INTERMEDIATE ACCOUNTING
INTERMEDIATE ACCOUNTING
8th Edition
ISBN: 9780078025839
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2.3E
To determine

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’.
  • The components of the T-account are as follows:
    1. a) The title of the account
    2. b) The left or debit side
    3. c) The right or credit side

To Post: The journal entries to the T-accounts.

Expert Solution
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Explanation of Solution

Post the journal entries to the T-accounts.

T-account of Cash Account:

Cash Account
Date Details

Debit

($)

Date Details

Credit

($)

March 1 Beginning balance 0   Equipment (Transaction 2) 10,000
 

Common stock

(Transaction 1)

300,000  

Rent expense

(Transaction 5)

5,000
 

Accounts receivable

(Transaction 8)

55,000   Prepaid insurance (Transaction 6) 6,000
         

Accounts payable

(Transaction 7)

70,000
  Total 355,000     Total 91,000
March 31 Ending Balance 264,000        

Table (1)

Cash is an asset account, and it has a normal debit balance. Hence, debit all the journal entries which increase the cash account, and credit all the journal entries which decrease the cash account.

T-account of Accounts Receivable:

Accounts Receivable Account
Date Details

Debit

($)

Date Details

Credit

($)

March 1 Beginning balance 0  

Cash

(Transaction 8)

55,000
 

Service Revenue

(Transaction 4)

120,000      
  Total 120,000   Total 55,000
March 31 Ending Balance 65,000      

Table (2)

Accounts receivable is an asset account, and it has a normal debit balance. Hence, debit all the journal entries which increase the accounts receivable account, and credit all the journal entries which decrease the accounts receivable account.

T-account of Inventory Account:

Inventory Account
Date Details

Debit

($)

Date Details

Credit

($)

March 1 Beginning balance 0  

Cost of goods sold

(Transaction 4)

70,000
 

Accounts payable

(Transaction 3)

90,000      
  Total 90,000     Total 70,000
March 31 Ending Balance 20,000        

Table (3)

Inventory is an asset account, and it has a normal debit balance. Hence, debit all the journal entries which increase the inventory account, and credit all the journal entries which decrease the inventory account.

T-account of Prepaid Insurance Account:

Prepaid Insurance Account
Date Details

Debit

($)

Date Details

Credit

($)

March 1 Beginning balance 0     -
 

Cash

(Transaction 6)

6,000      
  Total 6,000     Total -
March 31 Ending Balance 6,000        

Table (4)

Prepaid insurance is an asset account, and it has a normal debit balance. Hence, debit all the journal entries which increase the prepaid insurance account, and credit all the journal entries which decrease the prepaid insurance account.

T-account of Equipment Account:

Equipment Account
Date Details

Debit

($)

Date Details

Credit

($)

March 1 Beginning balance 0     -
 

Cash

(Transaction 2)

40,000     -
  Total 40,000     Total -
March 31 Ending Balance 40,000        

Table (5)

Equipment is an asset account, and it has a normal debit balance. Hence, debit all the journal entries which increase the equipment account, and credit all the journal entries which decrease the equipment account.

T-account of Accumulated Depreciation- Equipment account:

Accumulated Depreciation-Equipment Account
Date Details

Debit

($)

  Date Details

Credit

($)

      March 1 Beginning balance 0
         Depreciation expense (Transaction 9) 1,000
      March 31 Ending Balance 1,000

Table (6)

Accumulated Depreciation – Equipment is a liability account, and it has a normal credit balance. Hence, debit all the journal entries which decrease the accumulated depreciation–Equipment account, and credit all the journal entries which increase the accumulated depreciation–Equipment account.

T-account of Accounts Payable:

Accounts Payable Account
Date Details

Debit

($)

  Date Details

Credit

($)

 

Cash

(Transaction 7)

70,000 March 1 Beginning balance 0
        Inventory (Transaction 3) 90,000
  Total 70,000   Total 90,000
        March 31 Ending Balance 20,000

Table (7)

Accounts payable is a liability account, and it has a normal credit balance. Hence, debit all the journal entries which decrease the accounts payable account, and credit all the journal entries which increase the accounts payable account.

T-account of Notes Payable:

Notes Payable Account
Date Details

Debit

($)

  Date Details

Credit

($)

      March 1 Beginning balance 0
       

Equipment

(Transaction 2)

30,000
        Total 30,000
        March 31 Ending Balance 30,000

Table (8)

Notes payable is a liability account, and it has a normal credit balance. Hence, debit all the journal entries which decrease the notes payable account, and credit all the journal entries which increase the notes payable account.

T-account of Common Stock:

Common Stock Account
Date Details

Debit

($)

  Date Details

Credit

($)

      March 1 Beginning balance 0
        Cash (Transaction 1) 300,000
        Total 300,000
        March 31 Balance 300,000

Table (9)

Common stock is a component of owner’s equity, and it has a normal credit balance. Hence, debit all the journal entries which decrease the common stock account, and credit all the journal entries which increase the common stock account.

T-account of Sales Revenue:

Sales Revenue Account
Date Details

Debit

($)

  Date Details

Credit

($)

      March 1 Beginning balance 0
        Accounts receivable (Transaction 4) 120,000
          Total 120,000
        March 31 Ending Balance 120,000

Table (10)

Sales Revenue is a revenue account which is a component of owner’s equity, and it has a credit balance. Hence, debit all the journal entries which decrease the sales revenue account, and owner’s equity, and credit all the journal entries which increase the sales revenue account, and owner’s equity.

T-account of Cost of Goods Sold:

Cost of Goods Sold Account
Date Details

Debit

($)

  Date Details

Credit

($)

March 1 Beginning balance 0     -
  Inventory (Transaction 4) 70,000      
  Total 70,000   Total -
March 31 Ending Balance 70,000        

Table (11)

Cost of goods sold is an expense account which is a component of owner’s equity, and it has a debit balance. Hence, debit all the journal entries which increase the cost of goods sold account, and decrease the owner’s equity account, and credit all the journal entries which decrease the cost of goods sold account, and increase the owner’s equity account.

T-account of Rent Expense:

Rent Expense Account
Date Details

Debit

($)

  Date Details

Credit

($)

March 1 Beginning balance 0     -
  Cash(Transaction 5) 5,000      
  Total 5,000   Total -
March 31 Ending Balance 5,000        

Table (12)

Rent expense is an expense account which is a component of owner’s equity, and it has a debit balance. Hence, debit all the journal entries which increase the rent expense account, and decrease the owner’s equity account, and credit all the journal entries which decrease the rent expense account, and increase the owner’s equity account.

T-account of Depreciation Expense:

Depreciation Expense Account
Date Details

Debit

($)

  Date Details

Credit

($)

March 1 Beginning balance 0     -
  Accumulated depreciation (Transaction 9) 1,000      
  Total 1,000   Total -
March 31 Ending Balance 1,000        

Table (13)

Depreciation expense is an expense account which is a component of owner’s equity, and it has a debit balance. Hence, debit all the journal entries which increase the depreciation account, and decrease the owner’s equity account, and credit all the journal entries which decrease the depreciation account, and increase the owner’s equity account.

To determine

To Prepare: A trial balance for Corporation W from the ending account balances.

Expert Solution
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Explanation of Solution

Trial Balance:

Trial Balance is prepared at the end of an accounting period listing all the ledgers and their balances. The total of the debit balances in the trial balance shall match the total of the credit balances. It is prepared to check whether there is any mathematical error in the accounts.

Prepare a trial balance for Corporation W from the ending account balances.

Corporation W

Trial Balance

Particulars Debit ($) Credit ($)
Cash 264,000  
Accounts receivable 65,000  
Inventory 20,000  
Prepaid Insurance 6,000  
Equipment 40,000  
Accumulated depreciation   1,000
Accounts payable   20,000
Notes payable   30,000
Common stock   300,000
Sales revenue   120,000
Cost of goods sold 70,000  
Rent expense 5,000  
Depreciation expense 1,000  
Total 471,000 471,000

Table (14)

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Chapter 2 Solutions

INTERMEDIATE ACCOUNTING

Ch. 2 - What is an unadjusted trial balance? An adjusted...Ch. 2 - Define adjusting entries and discuss their...Ch. 2 - Define closing entries and their purpose.Ch. 2 - Define prepaid expenses and provide at least two...Ch. 2 - Deferred revenues represent liabilities recorded...Ch. 2 - Define accrued liabilities. What adjusting journal...Ch. 2 - Prob. 2.17QCh. 2 - [Based on Appendix A] What is the purpose of a...Ch. 2 - [Based on Appendix B] Define reversing entries and...Ch. 2 - [Based on Appendix C] What is the purpose of...Ch. 2 - Prob. 2.21QCh. 2 - Transaction analysis LO21 The Marchetti Soup...Ch. 2 - Journal entries LO22 Prepare journal entries for...Ch. 2 - Prob. 2.3BECh. 2 - Journal entries LO22 Prepare journal entries for...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Adjusting entries; income determination LO24,...Ch. 2 - BE2–7 Adjusting entries • LO2–5 Prepare the...Ch. 2 - Prob. 2.8BECh. 2 - Prob. 2.9BECh. 2 - BE2–10 Financial statements The following account...Ch. 2 - Prob. 2.11BECh. 2 - Closing entries LO27 The year-end adjusted trial...Ch. 2 - Prob. 2.13BECh. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Prob. 2.3ECh. 2 - Prob. 2.4ECh. 2 - Prob. 2.5ECh. 2 - Debits and credits LO22 Indicate whether a debit...Ch. 2 - Prob. 2.7ECh. 2 - Prob. 2.8ECh. 2 - Prob. 2.9ECh. 2 - Prob. 2.10ECh. 2 - Prob. 2.11ECh. 2 - Prob. 2.12ECh. 2 - Prob. 2.13ECh. 2 - Prob. 2.14ECh. 2 - Prob. 2.15ECh. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Prob. 2.18ECh. 2 - Prob. 2.19ECh. 2 - Prob. 2.20ECh. 2 - Reversing entries Appendix 2B The employees of...Ch. 2 - Prob. 2.22ECh. 2 - Prob. 2.23ECh. 2 - Special journals Appendix 2C The White Companys...Ch. 2 - Prob. 2.25ECh. 2 - Prob. 1CPACh. 2 - Prob. 2CPACh. 2 - 3. Compared to the accrual basis of accounting,...Ch. 2 - Prob. 4CPACh. 2 - Prob. 5CPACh. 2 - Prob. 2.1PCh. 2 - Prob. 2.2PCh. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Prob. 2.5PCh. 2 - Prob. 2.6PCh. 2 - Prob. 2.7PCh. 2 - Prob. 2.8PCh. 2 - Prob. 2.9PCh. 2 - P2–10 Accrual accounting; financial...Ch. 2 - Prob. 2.11PCh. 2 - Prob. 2.12PCh. 2 - Prob. 2.13PCh. 2 - Judgment Case 21 Cash versus accrual accounting;...Ch. 2 - Judgment Case 2–2 Cash versus accrual...Ch. 2 - Communication Case 23 Adjusting entries LO24 I...
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