horngren's accounting - eleventh edition - test...

HORNGREN'S ACCOUNTING - Eleventh Edition

1.

2.

3.

4.

Identify the three categories of the accounting equation and list at least fouraccounts associated with each category.

What is the purpose of the chart of accounts? Explain the numbering typicallyassociated with the accounts.

What does a ledger show? What’s the difference between a ledger and the chartof accounts?

Accounting uses a double-entry system. Explain what this sentence means.

Chapter 2: Recording Business Transactions of 103


5.

6.

7.

8.

9.

When are credits increases? When are credits decreases?

Identify which types of accounts have a normal debit balance and which typesof accounts have a normal credit balance.

What is a T-account? On which side is the debit? On which side is the credit?Where does the account name go on a T-account?

When are debits increases? When are debits decreases?

What are source documents? Provide examples of source documents that a business might use.



10.

11.

12.

13.

Where are transactions initially recorded?

Explain the five steps in journalizing and posting transactions.

What are the four parts of a journal entry?

What is involved in the posting process?



14.

15.

16.

17. What is the calculation for the debt ratio? Explain what the debt ratio evaluates.

What is the purpose of the trial balance?

What is the difference between the trial balance and the balance sheet?

If total debits equal total credits on the trial balance, is the trial balance error-free?Explain your answer.



S2-1

Identify each account as an asset (A), liability (L), or equity (E).

Solution:

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



S2-2

Solution:

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

For each account, identify whether the changes would be recorded as a debit (DR) or credit (CR).



S2-3

For each account, identify whether the normal balance is a debit (DR) or credit (CR).

Solution:

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



S2-4

Solution:

Date Debit Credit

Journalize the transactions of Jack Davis, M.D. Include an explanation with each entry.

Accounts and Explanation



S2-5

Solution:

Date Debit Credit

Journalize the transactions of Arkansas Sales Consultants. Include an explanation with each journal entry.




S2-6

Calculate the Accounts Payable balance.

Solution:

Accounts Payable



S2-7

Requirements

1.

2.

Solution:

Requirement 1

Debit Credit

Requirement 2

Journalize the transactions of Kenneth Watson Optical Dispensary. Include an explanation with each journal entry.

Open the following accounts (use T-account format): Cash (Beginning Balance of $23,000), Office Supplies, and Accounts Payable. Post the journal entries from Requirement 1 to the accounts and compute the balance in each account.


Office Supllies

Cash Accounts Payable

Date



S2-8

Prepare the trial balance of Henderson Floor Coverings at December 31, 2016.

Solution:

Debit Credit

HENDERSON FLOOR COVERINGSTrial Balance

December 31, 2016Account Title Balance



S2-9

What is Magic Carpet Care’s debt ratio as of October 31?

Solution:



E2-10

Match the accounting terms with the corresponding definitions.

Solution:

1.2.3.4.5.6.7.8.9.

10.



E2-11

Solution:

Expenses

Equity

Create a chart of accounts for Raymond Autobody Shop using the standard system.

Assets

Liabilities Revenues



E2-12

Requirements

1. Identify each account as asset (A), liability (L), or equity (E).

2. Identify whether the account is increased with a debit (DR) or credit (CR).

3. Identify whether the normal balance is a debit (DR) or credit (CR).

Solution:

Account Name

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

Requirement 3Requirement 2Requirement 1

Type of Account Normal Balance with Debit/Credit

Increase with Debit/Credit



E2-13

Solution:

a.b.c.d.e.f.g.h.i.j.k.l.m.n.o.p.q.r.

Insert the missing information into the accounting equation. Signify increases as Incr. and decreases as Decr.



E2-14

For each transaction, identify a possible source document.

Solution:

a.b.c.



E2-15

Solution:

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

As the manager of Margarita Mexican Restaurant, you must deal with a variety of business transactions. Provide an explanation for the following transactions:



E2-16

Solution:

Date Debit Credit

Journalize the transactions of London Engineering. Include an explanation with each journal entry.




E2-17

Requirements

1. Open the following T-accounts for London Engineering: Cash; AccountsReceivable; Office Supplies; Equipment; Accounts Payable; Notes Payable;London, Capital; London, Withdrawals; Service Revenue; Utilities Expense.

2.

3. Compute the July 31 balance for each account.

Solution:

Requirements 1, 2, and 3

Post the journal entries to the T-accounts. Also transfer the dates to the T-accounts.


Accounts Receivable Notes Payable

Office Supplies London, Capital



Service Revenue Utilities Expense

Equipment London, Withdrawals



E2-18

Solution:

Date Debit Credit

Journalize the transactions of Wilson Technology Solutions. Include an explanationwith each journal entry.




Date Debit CreditAccounts and Explanation



E2-19

Requirements

1 Open four-column accounts using the following account numbers: Cash, 110;Accounts Receivable, 120; Office Supplies, 130; Prepaid Advertising, 140; Building,150; Land, 160; Accounts Payable, 210; Unearned Revenue, 220; Wilson, Capital,310; Service Revenue, 410; Rent Expense, 510; Salaries Expense, 520.

2

Solution:

Requirement 2

Post Ref. Debit CreditDate

Post the journal entries to the four-column accounts and determine the balance in the account after each transaction. Assume that the journal entries were recorded on page 10 of the journal. Make sure to complete the Post. Ref. columns in the journal and ledger.




Post Ref. Debit Credit

Requirements 1 and 2

Debit Credit

Date

CASH Account No. 110Post. Ref. Debit CreditDate

BalanceItem




ACCOUNTS RECEIVABLE

Debit Credit

OFFICE SUPPLIES

Debit Credit

PREPAID ADVERTISING

Debit Credit

BUILDING

Debit Credit

LAND

Debit Credit

ACCOUNTS PAYABLE

Debit Credit

ItemPost. Ref. Debit Credit

Account No. 130

Date

Account No. 120Balance

Date ItemBalancePost.

Ref. Debit

Account No. 140

Credit

Date Item CreditBalancePost.

Ref. Debit

Date ItemPost. Ref. Debit

Account No. 160

Account No. 150

CreditBalance

CreditBalance


Account No. 210

CreditBalancePost.

Ref. DebitDate Item



UNEARNED REVENUE

Debit Credit

WILSON, CAPITAL

Debit Credit

SERVICE REVENUE

Debit Credit

RENT EXPENSE

Debit Credit

SALARIES EXPENSE

Debit Credit

DebitPost. Ref.

Account No. 410

Date

Account No. 220

CreditBalance

Date Item

CreditBalance

DebitItem

Account No. 310

CreditBalance

Item

DatePost. Ref.

Date Item

BalanceCreditDate Item

Account No. 520Post. Ref. Debit

Post. Ref. Debit

Account No. 510

CreditBalancePost.

Ref. Debit



E2-20

Solution:

1.2.3.4.5.6.7.8.9.

The first nine transactions of North-West Airplane Repair have been posted to the T-accounts. Provide an explanation for each of the nine transactions.



E2-21

Solution:

Date Debit CreditPosting

Ref.Accounts and Explanation

Prepare the journal entries that served as the sources for the five transactions. Include an explanation for each entry.



E2-22

Prepare Aker's trial balance as of August 31, 2016.

Solution:

Debit Credit

AKER MOVING COMPANYTrial Balance

August 31, 2016BalanceAccount Title



E2-23

Prepare Morris Farm Equipment Repair’s trial balance as of May 31, 2016.

Solution:

Debit Credit

MORRIS FARM EQUIPMENT REPAIRTrial Balance May 31, 2016

Account Title Balance



E2-24

Requirements

1. Open the following four-column accounts of Tori Peel, CPA: Cash, 110;Accounts Receivable, 120; Office Supplies, 130; Office Furniture, 140; AccountsPayable, 210; Utilities Payable, 220; Peel, Capital, 310; Peel, Withdrawals, 320;Service Revenue, 410; Salaries Expense, 510; Rent Expense, 520; UtilitiesExpense, 530.

2.

3. Prepare the trial balance as of June 30, 2016.

Solution:

Requirement 2

Debit CreditDate Accounts and Explanation

Journalize the transactions and then post the journal entries to the four-column accounts. Keep a running balance in each account. Assume the journal entries are recorded on page 10 of the journal.

Posting Ref.



Debit Credit

Requirements 1 & 2

Debit Credit

ACCOUNTS RECEIVABLE

Debit Credit

OFFICE SUPPLIES

Debit Credit

OFFICE FURNITURE

Debit Credit

Account No. 120

Debit


Date

Date Item

Credit

DebitItem

Item Debit

Post. Ref.Date Item

Date CreditPost. Ref.

BalanceCredit

Balance

Post. Ref.

Account No. 130

BalanceAccount No. 140

CreditDebitPost. Ref.

Posting Ref.Date Accounts and Explanation

CASH



ACCOUNTS PAYABLE

Debit Credit

UTILITIES PAYABLE

Debit Credit

PEEL, CAPITAL

Debit Credit

PEEL, WITHDRAWALS

Debit Credit

SERVICE REVENUE

Debit Credit

SALARIES EXPENSE

Debit Credit

RENT EXPENSE

Debit Credit

Date Item

Date

Balance

Item

Credit

Debit CreditDate

Debit Credit

Debit

Credit

Post. Ref.Item

Item

Account No. 520Post. Ref.

Balance

Credit

Post. Ref. Debit

Account No. 210Post. Ref. Debit Credit

Balance


BalanceDate Item Debit


BalanceDate Item CreditDebit

Account No. 320

Account No. 220


BalanceDate

BalanceDate Item



UTILITIES EXPENSE

Debit Credit

Requirement 3

Debit CreditJune 30, 2016Trial Balance

Acct. No. Account Name

TORI PEEL, CPA

Post. Ref. Debit

BalanceDate Item

Account No. 530

Credit



E2-25

Requirements

1.

2.

Solution:


a.b.c.

d.e.

For each of these errors, state whether total debits equal total credits on the trial balance.

Identify each account that has an incorrect balance, and the amount anddirection of the error (such as “Accounts Receivable $500 too high”).

Debits equal Credits,Yes or No Accounts Amount High or Low



E2-26

Solution:

Debit Credit

Prepare the corrected trial balance as of November 30, 2016. Assume all amounts are correct and all accounts have normal balances.

Balance

TOWN AND COUNTRY PAINTING SPECIALISTSTrial Balance

November 30, 2016Account Title



E2-27

Solution:

Debit Credit

Explanation:

a.b.c.d.

May 31, 2016Account Title

Prepare the corrected trial balance as of May 31, 2016, complete with a heading;journal entries are not required.

Balance

CARLA MADOCK TUTORING SERVICETrial Balance



E2-28

Calculate the debt ratio for Jason Hilton, M.D.

Solution:

Assets:

Liabilities:



P2-29A

Requirements

1. Journalize each transaction. Explanations are not required.

2.

3. Prepare the trial balance of Vincent Yarwood, M.D. as of July 31, 2017.

Solution:

Requirement 1

Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal.

Posting Ref.Date Accounts and Explanation Debit Credit



Requirement 2

Unearned RevenueOffice Supplies

Debit

Accounts Receivable Advertising Payable

Credit


Date Accounts and ExplanationPosting

Ref.



Advertising Expense


Yarwood, Withdrawals

Salaries Expense Rent Expense

Notes PayableYarwood, Capital

Land



Requirement 3

Debit Credit

VINCENT YARWOOD, MDTrial Balance July 31, 2017




P2-30A

Requirements

1. Record each transaction in the journal using the following account titles: Cash;Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Land;Accounts Payable; Utilities Payable; Unearned Revenue; Stann, Capital;Stann, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense.Explanations are not required.

2.

3.

4. Prepare the trial balance of Doris Stann, Designer, as of September 30, 2017.

Solution:

Requirement 1

Open a T-account for each of the accounts.

Post the journal entries to the T-accounts, using transaction dates as postingreferences in the ledger accounts. Label the balance of each account Bal.

Posting Ref. CreditDate Accounts and Explanation Debit




Ref. Debit Credit




Office Supplies Stann, Capital

Prepaid Insurance Stann, Withdrawals

Accounts Payable

Utilities Payable

Accounts Receivable Unearned Revenue

Land Service Revenue

Cash



Requirement 4

Debit CreditAccount Title Balance

Furniture Utilities Expense

Rent Expense

DORIS STANN, DESIGNERTrial Balance

September 30, 2017.

Salaries Expense



P2-31A

Requirements

1. Record each transaction in the journal, using the following account titles: Cash;Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Building;Land; Accounts Payable; Utilities Payable; Notes Payable; Monroe, Capital;Monroe, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; and UtilitiesExpense. Explanations are not required.

2. Open the following four-column accounts including account numbers:Cash, 101; Accounts Receivable, 111; Office Supplies, 121; PrepaidInsurance, 131; Furniture, 141; Building, 151; Land, 161; AccountsPayable, 201; Utilities Payable, 211; Notes Payable, 221; Monroe, Capital, 301;Monroe, Withdrawals, 311; Service Revenue, 411; Salaries Expense, 511;Rent Expense, 521; and Utilities Expense, 531.

3.

4. Prepare the trial balance of Timothy Monroe, Attorney, at January 31, 2017.

Solution:

Requirement 1 and 3

Post the journal entries to four-column accounts in the ledger, using dates,account numbers, journal references, and posting references. Assume the journalentries were recorded on page 1 of the journal.

Posting Ref. CreditDebitDate Accounts and Explanation



Accounts and Explanation DebitDate CreditPosting

Ref.




CASH Account No. 101

Debit Credit

ACCOUNTS RECEIVABLE

Debit Credit

OFFICE SUPPLIES

Debit Credit

PREPAID INSURANCE

Debit Credit

FURNITURE

Debit Credit

BUILDING

Debit Credit

Date

Post. Ref. Debit Credit

BalanceDate Item


BalanceDate Item

DebitPost. Ref. Credit

BalanceItem

Account No. 121

BalancePost. Ref.Date Item

Account No. 131

Debit Credit


BalanceDate Item

Item


BalanceDate



LAND

Debit Credit

ACCOUNTS PAYABLE

Debit Credit

UTILITIES PAYABLE

Debit Credit

NOTES PAYABLE

Debit Credit

MONROE, CAPITAL

Debit Credit

MONROE, WITHDRAWALS

Debit Credit

SERVICE REVENUE

Debit Credit

SALARIES EXPENSE

Debit Credit

Date

Date

Date

Date Item CreditBalance

CreditBalance

Date Item


Date Item



Balance

Account No. 221

Account No. 301

BalancePost. Ref. DebitItem Credit

CreditBalance

ItemPost. Ref. Debit

Account No. 311Post. Ref. Debit CreditDate

Account No. 411

BalanceItem

CreditBalance

ItemPost. Ref. Debit

Date Item


Balance



RENT EXPENSE

Debit Credit

UTILITIES EXPENSE

Debit Credit

Requirement 4

Debit Credit

Date


BalanceDate


Account No. 531

Account No. 521

Item

Account Title

Item

Balance

TIMOTHY MONROE, ATTORNEYTrial Balance

January 31, 2017

Balance



P2-32A

Requirements

1. Record the April transactions in the journal.

2.

3.

4. Prepare the trial balance of Steve Mentz, CPA, at April 30, 2017.

Solution:

Requirement 1

Date Accounts and Explanation Debit

Open the four-column ledger accounts listed in the trial balance, together withtheir balances as of March 31.

Post the journal entries to four-column accounts in the ledger, using dates, accountnumbers, journal references, and posting references. Assume the journalentries were recorded on page 5 of the journal.

Posting Ref. Credit



CreditDate Accounts and ExplanationPosting

Ref. Debit




CASH Account No. 11

Debit Credit

ACCOUNTS RECEIVABLE

Debit Credit

OFFICE SUPPLIES

Debit Credit

FURNITURE

Debit Credit

AUTOMOBILE

Debit Credit

Date Item Debit CreditBalancePost.

Ref.



BalanceDate Item

Date Item Debit



BalanceCredit

CreditBalance

Account No. 15


Date Item



LAND

Debit Credit

ACCOUNTS PAYABLE

Debit Credit

UNEARNED REVENUE

Debit Credit

MENTZ, CAPITAL

Debit Credit

MENTZ, WITHDRAWALS

Debit Credit

SERVICE REVENUE

Debit CreditDate

Date

Date Item

Item


Balance


BalanceDate


BalanceDate Item

Account No. 31

CreditBalance



BalanceItem

CreditBalance

Item




SALARIES EXPENSE

Debit Credit

RENT EXPENSE

Debit Credit

Requirement 4

Debit Credit

Account No. 51


BalanceDate Item

Account TitleAcct. No.

STEVE MENTZ, CPATrial BalanceApril 30, 2017

Balance

BalanceDate Item




P2-33A

Solution:

Account TitleDebit Credit

Explanations:

Prepare the corrected trial balance as of August 31, 2017. Journal entries are not required.

Balance

CREATIVE CHILD CARETrial Balance

August 31, 2017



P2-34A

Requirements

1. Prepare the income statement for the month ended July 31, 2017.

2.

3. Prepare the balance sheet as of July 31, 2017.

4. Calculate the debt ratio as of July 31, 2017.

Solution:

Requirement 1

Prepare the statement of owner's equity for the month ended July 31, 2017.The beginning balance of capital was $0 and the owner contributed $24,000.

SANDRA SOUSA, REGISTERED DIETICIANIncome Statement

Month Ended July 31, 2017



Requirement 2

Requirements 3

Requirements 4

Statement of Owner’s Equity Month Ended July 31, 2017

SANDRA SOUSA, REGISTERED DIETICIAN

SANDRA SOUSA, REGISTERED DIETICIANBalance Sheet

Owner's Equity

July 31, 2017Assets Liabilities



P2-35B

Requirements

1. Journalize each transaction. Explanations are not required.

2.

3. Prepare the trial balance of Vito York, M.D. as of March 31, 2017.

Solution:

Requirement 1

Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal.


Ref. Debit Credit



Requirement 2

Credit


Accounts Receivable Advertising Payable


Ref. Debit

Office Supplies Unearned Revenue



York, Capital Notes Payable

Land York, Withdrawals


Salaries Expense Rent Expense

Advertising Expense



Requirement 3

Debit CreditBalance

VITO YORK, MDTrial Balance

March 31, 2017Account Title



P2-36B

Requirements

1. Record each transaction in the journal using the following account titles: Cash;Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Land;Accounts Payable; Utilities Payable; Unearned Revenue; Sikes, Capital;Sikes, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense.Explanations are not required.

2.

3.

4. Prepare the trial balance of Deb Sikes, Designer, as of November 30, 2017.

Solution:

Requirement 1

DatePosting

Ref.

Open a T-account for each of the accounts.

Post the journal entries to the T-accounts, using transaction dates as postingreferences in the ledger accounts. Label the balance of each account Bal.

Debit CreditAccounts and Explanation



Accounts and ExplanationPosting

Ref. DebitDate Credit




Prepaid Insurance

Sikes, Capital

Sikes, Withdrawals

Cash

Unearned Revenue

Utilities Payable

Accounts Payable

Accounts Receivable

Office Supplies



Salaries Expense

Utilities Expense

Land

Rent Expense

Service Revenue

Furniture



Requirement 4

Debit Credit

DEB SIKES,DESIGNER

November 30, 2017Account Title Balance

Trial Balance



P2-37B

Requirements

1. Record each transaction in the journal, using the following account titles: Cash;Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Building;Land; Accounts Payable; Utilities Payable; Notes Payable; Moore, Capital;Moore, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; and UtilitiesExpense. Explanations are not required.

2. Open the following four-column accounts including account numbers:Cash, 101; Accounts Receivable, 111; Office Supplies, 121; PrepaidInsurance, 131; Furniture, 141; Building, 151; Land, 161; AccountsPayable, 201; Utilities Payable, 211; Notes Payable, 221; Moore, Capital, 301;Moore, Withdrawals, 311; Service Revenue, 411; Salaries Expense, 511;Rent Expense, 521; and Utilities Expense, 531.

3.

4. Prepare the trial balance of Trevor Moore, Attorney, at April 30, 2017.

Solution:

Requirement 1 and 3

Date Accounts and Explanation Debit CreditPosting

Ref.

Post the journal entries to four-column accounts in the ledger, using dates,account numbers, journal references, and posting references. Assume the journalentries were recorded on page 1 of the journal.



Date CreditAccounts and ExplanationPosting

Ref. Debit




CASH Account No. 101

Debit Credit

ACCOUNTS RECEIVABLE

Debit Credit

OFFICE SUPPLIES

Debit Credit

PREPAID INSURANCE

Debit Credit

FURNITURE

Debit Credit

BUILDING

Debit Credit

Item

Item

Balance

Debit Credit

Account No. 121

DebitPost. Ref.

DatePost. Ref.

Balance

Account No. 131

Debit Credit

Post. Ref. Credit

Balance

Balance

Date ItemPost. Ref.

Account No. 141

CreditDebit

Debit

Post. Ref.

CreditDate

Date Item


Date Item

Date

Account No. 151

CreditBalance

DebitPost. Ref.Item



LAND

Debit Credit

ACCOUNTS PAYABLE

Debit Credit

UTILITIES PAYABLE

Debit Credit

NOTES PAYABLE

Debit Credit

MOORE, CAPITAL

Debit Credit

MOORE, WITHDRAWALS

Debit Credit

SERVICE REVENUE

Debit Credit


CreditDate DebitItemPost. Ref.

CreditBalance


Account No. 201

Date ItemPost. Ref. Debit Credit



BalanceDate Item

BalanceDate Item



BalanceDate Item

BalanceDate Item




SALARIES EXPENSE

Debit Credit

RENT EXPENSE

Debit Credit

UTILITIES EXPENSE

Debit Credit

Date Item

Balance

Date

ItemPost. Ref.

Debit

Credit

Post. Ref.

DebitPost. Ref.

Date

Credit

Item

Account No. 511

Debit

CreditBalance

Account No. 521

Account No. 531

Balance



Requirement 4

Debit CreditAccount Title Balance

TREVOR MOORE, ATTORNEYTrial BalanceApril 30, 2017



P2-38B

Requirements

1. Record the April transactions in the journal using the following accounts: Cash;Accounts Receivable; Office Supplies; Furniture; Automobile; Land; AccountsPayable; Unearned Revenue; Howe, Capital; Howe, Withdrawals; Service Revenue;Salaries Expense; and Rent Expense. Include an explanation for each entry.

2.

3.

4. Prepare the trial balance of James Howe, CPA, at April 30, 2017.

Solution:

Requirement 1

Open the four-column ledger accounts listed in the trial balance, togetherwith their balances as of March 31. Use the following account numbers: Cash,11; Accounts Receivable, 12; Office Supplies, 13; Furniture, 14; Automobile,15; Land, 16; Accounts Payable, 21; Unearned Revenue, 22; Howe, Capital, 31; Howe, Withdrawals; 33; Service Revenue, 41; Salaries Expense, 51; and RentExpense, 52.

Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal references, and posting references. Assume the journalentries were recorded on page 5 of the journal.

Date Accounts and Explanation Debit CreditPosting

Ref.




Ref. Debit Credit




CASH Account No. 11

Debit Credit

ACCOUNTS RECEIVABLE Account No. 12

Debit Credit

OFFICE SUPPLIES Account No. 13

Debit Credit

FURNITURE Account No. 14

Debit CreditPost. Ref.

Date Item

Item

Post. Ref.

CreditBalance

Date

BalanceDate Item CreditDebit

Post. Ref.

Balance

Debit

Debit Credit

Debit Credit

Post. Ref.Date Item

Balance



AUTOMOBILE Account No. 15

Debit Credit

LAND Account No. 16

Debit Credit

ACCOUNTS PAYABLE Account No. 21

Debit Credit

UNEARNED REVENUE Account No. 22

Debit Credit

HOWE, CAPITAL Account No. 31

Debit Credit

HOWE, WITHDRAWALS Account No. 33

Debit CreditBalance

Date ItemPost. Ref. Debit Credit

BalanceDate Item


Date

Date Item

Date

BalanceCredit

Debit

Post. Ref. Debit

Post. Ref.

Post. Ref.

Balance

CreditBalance

Item

Debit CreditDate Item

Debit CreditPost. Ref.

BalanceItem



SERVICE REVENUE Account No. 41

Debit Credit

SALARIES EXPENSE Account No. 51

Debit Credit

RENT EXPENSE Account No. 52

Debit Credit

ItemDatePost. Ref.

ItemPost. Ref. Debit Credit

BalanceDate

Debit CreditBalance


BalanceDate Item



Requirement 4

Debit Credit

JAMES HOWE, CPATrial Balance

Account TitleApril 30, 2017

Acct. No. Balance



P2-39B

Solution:

Debit Credit

Explanations:

Prepare the corrected trial balance as of May 31, 2015. Journal entries are not required.

LEARN FOR LIFE CHILD CARETrial BalanceMay 31, 2017




P2-40B

Requirements

1. Prepare the income statement for the month ended July 31, 2017.

2.

3. Prepare the balance sheet as of July 31, 2017.

4. Calculate the debt ratio as of July 31, 2017.

Solution:

Requirement 1

Prepare the statement of owner's equity for the month ended July 31, 2017. The beginning balance of capital was $0 and the owner contributed $26,000.

SARAH SILK, REGISTERED DIETICIANIncome Statement




Requirement 2

Requirements 3

Requirements 4

Assets Liabilities

Owner's Equity

July 31, 2017


SARAH SILK, REGISTERED DIETICIANStatement of Owner’s Equity

SARAH SILK, REGISTERED DIETICIANBalance Sheet



P2-41

Requirements

1. Journalize the transactions, using the following accounts: Cash; AccountsReceivable; Office Supplies; Equipment; Furniture; Accounts Payable;Unearned Revenue; Daniels, Capital; Daniels, Withdrawals; Service Revenue; RentExpense; and Utilities Expense. Explanations are not required.

2. Open a T-account for each of the accounts.

3.

4. Prepare a trial balance as of December 31, 2016.

5.

6.

7. Prepare the balance sheet as of December 31, 2016.

8. Calculate the debt ratio for Daniels Consulting.

Post the journal entries to the T-accounts and calculate account balances.Formal posting references are not required.

Prepare the income statement of Davis Consulting for the month endedDecember 31, 2016.

Prepare the statement of owner's equity for the month ended December 31,2016.



Solution:

Requirement 1

CreditPosting

Ref.Date Accounts and Explanation Debit




Cash

Office Supplies


Ref. Debit Credit

Unearned Revenue

Daniels, Capital

Accounts Receivable

Accounts Payable

Equipment Daniels, Withdrawals



Requirement 4


Balance

DANIELS CONSULTINGTrial Balance

December 31, 2016

Utilities ExpenseRent Expense

Service Revenue Furniture



Requirement 5

Requirement 6

DANIELS CONSULTING

DANIELS CONSULTING

Month Ended December 31, 2016Statement of Owner’s Equity

Month Ended December 31, 2016Income Statement



Requirement 7

Requirement 8

Assets Liabilities December 31, 2016

DANIELS CONSULTINGBalance Sheet



P2-42

Requirements

1. Journalize the transactions, using the following accounts: Cash; AccountsReceivable; Cleaning Supplies; Prepaid Rent; Prepaid Insurance; Equipment;Truck; Accounts Payable; Unearned Revenue; Notes Payable; Habib, Capital;Habib, Withdrawals; Service Revenue; Salaries Expense; Advertising Expense; andUtilities Expense. Explanations are not required.

2. Open a T-account for each account.

3.

4. Prepare a trial balance as of November 30, 2017.

Solution:

Requirement 1

Post the journal entries to the T-accounts and calculate account balances.Formal posting references are not required.

Posting Ref.Date Accounts and Explanation Debit Credit



Accounts and ExplanationPosting

Ref. Debit CreditDate




Accounts PayableCash

Unearned Revenue Accounts Receivable

Cleaning Supplies Notes Payable

Prepaid Rent Habib, Capital

Prepaid Insurance Habib, Withdrawals



Equipment Service Revenue

Salaries ExpenseTruck

Advertising ExpenseUtilities Expense



Requirement 4


Trial BalanceNovember 30, 2017

Balance

CRYSTAL CLEAR CLEANING



Decision Case 2-1

Requirements

1. Open the following T-accounts: Cash; Accounts Receivable; Office Supplies;Accounts Payable; McChesney, Capital; Service Revenue; Salaries Expense; RentExpense; and Advertising Expense.

2.

3. Prepare a trial balance at June 30, 2016.

4.

Solution:


McChesney, CapitalAccounts Receivable

Office Supplies Service Revenue

Post the transactions directly to the accounts without using a journal. Recordeach transaction by letter. Calculate account balances.

Compute the amount of net income or net loss for this first month of operations.Would you recommend that McChesney continue in business?




Requirement 3

Debit Credit

Advertising Expense

BalanceAccount Title

A-PLUS TRAVEL PLANNERS

June 30, 2016Trial Balance

Salaries ExpenseRent Expense



Requirement 4



Ethical Issue 2-1

Solution:

What is the ethical issue in this situation, if any? State why you approve or disapprove of Henson’s management of Better Days Ahead’s funds.



Fraud Case 2-1

Requirements

1.

2. Who gained and who lost as a result of these actions?

Solution:

Requirement 1

Requirement 2

How did the change in the journal entries affect the net income of the company at year-end?



Financial Statement Case 2-1

Requirement

1. Calculate the debt ratio for Starbucks Corporation as of September 29, 2013.

2.

Solution:

Requirement 1

Requirement 2

How did the debt ratio for Starbucks Corporation compare to the debt ratio for Green Mountain Coffee Roasters, Inc.? Discuss.



Communication Activity 2-1

Solution:

In 35 words or fewer, explain the difference between a debit and a credit, and explain what the normal balance of the six account types is.


horngren's accounting - eleventh edition - test...

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