100

175

Cash

Jack James, Capital 3,500

Cr.

PROBLEM 2C-2. Cash (A) 14,000 (C) 3,250 17,250

111

Val McIntyre, Withdrawals (D) 364

312

121

Consulting Fees Earned

411

364 (D) 725 (E) 2,750 (G) 3,839

13,411

Computer Equipment (B) 5,500

Accounts Payable (G) 2,750

3,250 (C)

211

Advertising Expense (E) 725

511

311

Rent Expense (F) 615

512

5,500 (B) 615 (F) 6,115 3,365

Val McIntyre, Capital 14,000 (A)

2-19

PROBLEM 2C-3. (a) Cash (A) 6,000 (F) 3,500 (G) 3,000

111 4,000 (B) 340 (D) 150 (E) 600 (H)

12,500

Accounts Receivable (G) 1,000

112

Equipment (B) 4,000 (C) 500

121

4,500

5,090

7,410

Accounts Payable

211

Linda Miyagawa, Capital 6,000 (A)

311

Linda Miyagawa Withdrawals 312 (H) 600

411

Rent Expense (D) 340

511

Utilities Expense (E) 150

500 (C)

Fees Eearned 3,500 (F) 4,000 (G)

512

7,500

(b) LINDA’S CONSULTING SERVICE TRIAL BALANCE OCTOBER 31, 2017 Dr. Cash Accounts Receivable Equipment Accounts Payable Linda Miyagawa, Capital Linda Miyagawa, Withdrawals Fees Earned Rent Expense Utilities Expense Totals

2-20

Cr.

7 4 1 0 00 1 0 0 0 00 4 5 0 0 00 5 0 0 00 6 0 0 0 00 6 0 0 00 7 5 0 0 00 3 4 0 00 1 5 0 00 14 0 0 0 0 0 14 0 0 0 0 0

PROBLEM 2C-4. (a) GLENDA SHAVER, ARCHITECT INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 2017 Revenue: Fees Earned Operating Expenses: Rent Expense Advertising Expense Utilities Expense Total Operating Expenses Net Income

$6 7 1 5 0 0 $1 2 0 0 0 0 4 8 0 00 5 6 5 00 2 2 4 5 00 $4 4 7 0 0 0

(b) GLENDA SHAVER, ARCHITECT STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 2017 Glenda Shaver, Capital, June 1, 2017 Net Income for June Less: Withdrawals for June Increase in Capital Glenda Shaver,Capital, June 30, 2017

$5 6 0 0 0 0 $4 4 7 0 0 0 9 5 0 00 3 5 2 0 00 $9 1 2 0 0 0

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Supplies Equipment

Liabilities: $2 2 0 0 0 0 Accounts Payable 1 0 7 5 00 2 6 5 0 0 Owner’s Equity: 6 2 0 0 00 Glenda Shaver,Capital

Total Assets

$9 7 4 0 0 0

Total Liabilities and Owner’s Equity

$ 6 2 0 00

9 1 2 0 00

$9 7 4 0 0 0

2-21

PROBLEM 2C-5. 1., 2., 3. Cash (A)33,000 (E) 5,900 (J) 2,000

40,900

111 3,300 (D) 1,720 (F) 320 (G) 150 (I) 66 (K) 700 (L)

Accounts Payable 211 (L) 700 14,000 (B) 1,150 (C) 700

Advertising Expense (C) 1,150

511

Repair Expense (G) 320

512

Salaries Expense (F) 1,720

513

Telephone Expense (I) 150

514

15,150 14,450

Clara Benson, Capital 311 33,000 (A)

6,256

34,644

Accounts Receivable 112 (H) 4,300 2,000 (J) 2,300

Office Equipment (D) 3,300

121

Design Equipment (B) 14,000

122

Clara Benson, Withdrawals (K) 66

312

Design Fees Earned 411 5,900 (E) 4,300 (H) 10,200

4. CLARA’S DESIGN SERVICE TRIAL BALANCE MARCH 31, 2017

Cash Accounts Receivable Office Equipment Design Equipment Accounts Payable Clara Benson, Capital Clara Benson, Withdrawals Design Fees Earned Advertising Expense Repair Expense Salaries Expense Telephone Expense Totals

2-22

Dr. 34 6 4 4 0 0 2 3 0 0 00 3 3 0 0 00 14 0 0 0 0 0

Cr.

14 4 5 0 0 0 33 0 0 0 0 0 6 6 00 10 2 0 0 0 0 1 1 5 0 00 3 2 0 00 1 7 2 0 00 1 5 0 00 57 6 5 0 0 0 57 6 5 0 0 0

PROBLEM 2C-5., Cont. 5.(a)

CLARA’S DESIGN SERVICE INCOME STATEMENT FOR THE MONTH ENDED MARCH 31, 2017

Revenue: Design Fees Earned

$10 2 0 0 0 0

Operating Expenses: Advertising Expense Repair Expense Salaries Expense Telephone Expense Total Operating Exenses Net Income

$1 1 5 0 0 0 3 2 0 00 1 7 2 0 00 1 5 0 00 3 3 4 0 00 $6 8 6 0 0 0

5.(b)

CLARA’S DESIGN SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MARCH 31, 2017

Clara Benson, Capital, March 1, 2017 Net Income for March Less: Withdrawals for March Increase in Capital Clara Benson, Capital, March 31, 2017

5.(c)

$33 0 0 0 0 0 $6 8 6 0 0 0 6 6 00 6 7 9 4 00 $39 7 9 4 0 0

CLARA’S DESIGN SERVICE BALANCE SHEET MARCH 31, 2017 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Office Equipment Design Equipment

Liabilities: $34 6 4 4 0 0 Accounts Payable 2 3 0 0 00 3 3 0 0 0 0 Owner’s Equity: 14 0 0 0 0 0 Clara Benson, Capital

Total Assets

$54 2 4 4 0 0

Total Liabilities and Owner’s Equity

$14 4 5 0 0 0

39 7 9 4 0 0

$54 2 4 4 0 0

2-23

SOLUTIONS TO ON-THE-JOB TRAINING, #T-1. RANCH COMPANY TRIAL BALANCE JUNE 30, 2017 Dr. Cash Accounts Receivable Office Equipment Accounts Payable Wages Payable H. Clo, Capital H. Clo, Withdrawals Professional Fees Rent Expense Advertising Expense Totals

Cr.

4 9 0 00 6 2 0 00 3 6 5 00 1 1 5 00 1 0 00 6 3 5 00 1 4 4 0 00 2 4 2 0 00 2 4 0 00 2 5 00 3 1 8 0 00

3 1 8 0 00

Note: 1. The Cash account subtraction error means the amount in Cash is overstated. 2. The normal balance of Accounts Receivable is a debit. Therefore, the $635 should have been on the debit side. ($15 from the $635 = $620.) Accounts Receivable would be severely understated if not corrected. 3. The normal balance of Accounts Payable, Wages Payable and Capital (H. Clo, Capital) is a credit. All understated. 4. Before recording the office equipment on account, Assets and money owed (Accounts Payable) would be understated. 5. Revenue being understated would mean net income would be lower than actual. 6. Expense accounts are normally debit accounts. Therefore, Rent Expense would be understated. To avoid this problem, Ranch Co. might insist that Andy take a course in accounting at a local college. He obviously needs more experience/training before he can be trusted to handle the company’s books. Better supervision may help somewhat, but the real solution is in getting a bookkeeper who is accurate and well trained.

SOLUTIONS TO ON-THE-JOB TRAINING, #T-2. Situation

Totals of Trial Balance

Effect on Accounts

Will balance, but be understated by $765.

Cash overstated by $765 and equipment understated by $765.

Will not balance.

Cash overstated by $200.

Will balance but be overstated by $400.

Capital and Accounts Receivable overstated by $400.

Will balance but be overstated by $360.

Accounts Payable overstated by $360 and Cash overstated by $400. Supplies understated by $40.

Trial Balance will balance with the correct amount.

Supplies overstated and Equipment understated by $800.

Trial Balance will not balance.

Cash overstated by $36.

Mistakes can be avoided in the future by carefully checking entries.

2-24

CONTINUING PROBLEM 1., 2., 3. Cash (p)

3,850 900

4,750

1000 150 (l) 200 (m) 1,400 (n) 85 (q) 50 (r)

285

690

Advertising Expense (n) 1,400 Rent Expense 400

5010

5020

405

1,885

T. Freedman, Capital

2,865

Accounts Receivable (o) 850 Supplies (s)

Accounts Payable 2000 (m) 200 335 (q) 85 155 (k) 200 (s)

3000

Utilities Expense 85

5030

T. Freedman, Withdrawals 100

3010

Phone Expense (k) 155

5040

Supplies Expense

5050

Service Revenue 1,650 850 (o) 900 (p)

4000

Insurance Expense (l) 150

5060

Postage Expense (r) 50

5070

1020

4,500

1030 250 200 450

Computer Shop Equipment 1080 1,200

3,400

Office Equipment 600

1090

PRECISION COMPUTER CENTRE TRIAL BALANCE JUNE 30, 2016

Cash Accounts Receivable Supplies Computer Shop Equipment Office Equipment Accounts Payable T. Freedman, Capital T. Freedman, Withdrawals Service Revenue Advertising Expense Rent Expense Utilities Expense Phone Expense Insurance Expense Postage Expense Total

2 8 6 5 00 8 5 0 00 4 5 0 00 1 2 0 0 00 6 0 0 00 4 0 5 00 4 5 0 0 00 1 0 0 00 3 4 0 0 00 1 4 0 0 00 4 0 0 00 8 5 00 1 5 5 00 1 5 0 00 5 0 00 8 3 0 5 00

8 3 0 5 00

2-25

CONTINUING PROBLEM, Cont. 5.

PRECISION COMPUTER CENTRE INCOME STATEMENT FOR THE TWO MONTHS ENDED JUNE 30, 2016

Revenue: Service Revenue Operating Expenses: Advertising Expense Insurance Expense Phone Expense Postage Expense Rent Expense Utilities Expense Total Operating Expenses Net Income

$ 3 4 0 0 00 $ 1 4 0 0 00 1 5 0 00 1 5 5 00 5 0 00 4 0 0 00 8 5 00 2 2 4 0 00 $ 1 1 6 0 00

PRECISION COMPUTER CENTRE STATEMENT OF OWNER’S EQUITY FOR THE TWO MONTHS ENDED JUNE 30, 2016 T. Freedman, Capital Contributed, May 1, 2016 Net Income for the two months Less: Withdrawals Increase in Capital T. Freedman, Capital, June 30, 2016

$ 4 5 0 0 00 $ 1 1 6 0 00 1 0 0 00 1 0 6 0 00 $ 5 5 6 0 00

PRECISION COMPUTER CENTRE BALANCE SHEET JUNE 30, 2016 ASSETS Assets: Cash Accounts Receivable Supplies Computer Shop Equipment Office Equipment Total Assets

2-26

LIABILITIES AND OWNER’S EQUITY Liabilities: $ 2 8 6 5 00 Accounts Payable 8 5 0 00 4 5 0 0 0 Owner’s Equity: 1 2 0 0 00 T. Freedman, Capital 6 0 0 00 Total Liabilities and $ 5 9 6 5 00 Owner’s Equity

$ 4 0 5 00

5 5 6 0 00

$ 5 9 6 5 00

3 Beginning the Accounting Cycle: Journalizing, Posting, and the Trial Balance

ANSWERS TO DISCUSSION QUESTIONS , AND CRITICAL THINKING/ETHICAL CASE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

The accounting cycle represents the normal accounting procedures which are performed in a certain period of time (usually one year). Disagree; it is based on the income statement. Calendar year—January 1 to December 31 Fiscal year—Any 12 consecutive months. (A fiscal year could be a calendar year.) Interim reports are financial reports prepared for parts of the fiscal period. Transactions are first journalized in a book of original entry and then posted to the ledger, the book of final entry. The debit and credit parts of recording a transaction are located on the same page of the journal. In the ledger, they would be on separate pages. The chart of accounts provides all the titles of the accounts that will be used in the debit and credit parts of recording each transaction in the general journal. A compound journal entry is a journal entry that requires three or more accounts. Disagree; it means updating the ledger. False. The side that increases the account is the normal balance. Agree. Cross-referencing updates the PR column in the journal after the ledger account has been updated. Transposition is a rearrangement of digits: 5,132.00 5,312.00 Sliding means adding or deleting zeros: 4,821.00 482.10 The question in this case is whether Jay should be allowed to copy another company’s software. It is ethically wrong for Jay to ask his friend if he can copy his software. Software is protected under copyright laws. Maybe Jay should check with the manufacturer of the software for delayed billing.

3-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES 1.

a. b. c. d. e. f. g. h. i.

2012 November 19 Cash Equipment B. Moore, Capital Initial investment by owner $9,000 + $10,000 $19,000 1

(A) (B) (C)

Owner’s investment of cash and equipment Performed legal services for cash and charge Salary expense paid

NAME: CASH

Date 2015 May 1 4 11 14

ACCOUNT NO. Explanation

Post Ref. GJ1 GJ1

Debit 1 9 00 9 00

Dr Dr

6 00

GJ2 GJ3

DR CR

Credit

2 00

Dr Dr

111 Balance 1 9 00 2 8 00 2 2 00 2 4 00

Post. Ref. column of cash tells us from which page of Journal information came. The Acct #111 will be used to cross reference back to the Post Ref. column of the Journal to tell it was posted to Acct. #111 in the General Ledger. 4.

LEE COMPANY TRIAL BALANCE OCTOBER 31, 2017

Cash Equipment Accounts Payable D. Lee, Capital D. Lee, Withdrawals Taxi Fare Income Advertising Expense Rent Expense Totals

Date 2017 July 11

1 7 00 1 1 2 00 1 0 8 00 3 0 00 5 00 1 6 00

Account Title and Description Telephone Expense Repair Expense To correct posting of June 2

Post Ref.

3 00 1 7 00 1 5 4 00

1 5 4 00

Dr.

Cr.

2 1 0 00 2 1 0 00

When the original incorrect entry has been ruled through and the account balance corrected and initialed. Note that, in a computerized accounting environment, the correcting entry should be dated with the original June 2, 2017 date.

3-2

SOLUTIONS TO EXERCISES—SET A EXERCISE 3-1A. Date 2017 Oct 3

Account Title and Description

Post Ref.

Cash Equipment Janet Wills, Capital Owner’s investment Building Accounts Payable Purchased building on account Truck Cash Purchased truck for cash Supplies Accounts Payable Bought supplies from Lee Co. on account

Dr.

Cr.

70 0 0 0 00 6 0 0 0 00 76 0 0 0 00 40 0 0 0 00 40 0 0 0 00 16 0 0 0 00 16 0 0 0 00 9 0 0 00 9 0 0 00

EXERCISE 3-2A. Date 2016 Jan 4

Account Title and Description Cash Reggie Long, Capital Owner’s investment Auto Repair Equipment Cash Purchased auto repair equipment for cash Auto Repair Equipment Accounts Payable Bought equipment from Lowell Co. on account Cash Repair Fees Earned Fees collected Accounts Receivable Repair Fees Earned Fees charged to Sullivan Co. on account Reggie Long, Withdrawals Cash Personal withdrawal

Post Ref.

Dr.

Cr.

16 0 0 0 0 0 16 0 0 0 0 0 7 0 0 0 00 7 0 0 0 00 6 0 0 0 00 6 0 0 0 00 9 0 0 00 9 0 0 00 9 0 0 00 9 0 0 00 3 0 0 00 3 0 0 00

3-3A

SOLUTIONS TO EXERCISES—SET A, Cont. EXERCISE 3-3A. Date 2015 Apr 6

Page 4 Account Title and Description

Cash A. King, Capital Cash investment Equipment Cash Accounts Payable Purchase of equipment

3-4A

15 0 0 0 0 0 9 0 0 0 00 4 0 0 0 00 5 0 0 0 00

211

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ4

15 0 0 0 0 0

Credit

DR CR Dr

4 0 0 0 00

GJ4

Explanation

Post Ref.

Debit

GJ4

9 0 0 0 00

Explanation

15 0 0 0 0 0 11 0 0 0 0 0

Post Ref.

Debit

GJ4

Balance

9 0 0 0 00

Debit

211

Credit

DR CR

Balance

5 0 0 0 00

ACCOUNT NO. Post Ref.

121

DR CR

ACCOUNT NO.

GJ4

Explanation

Credit

111 Balance

ACCOUNT NO.

NAME: A. KING, CAPITAL Date 2015 Apr 6

15 0 0 0 0 0

Cr.

111

NAME: ACCOUNTS PAYABLE Date 2015 Apr 13

111

121

NAME: EQUIPMENT Date 2015 Apr 13

Dr.

311

NAME: CASH Date 2015 Apr 6 13

Post Ref.

311

Credit

DR CR

Balance

15 0 0 0 0 0

EXERCISE 3-4A. (a)

Page 1

Date 2017 July 4

Account Title and Description Cash J. Lowe, Capital Owner’s investment Equipment Accounts Payable Purchased equipment from Lax Co. on account Accounts Receivable Fees Earned Services billed to Friend Co. Cash Services Earned Cash fees Salaries Expense Cash Salaries paid J. Lowe, Withdrawals Cash Personal withdrawals

Post Ref.

Dr.

111

6 0 0 0 00

Cr. 6 0 0 0 00

311

121

8 0 0 00 8 0 0 00

211

112

4 0 0 0 00 4 0 0 0 00

411

111

5 0 0 0 00 5 0 0 0 00

411

511

1 8 0 0 00 1 8 0 0 00

111

312

4 0 0 00 4 0 0 00

111

(b) NAME: CASH Date 2017 July 4 18 25 28

ACCOUNT NO. Explanation

Post Ref. GJ1 GJ1

Debit 6 0 0 0 00 5 0 0 0 00

GJ1

Explanation

DR CR Dr Dr

1 8 0 0 00 4 0 0 00

GJ1

NAME: ACCOUNTS RECEIVABLE Date 2017 July 15

Credit

Dr Dr

111 Balance

6 0 0 0 00 1 1 0 0 0 00 9 2 0 0 00 8 8 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

4 0 0 0 00

Credit

112

DR CR

Balance

4 0 0 0 00

3-5A

SOLUTIONS TO EXERCISES—SET A, Cont. EXERCISE 3-4A., Cont. NAME: EQUIPMENT Date 2017 July 7

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

8 0 0 00

NAME: ACCOUNTS PAYABLE Date 2017 July 7

Explanation

Post Ref.

Debit

GJ1

Explanation

Post Ref.

Debit

GJ1

Explanation

3-6A

Explanation

Post Ref.

Debit

GJ1

4 0 0 00

8 0 0 00

Post Ref.

GJ1

Debit

211

Credit

DR CR

Balance

8 0 0 00

311

Credit

DR CR

Balance

6 0 0 0 00

Credit

Credit 4 0 0 0 00 5 0 0 0 00

312

DR CR

Balance

4 0 0 00

ACCOUNT NO.

GJ1

ACCOUNT NO.

NAME: SERVICES EARNED Date 2017 July 15 18

Balance

ACCOUNT NO.

NAME: J. LOWE, WITHDRAWALS Date 2017 July 28

DR CR

ACCOUNT NO.

NAME: J. LOWE, CAPITAL Date 2017 July 4

Credit

121

DR CR Cr Cr

411 Balance 4 0 0 0 00 9 0 0 0 00

EXERCISE 3-4A., Cont. NAME: SALARIES EXPENSE Date 2017 July 25

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

1 8 0 0 00

Credit

511

DR CR

Balance

1 8 0 0 00

(c) LOWE COMPANY TRIAL BALANCE JULY 31, 2017 Cash Accounts Receivable Equipment Accounts Payable J. Lowe, Capital J. Lowe, Withdrawals Fees Earned Salaries Expense Totals

8 8 0 0 00 4 0 0 0 00 8 0 0 00 8 0 0 00 6 0 0 0 00 4 0 0 00 9 0 0 0 00 1 8 0 0 00 15 8 0 0 0 0 15 8 0 0 0 0

EXERCISE 3-5A. SUN CO. TRIAL BALANCE MARCH 31, 2015 Cash Accounts Receivable Accounts Payable A. Sun, Capital A. Sun, Withdrawals Services Earned Concessions Earned Rent Expense Salaries Expense Miscellaneous Expense Totals

10 0 0 0 0 0 1 2 0 0 00 2 0 0 0 00 6 5 0 0 00 3 0 0 00 4 7 0 0 00 2 5 0 0 00 4 0 0 00 2 5 0 0 00 1 3 0 0 00 15 7 0 0 0 0 15 7 0 0 0 0

EXERCISE 3-6.A Put line through both 800.00 figures. Change to 1,600.00 and initial.

3-7A

SOLUTIONS TO EXERCISES—SET B EXERCISE 3-1B. Date 2017 Oct 3

Account Title and Description

Post Ref.

Dr.

Cr.

90 0 0 0 00 8 0 0 0 00 98 0 0 0 00 50 0 0 0 00 50 0 0 0 00 26 0 0 0 00 26 0 0 0 00 8 0 0 00 8 0 0 00

EXERCISE 3-2B. Date 2016 Jan 4

3-8B

Post Ref.

Dr.

Cr.

21 0 0 0 0 0 21 0 0 0 0 0 9 0 0 0 00 9 0 0 0 00 5 0 0 0 00 5 0 0 0 00 1 2 0 0 00 1 2 0 0 00 9 8 0 00 9 8 0 00 5 0 0 00 5 0 0 00

EXERCISE 3-3B. Date 2015 Apr 6

Page 4 Account Title and Description

Cash A. King, Capital Cash investment Equipment Cash Accounts Payable Purchase of equipment

17 0 0 0 0 0 8 0 0 0 00 3 0 0 0 00 5 0 0 0 00

211

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ4

17 0 0 0 0 0

Credit

DR CR Dr

3 0 0 0 00

GJ4

111 Balance

17 0 0 0 0 0 14 0 0 0 0 0

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ4

8 0 0 0 00

Explanation

Credit

121

DR CR

Balance

8 0 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ4

5 0 0 0 00

NAME: A. KING, CAPITAL Date 2015 Apr 6

17 0 0 0 0 0

Cr.

111

NAME: ACCOUNTS PAYABLE Date 2015 Apr 13

111

121

NAME: EQUIPMENT Date 2015 Apr 13

Dr.

311

NAME: CASH Date 2015 Apr 6 13

Post Ref.

Credit

121

DR CR

Balance

5 0 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ4

17 0 0 0 0 0

Credit

311

DR CR

Balance

17 0 0 0 0 0

3-9B

SOLUTIONS TO EXERCISES—SET B, Cont. EXERCISE 3-4B. (a)

Page 1

Date 2017 July 4

Account Title and Description Cash J. Lowe, Capital Owner’s investment Equipment Accounts Payable Purchased equipment from Lax Co. on account Accounts Receivable Services Earned Services billed to Friend Co. Cash Services Earned Cash fees Salaries Expense Cash Salaries paid J. Lowe, Withdrawals Cash Personal withdrawals

Post Ref.

Dr.

111

7 0 0 0 00

Cr. 7 0 0 0 00

311

121

9 0 0 00 9 0 0 00

211

112

4 6 0 0 00 4 6 0 0 00

411

111

3 0 0 0 00 3 0 0 0 00

411

511

1 6 0 0 00 1 6 0 0 00

111

312

5 0 0 00 5 0 0 00

111

(b) NAME: CASH Date 2017 July 4 18 25 28

ACCOUNT NO. Explanation

Post Ref. GJ1 GJ1

Debit 7 0 0 0 00 3 0 0 0 00

GJ1

3-10B

Explanation

DR CR Dr Dr

1 6 0 0 00 5 0 0 00

GJ1

NAME: ACCOUNTS RECEIVABLE Date 2017 July 15

Credit

Dr Dr

Balance 7 0 0 0 00 10 0 0 0 0 0 8 4 0 0 00 7 9 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

4 6 0 0 00

Credit

111

112

DR CR

Balance

4 6 0 0 00

EXERCISE 3-4B., Cont. NAME: EQUIPMENT Date 2017 July 7

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

9 0 0 00

NAME: ACCOUNTS PAYABLE Date 2017 July 7

Explanation

Post Ref.

Debit

GJ1

Explanation

Post Ref.

Debit

GJ1

Explanation

9 0 0 00

211

Credit

DR CR

Balance

9 0 0 00

311

Credit

DR CR

Balance

7 0 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

5 0 0 00

NAME: SERVICES EARNED Date 2017 July 15 18

Balance

ACCOUNT NO.

NAME: J. LOWE, WITHDRAWALS Date 2017 July 28

DR CR

ACCOUNT NO.

NAME: J. LOWE, CAPITAL Date 2017 July 4

Credit

121

Credit

312

DR CR

Balance

5 0 0 00

ACCOUNT NO. Post Ref. GJ1 GJ1

Debit

Credit 4 6 0 0 00 3 0 0 0 00

DR CR Cr Cr

411 Balance 4 6 0 0 00 7 6 0 0 00

3-11B

SOLUTIONS TO EXERCISES—SET B, Cont. EXERCISE 3-4B., Cont. NAME: SALARIES EXPENSE Date 2017 July 25

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

1 6 0 0 00

Credit

511

DR CR

Balance

1 6 0 0 00

(c) LOWE COMPANY TRIAL BALANCE JULY 31, 2017 Cash Accounts Receivable Equipment Accounts Payable J. Lowe, Capital J. Lowe, Withdrawals Services Earned Salaries Expense Totals

7 9 0 0 00 4 6 0 0 00 9 0 0 00 9 0 0 00 7 0 0 0 00 5 0 0 00 7 6 0 0 00 1 6 0 0 00 15 5 0 0 0 0 15 5 0 0 0 0

EXERCISE 3-5B. SUN CO. TRIAL BALANCE MARCH 31, 2015 Cash Accounts Receivable Accounts Payable A. Sun, Capital A. Sun, Withdrawals Services Earned Concessions Earned Rent Expense Salaries Expense Miscellaneous Expense Totals

10 0 0 0 0 0 1 2 0 0 00 3 0 0 0 00 6 5 0 0 00 3 0 0 00 5 7 0 0 00 2 5 0 0 00 1 4 0 0 00 3 5 0 0 00 1 3 0 0 00 17 7 0 0 0 0 17 7 0 0 0 0

EXERCISE 3-6B. Put line through both 800.00 figures. Change to 1,600.00 and initial.

3-12B

PROBLEM 3A.1. JACK’S CLEANING SERVICE GENERAL JOURNAL Date 2016 Aug. 1

Account Title and Description

Page 1 Post Ref.

Dr.

Prepaid Rent Cash Rent paid in advance

9 0 0 0 00

Cleaning Equipment Accounts Payable Equipment from Ryan’s Supply House on account

4 0 0 0 00

Cr. 9 0 0 0 00

4 0 0 0 00

Cleaning Supplies Cash Purchased supplies

9 0 0 00

Cash Cleaning Fees Earned Fees for cash

1 9 0 0 00

Jack Lang, Withdrawals Cash Personal withdrawal

9 0 0 00

Advertising Expense Accounts Payable Advertising bill

4 0 0 00

9 0 0 00

1 9 0 0 00

9 0 0 00

4 0 0 00

3-13

PROBLEM 3A-1., Cont. JACK’S CLEANING SERVICE CENTRE GENERAL JOURNAL Date 2016 Aug 23

3-14

Account Title and Description Hydro Expense Cash Paid hydro expense Salaries Expense Cash Paid salaries

Page 2 Post Ref.

Dr. 9 0 00

9 0 00

7 0 0 00 7 0 0 00

Accounts Receivable Cleaning Fees Earned Fees earned to be paid in October

2 1 0 0 00

Accounts Payable Cash Partial payment to Ryan’s Supply House

2 0 0 0 00

Cr.

2 1 0 0 00

2 0 0 0 00

PROBLEM 3A-2 BETTY’S ART STUDIO GENERAL JOURNAL Date 2017 June 2

Account Title and Description Cash Betty Rice, Capital Cash investment Prepaid Rent Cash Rent paid in advance Equipment Accounts Payable Purchased equipment from Astor Co. on account Cash Art Fees Earned Fees for cash Art Supplies Cash Bought art supplies for cash Accounts Receivable Art Fees Earned Fees to Lester Co. on account Salaries Expense Cash Paid salaries Betty Rice, Withdrawals Cash Personal withdrawal Electrical Expense Cash Paid electric bill Telephone Expense Cash Paid telephone bill

Page 1 Post Ref.

Dr.

111

12 0 0 0 0 0 12 0 0 0 0 0

311

114

1 2 0 0 00 1 2 0 0 00

111

131

6 0 0 00 6 0 0 00

211

111

9 0 0 00 9 0 0 00

411

121

4 0 0 00 4 0 0 00

111

112

2 1 0 0 00 2 1 0 0 00

411

521

6 0 0 00 6 0 0 00

111

312

2 0 0 00 2 0 0 00

111

511

1 4 0 00 1 4 0 00

111

531 111

Cr.

2 1 0 00 2 1 0 00

3-15

PROBLEM 3A-2., Cont. GENERAL LEDGER OF BETTY’S ART STUDIO NAME: CASH Date 2017 June 2 3 6 9 10 16 27 30

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

12 0 0 0 0 0 9 0 0 00

GJ1 GJ1 GJ1 GJ1

NAME: ACCOUNTS RECEIVABLE Date 2017

Explanation

June 10

Post Ref.

Debit

GJ1

2 1 0 0 00

Explanation

Post Ref.

Debit

GJ1

1 2 0 0 00

3-16

Dr. Dr. Dr.

Credit

Explanation

Post Ref.

Debit

GJ1

4 0 0 00

Credit

Balance

Dr.

2 1 0 0 00

Post Ref.

Debit

GJ1

6 0 0 00

Credit

114

DR CR

Balance

Dr.

1 2 0 0 00

121

DR CR

Balance

Dr.

4 0 0 00

ACCOUNT NO. Explanation

112

DR CR

ACCOUNT NO.

NAME: EQUIPMENT Date 2017 June 4

Dr.

12 0 0 0 0 0 10 8 0 0 0 0 11 7 0 0 0 0 11 3 0 0 0 0 10 7 0 0 0 0 10 5 0 0 0 0 10 3 6 0 0 0 10 1 5 0 0 0

ACCOUNT NO.

NAME: ART SUPPLIES Date 2017 June 9

Dr.

Balance

ACCOUNT NO.

NAME: PREPAID RENT Date 2017 June 3

Dr. Dr.

4 0 0 00 6 0 0 00 2 0 0 00 1 4 0 00 2 1 0 00

GJ1

DR CR Dr.

1 2 0 0 00

GJ1 GJ1

Credit

111

131

DR CR

Balance

Dr.

6 0 0 00

PROBLEM 3A-2., Cont. NAME: ACCOUNTS PAYABLE Date 2017 June 4

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

NAME: BETTY RICE, CAPITAL Date 2017 June 2

Explanation

Post Ref.

Debit

GJ1

Explanation

Post Ref.

Debit

GJ1

2 0 0 00

Post Ref.

Debit

GJ1

Explanation

Cr.

6 0 0 00

311

Credit

DR CR

Balance

12 0 0 0 0 0

Cr.

12 0 0 0 0 0

Credit

312

DR CR

Balance

Dr.

2 0 0 00

Credit

DR CR Cr. Cr.

411 Balance 9 0 0 00 3 0 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

1 4 0 00

NAME: SALARIES EXPENSE Date 2017 June 10

6 0 0 00

9 0 0 00 2 1 0 0 00

GJ1

Explanation

Balance

ACCOUNT NO.

NAME: ELECTRICAL EXPENSE Date 2017 June 27

DR CR

ACCOUNT NO.

NAME: ART FEES EARNED Date 2017 June 6 10

Credit

ACCOUNT NO.

NAME: BETTY RICE, WITHDRAWALS Date 2017 June 16

211

Credit

511

DR CR

Balance

Dr.

1 4 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

6 0 0 00

Credit

521

DR CR

Balance

Dr.

6 0 0 00

3-17

PROBLEM 3A-2., Cont. NAME: TELEPHONE EXPENSE Date 2017 June 30

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

2 1 0 00

Credit

531

DR CR

Balance

Dr.

2 1 0 00

BETTY’S ART STUDIO TRIAL BALANCE JUNE 30, 2017 Cash Accounts Receicable Prepaid Rent Art Supplies Equipment Accounts Payable Betty Rice, Capital Betty Rice, Withdrawals Art Fees Earned Electrical Expense Salaries Expense Telephone Expense Totals

3-18

10 1 5 0 0 0 2 1 0 0 00 1 2 0 0 00 4 0 0 00 6 0 0 00 6 0 0 00 12 0 0 0 0 0 2 0 0 00 3 0 0 0 00 1 4 0 00 6 0 0 00 2 1 0 00 15 6 0 0 0 0 15 6 0 0 0 0

PROBLEM 3A-3. A. FRENCH PLACEMENT AGENCY GENERAL JOURNAL Date 2015 June 1

Page 1 Post Ref.

Dr.

Cash A. French, Capital Owner investment

111

9 0 0 0 00

Equipment Accounts Payable Purchased equipment from Hook Co. on account

141

Accounts Receivable Placement Fees Earned Fees on account

112

A. French, Withdrawals Cash Personal withdrawals

321

Wages Expense Cash Paid wages

511

Cash Placement Fees Earned Cash fees

111

Supplies Accounts Payable Bought supplies from Lyon Co. on account

131

Telephone Expense Cash Paid telephone bill

521

Advertising Expense Accounts Payable Advertising bill received from Shale Co.

531

Account Title and Description

9 0 0 0 00

311

2 0 0 0 00 2 0 0 0 00

211

1 6 0 0 00 1 6 0 0 00

411

1 0 0 00 1 0 0 00

111

3 0 0 00 3 0 0 00

111

6 0 0 00 6 0 0 00

411

5 0 0 00 5 0 0 00

211

1 6 0 00 1 6 0 00

111

211

Cr.

9 0 0 00 9 0 0 00

3-19

PROBLEM 3A-3., Cont. GENERAL LEDGER OF A. FRENCH PLACEMENT AGENCY NAME: CASH Date 2015 June 1 5 8 11 28

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

9 0 0 0 00

GJ1 GJ1 GJ1

Explanation

Post Ref.

Debit

GJ1

1 6 0 0 00

Explanation

Post Ref.

Debit

GJ1

5 0 0 00

3-20

1 6 0 00

Dr.

Credit

Explanation

Post Ref.

Debit

GJ1

2 0 0 0 00

Explanation

Credit

GJ1 GJ1 GJ1

Debit

Credit 2 0 0 0 00 5 0 0 00 9 0 0 00

9 0 0 0 00 8 9 0 0 00 8 6 0 0 00 9 2 0 0 00 9 0 4 0 00

112 Balance

Dr.

1 6 0 0 00

131

DR CR

Balance

Dr.

5 0 0 00

141

DR CR

Balance

Dr.

2 0 0 0 00

ACCOUNT NO. Post Ref.

Balance

DR CR

ACCOUNT NO.

NAME: ACCOUNTS PAYABLE Date 2015 June 1 15 29

Dr.

ACCOUNT NO.

NAME: EQUIPMENT Date 2015 June 1

1 0 0 00 3 0 0 00

ACCOUNT NO.

NAME: SUPPLIES Date 2015 June 15

DR CR Dr.

6 0 0 00

GJ1

NAME: ACCOUNTS RECEIVABLE Date 2015 June 4

Credit

111

DR CR Cr. Cr. Cr.

211 Balance 2 0 0 0 00 2 5 0 0 00 3 4 0 0 00

PROBLEM 3A-3., Cont. NAME: A. FRENCH, CAPITAL Date 2015 June 1

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

9 0 0 0 00

NAME: A. FRENCH, WITHDRAWALS Date 2015 June 5

Explanation

Post Ref.

Debit

GJ1

1 0 0 00

Post Ref.

Debit

GJ1

Explanation

Post Ref.

Debit

GJ1

3 0 0 00

Explanation

9 0 0 0 00

321

DR CR

Balance

Dr.

1 0 0 00

Credit

DR CR Cr. Cr.

411 Balance 1 6 0 0 00 2 2 0 0 00

Credit

511

DR CR

Balance

Dr.

3 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

1 6 0 00

NAME: ADVERTISING EXPENSE Date 2015 June 29

Cr.

ACCOUNT NO.

NAME: TELEPHONE EXPENSE Date 2015 June 28

Credit

1 6 0 0 00 6 0 0 00

GJ1

Explanation

Balance

ACCOUNT NO.

NAME: WAGES EXPENSE Date 2015 June 8

DR CR

ACCOUNT NO.

NAME: PLACEMENT FEES EARNED Date 2015 June 4 11

Credit

311

Credit

521

DR CR

Balance

Dr.

1 6 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

9 0 0 00

Credit

531

DR CR

Balance

Dr.

9 0 0 00

3-21

PROBLEM 3A-3., Cont. A. FRENCH PLACEMENT AGENCY TRIAL BALANCE JUNE 30, 2015 Cash Accounts Receivable Supplies on Hand Equipment Accounts Payable A. French, Capital A. French, Withdrawals Placement Fees Earned Wages Expense Telephone Expense Advertising Expense Totals

3-22

9 0 4 0 00 1 6 0 0 00 5 0 0 00 2 0 0 0 00 3 4 0 0 00 9 0 0 0 00 1 0 0 00 2 2 0 0 00 3 0 0 00 1 6 0 00 9 0 0 00 14 6 0 0 0 0 14 6 0 0 0 0

PROBLEM 3B-1. JACK’S CLEANING SERVICE GENERAL JOURNAL Date 2016 April 1

Account Title and Description Cleaning Equipment Cash Jack Lang, Capital Owner’s investment

Page 1 Post Ref.

Dr. 6 0 0 0 00 3 0 0 0 00

9 0 0 0 00

Cleaning Supplies Accounts Payable Bought supplies from Rex Co. on account

5 0 0 00

Office Equipment Accounts Payable Equipment from Ross Stationery on account

4 0 0 00

5 0 0 00

4 0 0 00

Jack Lang, Withdrawals Cash Personal withdrawal

6 0 00

Cash Cleaning Fees Earned Cash fees

6 0 0 00

Advertising Expense Accounts Payable Advertising bill received

Cr.

6 0 00

6 0 0 00

7 5 00 7 5 00

3-23

PROBLEM 3B-1., Cont. JACK’S CLEANING SERVICE GENERAL JOURNAL Date 2016 April 23

3-24

Account Title and Description Hydro Expense Accounts Payable Hydro bill received

Page 2 Post Ref.

Dr. 9 0 00

9 0 00

Accounts Receivable Cleaning Fees Earned Fees re Eastgate School on account

7 0 0 00

Salaries Expense Cash Paid salaries

4 0 0 00

Accounts Payable Cash Reduced amount owed Ross by half

2 0 0 00

Cr.

7 0 0 00

4 0 0 00

2 0 0 00

PROBLEM 3B-2. BETTY’S ART STUDIO GENERAL JOURNAL Date 2017 June 2

Account Title and Description Cash Betty Rice, Capital Cash investment Prepaid Rent Cash Rent paid in advance Art Supplies Accounts Payable Purchasedsupplies from A.J.K. on account Equipment Accounts Payable Equipment from Reese Company on account Cash Art Fees Earned Cash fees Accounts Receivable Art Fees Earned Fees to Long Co. on account Betty Rice, Withdrawals Cash Personal withdrawal Salaries Expense Cash Paid salaries Telephone Expense Cash Paid telephone bill Electrical Expense Accounts Payable Electric bill received

Page 1 Post Ref.

Dr.

111

6 0 0 0 00 6 0 0 0 00

311

114

1 2 0 0 00 1 2 0 0 00

111

121

7 0 0 00 7 0 0 00

211

131

9 0 0 00 9 0 0 00

211

111

1 3 0 0 00 1 3 0 0 00

411

112

6 0 0 00 6 0 0 00

411

312

4 0 0 00 4 0 0 00

111

521

4 0 0 00 4 0 0 00

111

531

1 1 8 00 1 1 8 00

111

511 211

Cr.

1 2 0 00 1 2 0 00

3-25

PROBLEM 3B-2., Cont. GENERAL LEDGER OF BETTY’S ART STUDIO NAME: CASH Date 2017 June 2 2 9 13 16 27

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

6 0 0 0 00 1 3 0 0 00

GJ1 GJ1

NAME: ACCOUNTS RECEIVABLE Date 2017 June 10

Explanation

Post Ref. GJ1

Debit

3-26

Dr. Dr.

DR CR Dr.

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

1 2 0 0 00

Credit

Explanation

Post Ref.

Debit

GJ1

7 0 0 00

Credit

Post Ref.

Debit

GJ1

9 0 0 00

Credit

6 0 0 0 00 4 8 0 0 00 6 1 0 0 00 5 7 0 0 00 5 3 0 0 00 5 1 8 2 00

112 Balance 6 0 0 00

114 Balance

Dr.

1 2 0 0 00

121

DR CR

Balance

Dr.

7 0 0 00

ACCOUNT NO. Explanation

Balance

DR CR

ACCOUNT NO.

NAME: EQUIPMENT Date 2017 June 6

Credit

6 0 0 00

NAME: ART SUPPLIES Date 2017 June 3

Dr.

ACCOUNT NO.

NAME: PREPAID RENT Date 2017 June 2

Dr. Dr.

4 0 0 00 4 0 0 00 1 1 8 00

GJ1

DR CR Dr.

1 2 0 0 00

GJ1 GJ1

Credit

111

131

DR CR

Balance

Dr.

9 0 0 00

PROBLEM 3B-2., Cont. NAME: ACCOUNTS PAYABLE Date 2017 June 3 6 30

Explanation

ACCOUNT NO. Post Ref.

Debit

7 0 0 00 9 0 0 00 1 2 0 00

GJ1 GJ1 GJ1

NAME: BETTY RICE, CAPITAL Date 2017 June 2

Explanation

Post Ref.

Debit

GJ1

Explanation

Post Ref.

Debit

GJ1

4 0 0 00

Post Ref.

Debit

GJ1

Explanation

Post Ref.

Debit

GJ1

1 2 0 00

Explanation

DR CR

Balance

6 0 0 0 00

Cr.

6 0 0 0 00

Credit

312

DR CR

Balance

Dr.

4 0 0 00

Credit

DR CR Cr. Cr.

411 Balance 1 3 0 0 00 1 9 0 0 00

Credit

511

DR CR

Balance

Dr.

1 2 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

4 0 0 00

NAME: TELEPHONE EXPENSE Date 2017 June 27

311

ACCOUNT NO.

NAME: SALARIES EXPENSE Date 2017 June 16

Cr.

7 0 0 00 1 6 0 0 00 1 7 2 0 00

Credit

1 3 0 0 00 6 0 0 00

GJ1

Explanation

Cr.

ACCOUNT NO.

NAME: ELECTRICAL EXPENSE Date 2017 June 30

Cr.

Balance

ACCOUNT NO.

NAME: ART FEES EARNED Date 2017 June 9 10

DR CR

ACCOUNT NO.

NAME: BETTY RICE, WITHDRAWALS Date 2017 June 13

Credit

211

Credit

521

DR CR

Balance

Dr.

4 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

1 1 8 00

Credit

531

DR CR

Balance

Dr.

1 1 8 00

3-27

PROBLEM 3B-2., Cont. BETTY’S ART STUDIO TRIAL BALANCE JUNE 30, 2014 Cash Accounts Receivable Prepaid Rent Art Supplies Equipment Accounts Payable Betty Rice, Capital Betty Rice, Withdrawals Art Fees Earned Electrical Expense Salaries Expense Telephone Expense Totals

3-28

5 1 8 2 00 6 0 0 00 1 2 0 0 00 7 0 0 00 9 0 0 00 1 7 2 0 00 6 0 0 0 00 4 0 0 00 1 9 0 0 00 1 2 0 00 4 0 0 00 1 1 8 00 9 6 2 0 00

9 6 2 0 00

PROBLEM 3B-3. A. FRENCH PLACEMENT AGENCY GENERAL JOURNAL Date 2015 June 1

Page 1 Post Ref.

Dr.

Cash A. French, Capital Owner investment

111

6 0 0 0 00

Equipment Cash Purchased equipment for cash

141

Accounts Receivable Placement Fees Earned Fees to Avon Co. on account

112

Wages Expense Cash Paid wages

511

A. French, Withdrawals Cash Personal withdrawals

321

Cash Placement Fees Earned Cash fees

111

Supplies Cash Bought supplies for cash

131

Telephone Expense Accounts Payable Telephone bill owed

521

Advertising Expense Accounts Payable Advertising bill received

531

Account Title and Description

Cr. 6 0 0 0 00

311

3 5 0 00 3 5 0 00

111

2 1 0 0 00 2 1 0 0 00

411

4 0 0 00 4 0 0 00

111

6 9 00 6 9 00

111

9 0 0 00 9 0 0 00

411

3 5 0 00 3 5 0 00

111

1 8 5 00 1 8 5 00

211

2 0 0 00 2 0 0 00

3-29

PROBLEM 3B-3., Cont. GENERAL LEDGER OF A. FRENCH PLACEMENT AGENCY NAME: CASH Date 2015 June 1 4 8 11 12 15

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

6 0 0 0 00

GJ1 GJ1

9 0 0 00

NAME: ACCOUNTS RECEIVABLE Date 2015 June 5

Explanation

Post Ref. GJ1

Debit

3-30

Dr.

DR CR Dr.

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

3 5 0 00

Credit

Explanation

Post Ref.

Debit

GJ1

3 5 0 00

Explanation

Credit

GJ1 GJ1

Debit

Credit 1 8 5 00 2 0 0 00

6 0 0 0 00 5 6 5 0 00 5 2 5 0 00 5 1 8 1 00 6 0 8 1 00 5 7 3 1 00

112 Balance 2 1 0 0 00

131 Balance

Dr.

3 5 0 00

141

DR CR

Balance

Dr.

3 5 0 00

ACCOUNT NO. Post Ref.

Balance

DR CR

ACCOUNT NO.

NAME: ACCOUNTS PAYABLE Date 2015 June 28 29

Credit

2 1 0 0 00

NAME: EQUIPMENT Date 2015 June 4

Dr.

ACCOUNT NO.

NAME: SUPPLIES Date 2015 June 15

Dr.

3 5 0 00

GJ1

DR CR Dr.

3 5 0 00 4 0 0 00 6 9 00

GJ1

Credit

111

DR CR Cr. Cr.

211 Balance 1 8 5 00 3 8 5 00

PROBLEM 3B-3., Cont. NAME: A. FRENCH, CAPITAL Date 2015 June 1

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

NAME: A FRENCH, WITHDRAWALS Date 2015 June 11

Explanation

Post Ref. GJ1

Explanation

Debit

Post Ref.

Debit

Explanation

Cr.

6 0 0 0 00

Credit

DR CR

321 Balance 6 9 00

Dr.

Credit

DR CR Cr. Cr.

411 Balance 2 1 0 0 00 3 0 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

4 0 0 00

Credit

511

DR CR

Balance

Dr.

4 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

1 8 5 00

NAME: ADVERTISING EXPENSE Date 2015 June 29

6 0 0 0 00

2 1 0 0 00 9 0 0 00

GJ1

NAME: TELEPHONE EXPENSE Date 2015 June 28

Balance

ACCOUNT NO.

GJ1

Explanation

DR CR

6 9 00

NAME: WAGES EXPENSE Date 2015 June 8

Credit

ACCOUNT NO.

NAME: PLACEMENT FEES EARNED Date 2015 June 5 12

311

Credit

521

DR CR

Balance

Dr.

1 8 5 00

ACCOUNT NO. Post Ref.

Debit

GJ1

2 0 0 00

Credit

531

DR CR

Balance

Dr.

2 0 0 00

3-31

PROBLEM 3B-3., Cont. A. FRENCH PLACEMENT AGENCY TRIAL BALANCE JUNE 30, 2015 Cash Accounts Receivable Supplies Equipment Accounts Payable A. French, Capital A. French, Withdrawals Placement Fees Earned Wages Expense Telephone Expense Advertising Expense Totals

3-32

5 7 3 1 00 2 1 0 0 00 3 5 0 00 3 5 0 00 3 8 5 00 6 0 0 0 00 6 9 00 3 0 0 0 00 4 0 0 00 1 8 5 00 2 0 0 00 9 3 8 5 00

9 3 8 5 00

PROBLEM 3C-1. STANDFORTH FINANCIAL PLANNING CENTRE GENERAL JOURNAL Date 2015 Mar. 2

Account Title and Description Cash Computer Equipment Etta Standforth, Capital Investment in business Computer Supplies Accounts Payable Computer supplies from Carry Co. on account Office Equipment Accounts Payable Office equipment from A-One Stationery on account Etta Standforth, Withdrawals Cash Personal withdrawal Cash Planning Fees Earned Fees for cash Advertising Expense Accounts Payable Advertising bill received

Post Ref.

Page 1 Dr.

Cr.

9 0 0 0 00 4 5 0 0 00 13 5 0 0 0 0

3 5 5 00 3 5 5 00

1 8 9 5 00 1 8 9 5 00

5 5 00 5 5 00

1 8 7 5 00 1 8 7 5 00

4 9 5 00 4 9 5 00

3-33

PROBLEM 3C-1., Cont. STANDFORTH FINANCIAL PLANNING CENTRE GENERAL JOURNAL Date 2015 Mar. 23

3-34

Account Title and Description Cleaning Expense Accounts Payable Received cleaning bill

Post Ref.

Page 2 Dr. 9 5 00 9 5 00

Accounts Receivable Planning Fees Earned Fees to Harriet Corp. on account

2 7 2 5 00

Salaries Expense Cash Paid salaries

2 1 0 0 00

2 7 2 5 00

2 1 0 0 00

Accounts Payable Cash Paid half of March 9 bill to A-One Stationery

9 4 7 50

Repairs Expense Accounts Payable Received bill for equipment repairs

2 5 0 00

Cr.

9 4 7 50

2 5 0 00

PROBLEM 3C-2. RODGER’S FITNESS TRAINING STUDIO GENERAL JOURNAL Date 2017 July 2

Account Title and Description Cash Rodger Baldwin, Capital Cash investment Prepaid Rent Cash Rent paid in advance Supplies Accounts Payable Supplies from Marlin Supplies on account Equipment Accounts Payable Equipment from Brinkley Company on account Cash Fees Earned Cash fees Accounts Receivable Fees Earned Fees to Short Co. on account Rodger Baldwin, Withdrawals Cash Personal withdrawal Salaries Expense Cash Paid salaries Telephone Expense Cash Paid telephone bill Electrical Expense Accounts Payable Received electric bill Advertising Expense Accounts Payable Received advertising bill from City Newspaper

Page 1 Post Ref.

Dr.

111

16 2 0 0 0 0 16 2 0 0 0 0

311

114

1 6 5 0 00 1 6 5 0 00

111

121

6 4 0 00 6 4 0 00

211

131

8 3 0 0 00 8 3 0 0 00

211

111

2 1 0 0 00 2 1 0 0 00

411

112

1 4 0 0 00 1 4 0 0 00

411

321

7 5 9 00 7 5 9 00

111

521

1 3 5 0 00 1 3 5 0 00

111

531

1 6 0 00 1 6 0 00

111

515

1 5 0 00 1 5 0 00

211

511 211

Cr.

3 2 5 00 3 2 5 00

3-35

PROBLEM 3C-2., Cont. GENERAL LEDGER OF RODGER’S FITNESS TRAINING STUDIO NAME: CASH Date 2017 July 2 3 8 14 15 28

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

16 2 0 0 0 0 2 1 0 0 00

GJ1 GJ1

NAME: ACCOUNTS RECEIVABLE Date 2017 July 11

Explanation

Post Ref.

Debit

GJ1

1 4 0 0 00

Explanation

Post Ref.

Debit

GJ1

1 6 5 0 00

Explanation

Post Ref.

Debit

GJ1

6 4 0 00

3-36

Credit

Explanation

Post Ref. GJ1

Debit

Explanation

Credit

8 3 0 0 00

Balance

Dr.

1 4 0 0 00

GJ1 GJ1 GJ1 GJ1

Debit

Balance

Dr.

1 6 5 0 00

6 4 0 00 8 3 0 0 00 1 5 0 00 3 2 5 00

121

DR CR

Balance

Dr.

6 4 0 00

DR CR Dr.

Credit

114

DR CR

ACCOUNT NO. Post Ref.

112

DR CR

ACCOUNT NO.

NAME: ACCOUNTS PAYABLE Date 2017 July 4 7 29 31

Dr.

ACCOUNT NO.

NAME: EQUIPMENT Date 2017 July 7

Dr.

16 2 0 0 0 0 14 5 5 0 0 0 16 6 5 0 0 0 15 8 9 1 0 0 14 5 4 1 0 0 14 3 8 1 0 0

ACCOUNT NO.

NAME: SUPPLIES Date 2017 July 4

Dr.

Balance

ACCOUNT NO.

NAME: PREPAID RENT Date 2017 July 3

Dr. Dr.

7 5 9 00 1 3 5 0 00 1 6 0 00

GJ1

DR CR Dr.

1 6 5 0 00

GJ1 GJ1

Credit

111

DR CR Cr. Cr. Cr. Cr.

141 Balance 8 3 0 0 00

211 Balance 6 4 0 00 8 9 4 0 00 9 0 9 0 00 9 4 1 5 00

PROBLEM 3C-2., Cont. NAME: RODGER BALDWIN, CAPITAL Date 2017 July 2

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

NAME: RODGER BALDWIN, WITHDRAWALS Date 2017 July 14

Explanation

Post Ref.

Debit

GJ1

7 5 9 00

Explanation

Post Ref.

Debit

GJ1

Explanation

Post Ref.

Debit

GJ1

3 2 5 00

Cr.

16 2 0 0 0 0

Credit

321

DR CR

Balance

Dr.

7 5 9 00

Explanation

Credit

DR CR Cr. Cr.

411 Balance 2 1 0 0 00 3 5 0 0 00

Credit

511

DR CR

Balance

Dr.

3 2 5 00

ACCOUNT NO. Post Ref.

Debit

GJ1

1 5 0 00

Credit

515

DR CR

Balance

Dr.

1 5 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

1 3 5 0 00

NAME: TELEPHONE EXPENSE Date 2017 July 28

16 2 0 0 0 0

ACCOUNT NO.

NAME: SALARIES EXPENSE Date 2017 July 15

Balance

2 1 0 0 00 1 4 0 0 00

GJ1

NAME: ELECTRICAL EXPENSE Date 2017 July 29

DR CR

ACCOUNT NO.

NAME: ADVERTISING EXPENSE Date 2017 July 31

Credit

ACCOUNT NO.

NAME: FEES EARNED Date 2017 July 8 11

311

Credit

521

DR CR

Balance

Dr.

1 3 5 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

1 6 0 00

Credit

531

DR CR

Balance

Dr.

1 6 0 00

3-37

PROBLEM 3C-2., Cont. RODGER’S FITNESS TRAINING TRIAL BALANCE JULY 31, 2017 Cash Accounts Receivable Prepaid Rent Supplies Equipment Accounts Payable Rodger Baldwin, Capital Rodger Baldwin, Withdrawals Fees Earned Advertising Expense Electrical Expense Salaries Expense Telephone Expense Totals

3-38

14 3 8 1 0 0 1 4 0 0 00 1 6 5 0 00 6 4 0 00 8 3 0 0 00 9 4 1 5 00 16 2 0 0 0 0 7 5 9 00 3 5 0 0 00 3 2 5 00 1 5 0 00 1 3 5 0 00 1 6 0 00 29 1 1 5 0 0 29 1 1 5 0 0

PROBLEM 3C-3. MATT NEPOOSE INVESTIGATIVE AGENCY GENERAL JOURNAL Date 2016 June 3

Page 1

Post Ref.

Dr.

Cash M. Nepoose, Capital Owner investment

111

15 0 0 0 0 0

Equipment Cash Purchased equipment

141

Accounts Receivable Investigative Fees Earned Fees on account

112

M. Nepoose, Withdrawals Cash Personal withdrawals

321

Cash Investigative Fees Earned Cash fees

111

Supplies Cash Bought supplies

131

Wages Expense Cash Paid wages

511

Cash Accounts Receivable Received partial payment on account

111

Telephone Expense Accounts Payable Telephone bill received

521

Advertising Expense Accounts Payable Advertising bill received

531

Account Title and Description

1 5 0 0 0 00

311

5 1 0 0 00 5 1 0 0 00

111

3 2 0 0 00 3 2 0 0 00

411

1 0 7 00 1 0 7 00

111

9 7 5 00 9 7 5 00

411

2 7 0 00 2 7 0 00

111

1 1 0 0 00 1 1 0 0 00

111

1 6 0 0 00 1 6 0 0 00

112

1 3 0 00 1 3 0 00

211

Cr.

5 2 5 00 5 2 5 00

3-39

PROBLEM 3C-3., Cont. GENERAL LEDGER OF MATT NEPOOSE INVESTIGATIVE AGENCY NAME: CASH Date 2016 June 3 4 10 11 14 18 25

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

15 0 0 0 0 0

GJ1

9 7 5 00

GJ1 GJ1

1 6 0 0 00

NAME: ACCOUNTS RECEIVABLE Date 2016 June 7 25

Explanation

Post Ref.

Debit

GJ1

3 2 0 0 00

3-40

Dr.

15 0 0 0 0 0 9 9 0 0 00 9 7 9 3 00 10 7 6 8 0 0 10 4 9 8 0 0 9 3 9 8 00 10 9 9 8 0 0

Credit

DR CR Dr. Dr.

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

2 7 0 00

Credit

Explanation

Post Ref.

Debit

GJ1

5 1 0 0 00

Explanation

Credit

GJ1 GJ1

Debit

Credit 1 3 0 00 5 2 5 00

Balance 3 2 0 0 00 1 6 0 0 00

131 Balance

Dr.

2 7 0 00

141

DR CR

Balance

Dr.

5 1 0 0 00

ACCOUNT NO. Post Ref.

112

DR CR

ACCOUNT NO.

NAME: ACCOUNTS PAYABLE Date 2016 June 27 28

Dr.

1 6 0 0 00

GJ1

NAME: EQUIPMENT Date 2016 June 4

Dr.

Balance

ACCOUNT NO.

NAME: SUPPLIES Date 2016 June 14

Dr.

2 7 0 00 1 1 0 0 00

GJ1

DR CR Dr.

5 1 0 0 00 1 0 7 00

GJ1

Credit

111

DR CR Cr. Cr.

211 Balance 1 3 0 00 6 5 5 00

PROBLEM 3C-3., Cont. NAME: M. NEPOOSE, CAPITAL Date 2016 June 3

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

NAME: M. NEPOOSE, WITHDRAWALS Date 2016 June 10

Explanation

Post Ref.

Debit

GJ1

1 0 7 00

Post Ref.

Debit

GJ1

Explanation

Post Ref.

Debit

GJ1

1 1 0 0 00

Explanation

Cr.

15 0 0 0 0 0

Credit

321

DR CR

Balance

Dr.

1 0 7 00

Credit

DR CR Cr. Cr.

411 Balance 3 2 0 0 00 4 1 7 5 00

Credit

511

DR CR

Balance

Dr.

1 1 0 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

1 3 0 00

NAME: ADVERTISING EXPENSE Date 2016 June 28

15 0 0 0 0 0

ACCOUNT NO.

NAME: TELEPHONE EXPENSE Date 2016 June 27

Balance

3 2 0 0 00 9 7 5 00

GJ1

Explanation

DR CR

ACCOUNT NO.

NAME: WAGES EXPENSE Date 2016 June 18

Credit

ACCOUNT NO.

NAME: INVESTIGATIVE FEES EARNED Date 2016 June 7 11

311

Credit

521

DR CR

Balance

Dr.

1 3 0 00

ACCOUNT NO. Post Ref.

Debit

GJ1

5 2 5 00

Credit

531

DR CR

Balance

Dr.

5 2 5 00

3-41

PROBLEM 3C-3., Cont. MATT NEPOOSE INVESTIGATIVE AGENCY TRIAL BALANCE JUNE 30, 2016 Cash Accounts Receivable Supplies Equipment Accounts Payable M. Nepoose, Capital M. Nepoose, Withdrawals Investigative Fees Earned Wages Expense Telephone Expense Advertising Expense Totals

3-42

10 9 9 8 0 0 1 6 0 0 00 2 7 0 00 5 1 0 0 00 6 5 5 00 15 0 0 0 0 0 1 0 7 00 4 1 7 5 00 1 1 0 0 00 1 3 0 00 5 2 5 00 19 8 3 0 0 0 19 8 3 0 0 0

SOLUTIONS TO ON-THE-JOB TRAINING, #T-1. HAMPTON CO. TRIAL BALANCE JUNE 30, 2016 Cash Accounts Receivable Office Supplies Prepaid Rent Office Equipment Notes Payable Accounts Payable D. Hole, Capital D. Hole, Withdrawals Office Sales Wages Expense Rent Expense Utilities Expense Totals

3 4 8 0 00 5 7 8 0 00 2 4 0 00 3 6 0 00 8 4 0 0 00 2 4 0 0 00 3 4 8 0 00 11 5 6 0 0 0 1 1 0 0 00 5 7 2 0 00 2 6 0 0 00 9 4 0 00 2 6 0 00 23 1 6 0 0 0 23 1 6 0 0 0

Advice to Ken: Paul seems to require more training/experience before he can be trusted with the bookkeeping. Perhaps a course at a local college or technical institute would help. Advice to Paul: You need to be much more careful when doing bookkeeping. Pay strict attention to the rules of debit and credit, and exercise care when posting. Consider some formal training in bookkeeping procedures.

3-43

SOLUTIONS TO ON-THE-JOB TRAINING, #T-2. 1. Cash in trial balance is understated. Trial balance will not balance. 2. Computer supplies understated and computer equipment overstated. Trial balance will balance. 3. Wage expense overstated by $8 and trial balance will not balance. 4. Computer supplies understated and computer sales understated. Trial balance will balance. 5. Accounts payable is overstated and trial balance will not balance.

These errors can be prevented in the future by ensuring that the bookkeeping is done with care and attention to the rules of debit and credit. Also the posting of all amounts should be carefully thought out and carried through with precision. Some errors, such as the debit to Computer Supplies instead of Computer Equipment, may still slip through (no one is perfect), but the result should be a decrease in the number of errors. Errors such as this one can be caught at year or period end—See the next chapter for details.

3-44

CONTINUING PROBLEM 1.

PRECISION COMPUTER CENTRE - GENERAL JOURNAL

Date 2016 July 3

Account Title and Description Prepaid Rent Rent Expense Cash (Cheque #210) Rent paid for June, July and August Cash Service Revenue Cash fees for Invoice 12671 Cash Service Revenue Cash fees for Invoice 12672 Accounts Payable Cash Paid May telephone bill Cash Accounts Receivable Fees from Jeannine Sparks Accounts Payable Cash Paid Computer Connection account due Computer Shop Equipment Cash Paid Multi-Systems PO 200 Phone Expense Accounts Payable June phone bill received Utilities Expense Accounts Payable June utilities bill received Cash Service Revenue Cash fees for Invoice 12673 Accounts Receivable Service Revenue Fees to Dr. Anthony Pitale on account, re: Invoice 12674

Post Ref. 1025 5020

Page 1 Dr. 8 0 0 00 4 0 0 00 1 2 0 0 00

1000

3 2 5 00 3 2 5 00

4000

1000

2 2 0 00 2 2 0 00

4000

2000

1 5 5 00 1 5 5 00

1000

8 5 0 00 8 5 0 00

1020

2000

2 0 0 00 2 0 0 00

1000

1080

1 2 0 0 00 1 2 0 0 00

1000

5040

Cr.

6 5 00 6 5 00

2000

5030

9 5 00 9 5 00

2000

1000

1 4 0 00 1 4 0 00

4000

1020 4000

2 6 0 0 00 2 6 0 0 00

3-45

CONTINUING PROBLEM, Cont. 2.

GENERAL LEDGER OF PRECISION COMPUTER CENTRE

NAME: CASH Date 2016 July 1 3 5 8 10 12 15 17 26

ACCOUNT NO. Explanation

Post Ref.

Debit

✔

Balance

1 2 0 0 00

GJ1 GJ1 GJ1

3 2 5 00 2 2 0 00

Explanation

1 4 0 00

Post Ref.

Debit

GJ1

8 5 0 00

Explanation

Post Ref.

Debit

GJ1

8 0 0 00

Post Ref.

Debit

✔

Balance

Explanation

Debit

3-46

Credit

✔

Balance

GJ1

2 6 0 0 00

Explanation

Balance

8 0 0 00

Balance

DR CR

ACCOUNT NO. Post Ref.

✔

Debit

Credit

1025

DR CR

1 2 0 0 00

NAME: OFFICE EQUIPMENT

8 5 0 00

ACCOUNT NO. Post Ref.

1020

NAME: COMPUTER SHOP EQUIPMENT

July

Credit

2 8 6 5 00 1 6 6 5 00 1 9 9 0 00 2 2 1 0 00 2 0 5 5 00 2 9 0 5 00 2 7 0 5 00 1 5 0 5 00 1 6 4 5 00

Balance

ACCOUNT NO. Explanation

Date 2016

Credit

Balance

DR CR

ACCOUNT NO.

NAME: SUPPLIES

Date 2016 July 1 17

Credit

2 6 0 0 00

NAME: PREPAID RENT

Date 2016 July 1

ACCOUNT NO.

GJ1

Date 2016 July 3

✔

Balance

Dr Dr

2 0 0 00 1 2 0 0 00

GJ1 GJ1

8 5 0 00

GJ1

Dr Dr

1 5 5 00

GJ1 GJ1

DR CR Dr

NAME: ACCOUNTS RECEIVABLE Date 2016 July 1 12 30

Credit

1000

1030 Balance 4 5 0 00

1080 Balance 1 2 0 0 00 2 4 0 0 00

1090

DR CR

Balance

6 0 0 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE, Cont. NAME: ACCOUNTS PAYABLE Date 2016 July 1 10 15 19 24

Explanation

ACCOUNT NO. Post Ref.

Debit

✔

Balance

GJ1 GJ1

GJ1

Post Ref.

Debit

Explanation

Post Ref.

Debit

Explanation

Post Ref.

Debit

3 2 5 00 2 2 0 00 1 4 0 00 2 6 0 0 00

GJ1 GJ1 GJ1

Explanation

Balance

4 5 0 0 00

3010

DR CR

Balance

1 0 0 00

DR CR

Cr Cr Cr Cr

4000 Balance 3 4 0 0 00 3 7 2 5 00 3 9 4 5 00 4 0 8 5 00 6 6 8 5 00

ACCOUNT NO. Post Ref.

Debit

Credit

✔

Balance

3000

DR CR

GJ1

5010

DR CR

Balance

1 4 0 0 00

ACCOUNT NO. Explanation

Balance

Credit

✔

Balance

ACCOUNT NO.

NAME: RENT EXPENSE Date 2016 July 1 3

Credit

✔

Balance

4 0 5 00 2 5 0 00 5 0 00 1 1 5 00 2 1 0 00

ACCOUNT NO.

NAME: ADVERTISING EXPENSE Date 2016 July 1

Credit

✔

Balance

NAME: SERVICE REVENUE Date 2016 July 1 5 8 26 30

Balance

ACCOUNT NO.

NAME: T. FREEDMAN, WITHDRAWALS Date 2016 July 1

6 5 00 9 5 00

GJ1

Explanation

DR CR Cr

1 5 5 00 2 0 0 00

NAME: T. FREEDMAN, CAPITAL Date 2016 July 1

Credit

2000

Post Ref.

Debit

✔ GJ1

Credit

DR CR Dr

4 0 0 00

5020 Balance 4 0 0 00 8 0 0 00

3-47

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE, Cont. NAME: UTILITIES EXPENSE Date 2016 July 1 24

Explanation

ACCOUNT NO. Post Ref.

Debit

✔

Balance

GJ1

Explanation

9 5 00

ACCOUNT NO. Post Ref.

GJ1

Debit

Explanation

ACCOUNT NO. Post Ref.

Debit

July

3-48

Explanation

Credit

Balance

DR CR

ACCOUNT NO. Post Ref.

Debit

NAME: POSTAGE EXPENSE Date 2016

Credit

✔

Balance

DR CR Dr

NAME: INSURANCE EXPENSE Date 2016 July 1

Credit

6 5 00

NAME: SUPPLIES EXPENSE Date 2016

✔

Balance

DR CR Dr

NAME: PHONE EXPENSE Date 2016 July 1 19

Credit

✔

Debit

Credit

Balance 8 5 00 1 8 0 00

5040 Balance 1 5 5 00 2 2 0 00

5050 Balance

5060

DR CR

Balance

1 5 0 00

ACCOUNT NO. Post Ref.

5030

DR CR Dr

5070 Balance 5 0 00

CONTINUING PROBLEM, Cont. 3.

PRECISION COMPUTER CENTRE TRIAL BALANCE JULY 31, 2016

Cash Accounts Receivable Prepaid Rent Supplies Computer Shop Equipment Office Equipment Accounts Payable T. Freedman, Capital T. Freedman, Withdrawals Service Revenue Advertising Expense Rent Expense Utilities Expense Phone Expense Insurance Expense Postage Expense Totals

1 6 4 5 00 2 6 0 0 00 8 0 0 00 4 5 0 00 2 4 0 0 00 6 0 0 00 2 1 0 00 4 5 0 0 00 1 0 0 00 6 6 8 5 00 1 4 0 0 00 8 0 0 00 1 8 0 00 2 2 0 00 1 5 0 00 5 0 00 11 3 9 5 0 0 11 3 9 5 0 0

PRECISION COMPUTER CENTRE INCOME STATEMENT FOR THE THREE MONTHS ENDING JULY 31, 2016

Revenue: Service Revenue Operating Expenses: Advertising Expense Rent Expense Utilities Expense Phone Expense Insurance Expense Postage Expense Total Operating Expenses Net Income

$6 6 8 5 0 0 $1 4 0 0 0 0 8 0 0 00 1 8 0 00 2 2 0 00 1 5 0 00 5 0 00 2 8 0 0 00 $3 8 8 5 0 0

3-49

CONTINUING PROBLEM, Cont. 4., Cont. PRECISION COMPUTER CENTRE STATEMENT OF OWNER’S EQUITY FOR THE THREE MONTHS ENDING JULY 31, 2016 T. Freedman, Capital May 1, 2016 Net Income Less: T. Freedman, Withdrawals Net Increase in Capital T. Freedman, Capital July 31, 2016

$4 5 0 0 0 0 $3 8 8 5 0 0 1 0 0 00 3 7 8 5 00 $8 2 8 5 0 0

PRECISION COMPUTER CENTRE BALANCE SHEET JULY 31, 2016 ASSETS Assets: Cash Accounts Receivable Prepaid Rent Supplies Computer Shop Equipment Office Equipment Total Assets

3-50

LIABILITIES AND OWNER’S EQUITY Liabilities: $1 6 4 5 0 0 Accounts Payable 2 6 0 0 00 8 0 0 0 0 Owner’s Equity: 4 5 0 00 T. Freedman, Capital 2 4 0 0 00 6 0 0 00 Total Liabilities and $8 4 9 5 0 0 Owner’s Equity

$ 2 1 0 00

8 2 8 5 00

$8 4 9 5 0 0

4 The Accounting Cycle Continued: Preparing Worksheets and Financial Statements

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

11.

Disagree; worksheets are optional (and often used), but are not required. The purpose of adjusting is to update accounts to the latest balance before financial reports are prepared, thus presenting an up-to-date picture in the financial reports. The internal transactions make it necessary to make adjustments. Example: Rent expiring over a period of time. An example would be an depreciation adjustment: Depreciation Expense goes on the income statement and Accumulated Depreciation goes on the balance sheet. We need the Accumulated Depreciation account because it records a history of depreciation that has been accumulated and aids in preserving the original cost of an asset in the ledger. False; Depreciation Expense goes on the income statement. Disagree; cost of equipment remains the same. Accrued salaries are salaries that are unpaid and unrecorded in an accounting period (and thus will need to be recorded by an adjustment) and will not come due for payment until the next accounting period. The balances of accounts, which appear on formal reports, were accumulated by the recording of debits or credits; it is not necessary to repeat this on the formal statements. The worksheet provides all the data to prepare the financial statements. The accountant rearranges the data from the worksheet to prepare the financial statements. Remember: The worksheet has the old figure for capital, which is updated when the statement of owner’s equity and balance sheet are prepared. All expenses that are incurred in the old year (whether paid or not) should be shown. Discussions should centre around expenses that could be postponed until next year to take advantage of accounting rules.

4-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES 1.

$700 -50 $650

Used up

1 Accounts Affected

2 Category

Office Supplies Office Supplies Exp.

$50

$700 Expired

A Exp.

5 T-Account

Cr.

Office Supplies 700 650

Dr.

Office Supplies Exp. 650

4 Rules

5 T-Account

2 Category

Prepaid Rent

Cr.

Prepaid Rent 1,200 700

Rent Exp.

Exp.

Dr.

Rent Exp. 700

4 Rules

5 T-Account

Cr.

Acc. Depn., Equip. 2,000 2,000

$500

Equipment.

Accumulated Depreciation, Equipment 1 Accounts Affected

2 Category

Acc. Depn., Equipment

A (C)

Depn. Exp., Equip.

4 Rules

1 Accounts Affected

Exp. $9,000 4,000 2,000

Dr.

Depn. Exp., Equip. 2,000

4 Rules

5 T-Account Salaries Exp. 1,400 300

Equipment Acc. Depn., Equip. Depn. Exp., Equip.

Dr. Cr. Dr.

1 Accounts Affected

2 Category

Salaries Expense

Exp.

Dr.

Accrued Salaries

Cr.

4-2

Salaries Expense Accrued Salaries

$1,700 300

Dr. Cr.

Salaries Payable 300

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES—Cont. 5.

a. b. c. d. e. f. g.

IC BC BD BD BC ID BC

h. i. j. k. l. m. n.

BD BD ID BC ID BC BC

On worksheet Equipment was in debit column and Accumulated Depreciation is in credit column. Formal reports have no debits and credits. Inside columns are only for subtotalling on the formal reports. A. Equipment and Accumulated Depreciation are listed separately on the worksheet, not the net difference. B. The $3 of total liabilities is not on the worksheet since each one is shown separately.

SOLUTIONS TO EXERCISES - SET A EXERCISE 4-1A. Account Accounts Payable Prepaid Rent Office Equipment Depreciation Expense B. Reel, Capital

Category Liability Asset Asset Expense Owner’s Equity

Normal Balance Cr. Dr. Dr. Dr. Cr.

B. Reel, Withdrawals Offjce Supplies Accumulated Depreciation

Owner’s Equity Asset Contra-Asset

Dr. Dr. Cr.

Found on which Financial Statement(s) Balance Sheet Balance Sheet Balance Sheet Income Statement Statement of Owner’s Equity Balance Sheet Statement of Owner’s Equity Balance Sheet Balance Sheet

EXERCISE 4-2A. a. b.

Accounts Affected Depreciation Expense Accumulated Depreciation Rent Expense Prepaid Rent

Category Expense Asset (Contra) Expense Asset

Rules Dr. $600 Cr. $600 Dr. $400 Cr. $400

EXERCISE 4-3A. a. Supplies used up $500. Debit Supplies Expense and Credit Supplies on Hand $500. b. Depreciation $200. Debit Depreciation Expense and Credit Accumulated Depreciation for $200. Store Equipment is not adjusted.

4-3A

SOLUTIONS TO EXERCISES—SET A, Cont. EXERCISE 4-4A. J. TRENT WORKSHEET FOR THE MONTH ENDED DECEMBER 31, 2017 Account Titles

Trial Balance D r.

Adjustments C r.

Cash Accounts Receivable Prepaid Insurance

9 00 2 00 7 00

Store Supplies Store Equipment Acc. Depn., Store Equip. Accounts Payable J. Trent, Capital J. Trent, Withdrawals Revenue from Clients Rent Expense Wage Expense

6 00 7 00

D r.

C r.

2 00 4 00 1 7 00

1 00

(c)

2 00

(a)

2 00

(d)

5 00 1 0 00

6 00 2 4 00 4 00 6 00 4 7 00

Depn. Exp., Store Equip. Insurance Expense Store Supplies Expense Accrued Wages

(d)

5 00

(a) (b) (c)

2 00 1 00 2 00

4 7 00

1 0 00 Net Income

4-4A

(b)

EXERCISE 4-4A., Cont. J. TRENT WORKSHEET - CONTINUED FOR MONTH ENDED DECEMBER 31, 2017 Adjusted Trial Balance D r. C r. 9 00 2 00 6 00 4 00 7 00

Income Statement D r. C r.

Balance Sheet D r.

C r. 9 2 6 4 7

00 00 00 00 00

4 00 4 00 1 7 00

6 00

6 00 2 4 00

2 4 00

4 00 1 1 00

2 00 1 00 2 00

5 4 00

5 00 5 4 00

2 0 00 4 00 2 4 00

2 4 00

3 4 00

2 4 00

3 4 00

5 3 0 4 3 4

00 00 00 00

4-5A

SOLUTIONS TO EXERCISES—SET A, Cont. EXERCISE 4-5A. a.

J. TRENT INCOME STATEMENT FOR THE MONTH ENDED DECEMBER 31, 2017

Revenue: Revenue From Clients Operating Expenses: Rent Expense Wage Expense Depreciation Expense, Equipment Insurance Expense Store Supplies Expense Total Operating Expenses Net Income

2 4 00

2 0 00 4 00

1 7 00

2 00 1 5 00

4 00 1 1 00 2 00 1 00 2 00

J. TRENT STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED DECEMBER 31, 2017

J. Trent, Capital, Dec. 1, 2017 Net Income For December Less Withdrawals Decrease in Capital J. Trent, Capital, Dec. 31, 2017

4 00 6 00

J. TRENT BALANCE SHEET DECEMBER 31, 2017 ASSETS

Assets Cash Accounts Receivable Prepaid Insurance Store Supplies Store Equipment Less Acc. Depn.

LIABILITIES AND OWNER’S EQUITY $

7 00 4 00

Total Assets

4-6A

9 00 2 00 6 00 4 00

Liabilities Accounts Payable Accrued Wages Total Liabilities

3 00

Owner’s Equity J. Trent, Capital

2 4 00

Total Liabilities and Owner’s Equity

4 00 5 00 9 00

1 5 00

2 4 00

SOLUTIONS TO EXERCISES—SET B EXERCISE 4-1B. Account Cash Office Supplies Building Depreciation Expense B. Reel, Capital

Category Asset Asset Asset Expense Owner’s Equity

Normal Balance Dr. Dr. Dr. Dr. Cr.

B. Reel, Withdrawals Prepaid Insurance Accrued Salaries

Owner’s Equity Asset Contra-Asset

Dr. Dr. Cr.

Found on which Financial Statement(s) Balance Sheet Balance Sheet Balance Sheet Income Statement Statement of Owner’s Equity Balance Sheet Statement of Owner’s Equity Balance Sheet Balance Sheet

EXERCISE 4-2B. a. b.

Accounts Affected Depreciation Expense Accumulated Depreciation Insurance Expense Prepaid Insurance

Category Expense Asset (Contra) Expense Asset

Rules Dr. $800 Cr. $800 Dr. $300 Cr. $300

EXERCISE 4-3B. a. Supplies used up $800. Debit Supplies Expense and Credit Supplies on Hand $800. b. Depreciation $2,100. Debit Depreciation Expense and Credit Accumulated Depreciation for $2,100. Store Equipment is not adjusted.

4-7B