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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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Section
BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

During February of this year, H. Rose established Rose Shoe Hospital. The following asset, liability, and owner’s equity accounts are included in the chart of accounts:

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The following transactions occurred during the month of February:

  1. a. Rose deposited $25,000 cash in a bank account in the name of the business.
  2. b. Bought shop equipment for cash, $1,525, Ck. No. 1000.
  3. c. Bought advertising on account from Milland Company, $325.
  4. d. Bought store shelving on account from Inger Hardware, $750.
  5. e. Bought office equipment from Shara’s Office Supply, $625, paying $225 in cash and placing the balance on account, Ck. No. 1001.
  6. f. Paid on account to Inger Hardware, $750, Ck. No. 1002.
  7. g. Rose invested his personal leather working tools with a fair market value of $800 in the business
  8. h. Sold services for the month of February for cash, $250.

PART 1: The Accounting Cycle for a Service Business: Analyzing Business Transactions

Required

  1. 1. Write the account classifications (Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit.
  2. 2. Write the account names on the T accounts under the classifications, place the plus and minus signs for each T account, and label the debit and credit sides of the T accounts.
  3. 3. Record the amounts in the proper positions in the T accounts. Write the letter next to each entry to identify the transaction.
  4. 4. Foot and balance the accounts.

1.

To determine

Write the account classifications in the fundamental accounting equation.

Explanation

T-account:

T-account is the form of the ledger account, where the journal entries are posted to this account. It is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.

Accounting equation:

Accounting equation is an acc...

2, 3 & 4

To determine

Write the account names on the T-accounts record the amounts in the proper positions and balance the accounts.

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