Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
bartleby

Concept explainers

bartleby

Videos

Textbook Question
Chapter 2, Problem 23CE

Cornerstone Exercise 2-23 Debit and Credit Procedures

Refer ID the accounts listed below.

a. Accounts Payable e. Equipment

b. Accounts Receivable f. Common Stock

c. Retained Earnings g. Salary Expense

d. Sales h. Repair Expense

Required:

For each of the acmums1 complete the following table by entering the normal balance of the account (debit or credit) and the word increase or decrease in the debit and credit columns.

Chapter 2, Problem 23CE, Cornerstone Exercise 2-23 Debit and Credit Procedures Refer ID the accounts listed below. a.

Expert Solution
Check Mark
To determine

Concept Introduction:

‘T’ Account -: A ‘T’ account shows the effect of a financial transaction on two sides or a dual effect where left side of the ‘T’ is referred as debit side and the right side is known as credit side of account. A ‘normal balance’ in the account is assigned based on increases and decreases in the account. Assets, expenses and owner’s drawings have normal debit balance which increase with debit and decreases with credits while liabilities, revenue and stock holder’s equity have a normal credit balance which decreased with debit and increase with credits.

Requirement 1:

To show the impact on normal balance, debit side and credit side in an accounts payable account.

Answer to Problem 23CE

In an accounts payable account, there will be normal credit balance and debit will decrease and credit will increase.

Explanation of Solution

The primary activity that affects the account payable account is purchase of goods on credit(increase in accounts payable) and cash payment made related to these credit purchases(decrease in accounts payable). Since amount is due to be paid for purchases made, therefore it is a liability. Also, liabilities are recorded on the credit side and normal balance is assigned on the side where increases go. Therefore, normal balance will be on the credit side of ‘T’account. This will be shown as:

  Account             Normal Balance       Debit        Credit____________________________________________Accounts                 Credit                Decrease    IncreasePayable

Expert Solution
Check Mark
To determine

Concept Introduction:

‘T’ Account -: A ‘T’ account shows the effect of a financial transaction on two sides or a dual effect where left side of the ‘T’ is referred as debit side and the right side is known as credit side of account. A ‘normal balance’ in the account is assigned based on increases and decreases in the account. Assets, expenses and owner’s drawings have normal debit balance which increase with debit and decreases with credits while liabilities, revenue and stock holder’s equity have a normal credit balance which decreased with debit and increase with credits.

Requirement 2:

To show the impact on normal balance, debit side and credit side in an accounts receivable account.

Answer to Problem 23CE

In an accounts receivable account, there will be normal debit balance and debit will increase the account and credit side will decrease the account.

Explanation of Solution

The primary activity that affects the account receivable account is sale of goods on credit (increase in accounts receivable account) and cash received from customers (decrease in accounts receivable account). Since amount is due to be collected from customers, therefore assets will increase in the form of cash. Also, asset (accounts receivable account) are recorded on the debit side and normal balance is assigned on the side where increases go. Therefore, in case accounts receivable account increases, normal balance will be on the debit side of ‘T’account. This will be shown as:

  Account             Normal Balance       Debit        Credit____________________________________________Accounts                   Debit               Increase    DecreaseReceivable

Expert Solution
Check Mark
To determine

Concept Introduction:

‘T’ Account -: A ‘T’ account shows the effect of a financial transaction on two sides or a dual effect where left side of the ‘T’ is referred as debit side and the right side is known as credit side of account. A ‘normal balance’ in the account is assigned based on increases and decreases in the account. Assets, expenses and owner’s drawings have normal debit balance which increase with debit and decreases with credits while liabilities, revenue and stock holder’s equity have a normal credit balance which decreased with debit and increase with credits.

Requirement 3:

To show the impact on normal balance, debit side and credit side in a retained earnings account.

Answer to Problem 23CE

In retained earnings account, there will be normal credit balance and credit side will increase the account and debit side will decrease the account.

Explanation of Solution

Retained earnings is calculated by deducting dividends paid to stockholders from the net income. Since it is a part of equity account, therefore, it has a normal credit balance and it increases with a credit and decrease with a debit. This is shown as:

  Account             Normal Balance       Debit        Credit____________________________________________Retained                 Credit                Decrease    IncreaseEarnings

Expert Solution
Check Mark
To determine

Concept Introduction:

‘T’ Account -: A ‘T’ account shows the effect of a financial transaction on two sides or a dual effect where left side of the ‘T’ is referred as debit side and the right side is known as credit side of account. A ‘normal balance’ in the account is assigned based on increases and decreases in the account. Assets, expenses and owner’s drawings have normal debit balance which increase with debit and decreases with credits while liabilities, revenue and stock holder’s equity have a normal credit balance which decreased with debit and increase with credits.

Requirement 4:

To show the impact on normal balance, debit side and credit side in a sales account.

Answer to Problem 23CE

In sales account, there will be normal credit balance and debit will decrease the account and credit side will increase the account.

Explanation of Solution

An entity usually includes earning from cash sales and credit sales. Since revenue has normal credit balance, likewise, sales account also has a normal credit balance and debit decreases the account and credit increases the account. This is shown as:

  Account             Normal Balance       Debit        Credit____________________________________________Sales                        Credit                Decrease    Increase

Expert Solution
Check Mark
To determine

Concept Introduction:

‘T’ Account -: A ‘T’ account shows the effect of a financial transaction on two sides or a dual effect where left side of the ‘T’ is referred as debit side and the right side is known as credit side of account. A ‘normal balance’ in the account is assigned based on increases and decreases in the account. Assets, expenses and owner’s drawings have normal debit balance which increase with debit and decreases with credits while liabilities, revenue and stock holder’s equity have a normal credit balance which decreased with debit and increase with credits.

Requirement 5:

To show the impact on normal balance, debit side and credit side in an equipment account.

Answer to Problem 23CE

In an equipment account, there will be normal debit balance and debit will increase the account and credit side will decrease the account.

Explanation of Solution

Equipment’s are classified as a long-term asset and asset (equipment account) are recorded on the debit side and normal balance is assigned on the side where increases go. Therefore, in an equipment account debit increases and credit decreases the account while normal balance will be on the debit side of T-account. This will be shown as:

  Account             Normal Balance       Debit        Credit____________________________________________Equipment               Debit                Increase    Decrease

Expert Solution
Check Mark
To determine

Concept Introduction:

‘T’ Account -: A ‘T’ account shows the effect of a financial transaction on two sides or a dual effect where left side of the ‘T’ is referred as debit side and the right side is known as credit side of account. A ‘normal balance’ in the account is assigned based on increases and decreases in the account. Assets, expenses and owner’s drawings have normal debit balance which increase with debit and decreases with credits while liabilities, revenue and stock holder’s equity have a normal credit balance which decreased with debit and increase with credits.

Requirement 6:

To show the impact on normal balance, debit side and credit side in a Common Stock account.

Answer to Problem 23CE

In Common stock account, there will be normal credit balance and credit side will increase the account and debit side will decrease the account.

Explanation of Solution

Common stock includes both contributed capital and retained earnings and it has a normal credit balance. Since they have a normal credit balance, therefore, it is increased by credits and decreased by debits. This will be shown as:

  Account             Normal Balance       Debit        Credit____________________________________________Common stock           Credit             Decrease    Increase

Expert Solution
Check Mark
To determine

Concept Introduction:

‘T’ Account -: A ‘T’ account shows the effect of a financial transaction on two sides or a dual effect where left side of the ‘T’ is referred as debit side and the right side is known as credit side of account. A ‘normal balance’ in the account is assigned based on increases and decreases in the account. Assets, expenses and owner’s drawings have normal debit balance which increase with debit and decreases with credits while liabilities, revenue and stock holder’s equity have a normal credit balance which decreased with debit and increase with credits.

Requirement 7:

To show the impact on normal balance, debit side and credit side in a salary expense account.

Answer to Problem 23CE

In a salary expense account, there will be normal debit balance and debit will increase the account and credit side will decrease the account.

Explanation of Solution

Salary expense is treated as an expense which decreases the stockholder’s equity through retained earnings. Therefore, it has a normal debit balance. This means that debits will increase the salary expense account and credits will decrease the salary expense account.

  Account             Normal Balance       Debit        Credit____________________________________________Salary                        Debit               Increase    DecreaseExpense

Expert Solution
Check Mark
To determine

Concept Introduction:

‘T’ Account -: A ‘T’ account shows the effect of a financial transaction on two sides or a dual effect where left side of the ‘T’ is referred as debit side and the right side is known as credit side of account. A ‘normal balance’ in the account is assigned based on increases and decreases in the account. Assets, expenses and owner’s drawings have normal debit balance which increase with debit and decreases with credits while liabilities, revenue and stock holder’s equity have a normal credit balance which decreased with debit and increase with credits.

Requirement 8:

To show the impact on normal balance, debit side and credit side in repair expense account.

Answer to Problem 23CE

In a repair expense account, there will be normal debit balance and debit will increase the account and credit side will decrease the account.

Explanation of Solution

Repair expense is treated as an expense which decreases the stockholder’s equity through retained earnings. Therefore, it has a normal debit balance. This means that debits will increase the repair expense account and credits will decrease the repair expense account.

  Account             Normal Balance       Debit        Credit____________________________________________Repair Expense          Debit               Increase    Decrease

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 2 Solutions

Cornerstones of Financial Accounting

Ch. 2 - Prob. 11DQCh. 2 - In analyzing a transaction, can a transaction only...Ch. 2 - How do revenues and expenses affect the accounting...Ch. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - The words debit and credit are used in two ways in...Ch. 2 - Prob. 17DQCh. 2 - Prob. 18DQCh. 2 - Prob. 19DQCh. 2 - Prob. 20DQCh. 2 - Prob. 21DQCh. 2 - Prob. 22DQCh. 2 - Prob. 1MCQCh. 2 - Prob. 2MCQCh. 2 - Prob. 3MCQCh. 2 - Prob. 4MCQCh. 2 - Prob. 5MCQCh. 2 - Which principle requires that expenses be recorded...Ch. 2 - Taylor Company recently purchased a piece of...Ch. 2 - Prob. 8MCQCh. 2 - The effects of paying salaries for the current...Ch. 2 - Which of the following statements is false? The...Ch. 2 - Which of the following statements are true? Debits...Ch. 2 - Debits will: increase assets. expenses, and...Ch. 2 - Which of the following statements are true? A...Ch. 2 - Posting: involves transferring the information in...Ch. 2 - A trial balance: lists only revenue and expense...Ch. 2 - CORNERSTONE 2.1 Cornerstone Exercise 2-16...Ch. 2 - Prob. 17CECh. 2 - CORNERSTONE 2.1 Four statements are given below....Ch. 2 - Prob. 19CECh. 2 - Cornerstone Exercise 2-20 Transaction Analysis...Ch. 2 - Cornerstone Exercise 2-21 Transaction Analysis...Ch. 2 - Cornerstone Exercise 2-22 Transaction Analysis The...Ch. 2 - Cornerstone Exercise 2-23 Debit and Credit...Ch. 2 - Cornerstone Exercise 2-24 Journalize Transactions...Ch. 2 - Cornerstone Exercise 2-25 Journalize Transactions...Ch. 2 - Cornerstone Exercise 2-26 Preparing a Trial...Ch. 2 - Prob. 27BECh. 2 - Brief Exercise 2-28 Assumptions and Principles...Ch. 2 - Brief Exercise 2-2? Events and Transactions...Ch. 2 - Brief Exercise 2-30 Transaction Analysis Galle...Ch. 2 - Brief Exercise 2-31 Debit and Credit Procedures...Ch. 2 - Brief Exercise 2-32 Journalize Transactions Galle...Ch. 2 - Brief Exercise 2-33 Posting Journal Entries Listed...Ch. 2 - Brief Exercise 2-34 Preparing a Trial Balance The...Ch. 2 - Prob. 35ECh. 2 - Prob. 36ECh. 2 - Exercise 2-37 Events and Transactions Several...Ch. 2 - Exercise 2-38 Events and Transactions The...Ch. 2 - Exercise 2-39 Transaction Analysis OBJECTIVE e The...Ch. 2 - Exercise 2-40 Transaction Analysis Amanda Webb...Ch. 2 - Exercise 2-41 Transaction Analysis and Business...Ch. 2 - Exercise 2-42 Inferring Transactions from Balance...Ch. 2 - Exercise 2-43 Transaction Analysis Goal Systems, a...Ch. 2 - Exercise 2-44 Transaction Analysis OBJECTIVE 9...Ch. 2 - Prob. 45ECh. 2 - Exercise 2-46 Normal Balances and Financial...Ch. 2 - OBJECTIVE 9 Exercise 2-47 Debit and Credit Effects...Ch. 2 - Prob. 48ECh. 2 - Exercise 2-49 Journalizing Transactions Kauai...Ch. 2 - Exercise 2-50 Journalizing Transactions Remington...Ch. 2 - Exercise 2-51 Transaction Analysis and Journal...Ch. 2 - Exercise 2-52 Accounting Cycle Rosenthal...Ch. 2 - Exercise 2-53 Preparing a Trial Balance...Ch. 2 - Exercise 2-54 Effect of Errors on a Trial Balance...Ch. 2 - Problem 2-55A Events and Transactions The...Ch. 2 - Problem 2-56A Analyzing Transactions Luis Madero,...Ch. 2 - Problem 2-57A Inferring Transactions from...Ch. 2 - Prob. 58APSACh. 2 - Problem 2-59A Journalizing Transactions Monroe...Ch. 2 - Problem 2-60A Journalizing and Posting...Ch. 2 - Problem 2-61A The Accounting Cycle Karleens...Ch. 2 - Problem 2-62B Comprehensive Problem Mulberry...Ch. 2 - Prob. 55BPSBCh. 2 - Prob. 56BPSBCh. 2 - Prob. 57BPSBCh. 2 - Problem 2-58B Debit and Credit Procedures A list...Ch. 2 - Problem 2-593 Journalizing Transactions Monilast...Ch. 2 - Problem 2-603 Journalizing and Posting...Ch. 2 - Problem 2-6B The Accounting Cycle Sweetwater...Ch. 2 - Problem 2-62B Comprehensive Problem Mulberry...Ch. 2 - Prob. 63.1CCh. 2 - Prob. 63.2CCh. 2 - Prob. 63.3CCh. 2 - Prob. 64.1CCh. 2 - Prob. 64.2CCh. 2 - Case 2-64 Analysis of the Effects of Current Asset...Ch. 2 - Prob. 64.4CCh. 2 - Prob. 65.1CCh. 2 - Prob. 65.2CCh. 2 - Prob. 66.1CCh. 2 - Prob. 66.2CCh. 2 - Prob. 66.3CCh. 2 - Case 2-67 Comparative Analysis: Under Armour,...Ch. 2 - Prob. 67.2CCh. 2 - Case 2-67 Comparative Analysis: Under Armour,...Ch. 2 - Case 2-68 Accounting for Partially Completed...Ch. 2 - Prob. 68.2CCh. 2 - Prob. 69.1CCh. 2 - Case 2-69 CONTINUING PROBLEM: FRONT ROW...Ch. 2 - Case 2-69 CONTINUING PROBLEM: FRONT ROW...
Knowledge Booster
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
    Recommended textbooks for you
  • Cornerstones of Financial Accounting
    Accounting
    ISBN:9781337690881
    Author:Jay Rich, Jeff Jones
    Publisher:Cengage Learning
    Corporate Financial Accounting
    Accounting
    ISBN:9781305653535
    Author:Carl Warren, James M. Reeve, Jonathan Duchac
    Publisher:Cengage Learning
    Financial & Managerial Accounting
    Accounting
    ISBN:9781337119207
    Author:Carl Warren, James M. Reeve, Jonathan Duchac
    Publisher:Cengage Learning
  • Cornerstones of Financial Accounting
    Accounting
    ISBN:9781337690881
    Author:Jay Rich, Jeff Jones
    Publisher:Cengage Learning
    Corporate Financial Accounting
    Accounting
    ISBN:9781305653535
    Author:Carl Warren, James M. Reeve, Jonathan Duchac
    Publisher:Cengage Learning
    Financial & Managerial Accounting
    Accounting
    ISBN:9781337119207
    Author:Carl Warren, James M. Reeve, Jonathan Duchac
    Publisher:Cengage Learning
    The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY