Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 2, Problem 2.5CP
(a)
To determine
Chart of Accounts: The purpose of chart of accounts is to identify the particular account with the number assigned to it, to help the business better organize number of accounts used. Any account can be recognized through the short number allocated to it instead of large name of the account. This number is unique to an account to avoid any confusion.
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
T-account:
An account is referred to as a T-account, because the alignment of the components of the account resembles the capital letter ‘T’. An account consists of the three main components which are as follows:
- (a) The title of the account
- (b) The left or debit side
- (c) The right or credit side
To prepare: A chart of accounts that would be appropriate for Service EC.
(b)
To determine
To prepare: An income statement for the month of June using T-accounts in order to assess the profitability of Service EC.
c.
To determine
To compute: The amount of cash on hand on June 30 based on Person CN’s records of receipts and payments.
d.
To determine
To discuss: The possible causes of the difference between the amount of cash computed in (c) and the actual amount of cash on hand.
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Cory Neece is planning to manage and operate Eagle Caddy Service at Canyon Lake Golf and Country Club during June through August 2019. Cory will rent a small maintenance building from the country club for $500 per month and will offer caddy services, including cart rentals, to golfers. Cory has had no formal training in record keeping. Cory keeps notes of all receipts and expenses in a shoe box. An examination of Cory’s shoe box records for June revealed the following:June 1. Transferred $2,000 from personal bank account to be used to operate the caddy service.1. Paid rent expense to Canyon Lake Golf and Country Club, $500.2. Paid for golf supplies (practice balls, for example), $750.3. Arranged for the rental of 40 regular (pulling) golf carts and 20 gasoline-driven carts for $3,000 per month. Paid $600 in advance, with the remaining $2,400 due June 20.7. Purchased supplies, including gasoline, for the golf carts on account, $1,000. Canyon Lake Golf and Country Club has agreed to…
Cory Neece is planning to manage and operate Eagle Caddy Service at Canyon Lake Golf and Country Club during June through August 2019. Cory will rent a small maintenance building from the country club for $500 per month and will offer caddy services, including cart rentals, to golfers. Cory has had no formal training in record keeping.
Cory keeps notes of all receipts and expenses in a shoe box. An examination of Cory's shoe box records for June revealed the following:
June 1.
Transferred $2,000 from personal bank account to be used to operate the caddy service.
1.
Paid rent expense to Canyon Lake Golf and Country Club, $500.
2.
Paid for golf supplies (practice balls, for example), $750.
3.
Arranged for the rental of 40 regular (pulling) golf carts and 20 gasoline-driven carts for $3,000 per month. Paid $600 in advance, with the remaining $2,400 due June 20.
7.
Purchased supplies, including gasoline, for the golf carts on account, $1,000. Canyon Lake Golf and…
Journal Entries and Trial Balance
On June 1, 2016, Kim Wheeler established an interior decorating business, Intrex Designs. During the month, Kim completed the following transactions related to the business.
June
1
Kim transferred cash from a personal bank account to an account to be used for the business, $21,700.
4
Paid rent for period of June 4 to end of month, $2,100.
6
Purchased a truck for $18,000, paying $2,000 cash and giving a note payable for the remainder.
8
Purchased equipment on account, $8,460.
10
Purchased supplies for cash, $1,450.
12
Paid annual premiums on property and casualty insurance, $3,260.
15
Received cash for job completed, $9,110.
23
Paid creditor a portion of the amount owed for equipment purchased on June 13, $3,020.
24
Recorded jobs completed on account and sent invoices to customers, $10,370.
25
Received an invoice for truck expenses, to be paid in July, $950.
26
Paid utilities expense, $1,090.
27
Paid…
Chapter 2 Solutions
Financial & Managerial Accounting
Ch. 2 - What is the difference between an account and a...Ch. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - eCatalog Services Company performed services in...Ch. 2 - If the two totals of a trial balance are equal,...Ch. 2 - Assume that a trial balance is prepared with an...Ch. 2 - Prob. 7DQCh. 2 - Assume that Muscular Consulting erroneously...Ch. 2 - Assume that Sunshine Realty Co. borrowed 300,000...Ch. 2 - Checking accounts are one of the most common forms...
Ch. 2 - Prob. 2.1APECh. 2 - Rules of debit and credit and normal balances...Ch. 2 - Journal entry for asset purchase Prepare a journal...Ch. 2 - Journal entry for asset purchase Prepare a journal...Ch. 2 - Journal entry for fees earned Prepare a journal...Ch. 2 - Journal entry for fees earned Prepare a journal...Ch. 2 - Journal entry for dividends Prepare a journal...Ch. 2 - Journal entry for dividends Prepare a journal...Ch. 2 - Prob. 2.5APECh. 2 - Missing amount from an account On August 1, the...Ch. 2 - Prob. 2.6APECh. 2 - Trial balance errors For each of the following...Ch. 2 - Prob. 2.7APECh. 2 - Correcting entries The following errors took place...Ch. 2 - Prob. 2.8APECh. 2 - Prob. 2.8BPECh. 2 - Prob. 2.1EXCh. 2 - Chart of accounts Innerscape Interiors is owned...Ch. 2 - Chart of accounts LeadCo School is a newly...Ch. 2 - Rules of debit and credit The following table...Ch. 2 - Normal entries for accounts During the month,...Ch. 2 - Normal balances of accounts Identify each of the...Ch. 2 - Prob. 2.7EXCh. 2 - Prob. 2.8EXCh. 2 - Transactions and T accounts The following selected...Ch. 2 - Cash account balance During the month, Warwick Co....Ch. 2 - Account balances A. During February, 186,500 was...Ch. 2 - Retained earnings account balance As of January 1,...Ch. 2 - Identifying transactions Wyoming Tours Co. is a...Ch. 2 - Journal entries Based upon the T accounts in...Ch. 2 - Prob. 2.15EXCh. 2 - Prob. 2.16EXCh. 2 - Effect of errors on trial balance Indicate which...Ch. 2 - Errors in trial balance The following preliminary...Ch. 2 - Effect of errors on trial balance The following...Ch. 2 - Errors in trial balance Identify the errors in the...Ch. 2 - Entries to correct errors The following errors...Ch. 2 - Entries to correct errors The following errors...Ch. 2 - Prob. 2.23EXCh. 2 - Prob. 2.24EXCh. 2 - Entries into T accounts and trial balance Kimberly...Ch. 2 - Journal entries and trial balance On August 1,...Ch. 2 - Journal entries and trial balance On November 1,...Ch. 2 - Journal entries and trial balance Elite Realty...Ch. 2 - Corrected trial balance The Colby Group has the...Ch. 2 - Prob. 2.1BPRCh. 2 - Prob. 2.2BPRCh. 2 - Journal entries and trial balance On October 1,...Ch. 2 - Journal entries and trial balance Valley Realty...Ch. 2 - Prob. 2.5BPRCh. 2 - Prob. 1COPCh. 2 - Prob. 2.1CPCh. 2 - Prob. 2.2CPCh. 2 - Prob. 2.3CPCh. 2 - Prob. 2.5CP
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The policy covers a one-year period. 2. Received 1,000 on account. 3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3. Paid 250 on account. 4. Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, 7,500. 8. Paid for a newspaper advertisement, 200. 11. Received 1,000 for serving as a disc jockey for a party. 13. Paid 700 to a local audio electronics store for rental of digital recording equipment. 14. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on lage 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22. Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2018. 27. Paid electric bill, 915. 28. Paid wages of 1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, 540. 30. Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2018. 31. Received 3,000 for serving as a disc jockey for a party. July 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31. Paid dividends, 1,250. PS Musics chart of accounts and the balance of accounts as of July 1, 2018 (all normal balances), are as follows: 11 Cash 3,920 41 Fees Earned 6,200 12 Accounts Receivable 1,000 50 Wages Expense 400 14 Supplies 170 51 Office Rent Expense 800 15 Prepaid Insurance 52 Equipment Rent Expense 675 17 Office Equipment 53 Utilities Expense 300 21 Accounts Payable 250 54 Music Expense 1,590 23 Unearned Revenue 55 Advertising Expense 500 31 Common Stock 4,000 56 Supplies Expense 180 33 Dividends 500 59 Miscellaneous Expense 415 Instructions 1. Enter the July 1, 2018, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column, and place a check mark () in the Posting Reference column. {Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance as of July 31, 2018.arrow_forwardFor the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2016, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond Consulting entered into the following transactions during July: Instructions 1.Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 2.Post the journal to a ledger of four-column accounts. 3.Prepare an unadjusted trial balance. 4.At the end of July, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during July is 375. b. Supplies on hand on July 31 are 1,525. c. Depreciation of office equipment for July is 750. d. Accrued receptionist salary on July 31 is 175. e. Rent expired during July is 2,400. f. Unearned fees on July 31 are 2,750. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owners equity, and a balance sheet. 9.Prepare and post the closing entries. (Income Summary is account #33 in the chart of accounts.) Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forward
- Entries into T accounts and Trial Balance Ken Jones, an architect, opened an office on April 1, 2016. During the month, he completed the following transactions connected with his professional practice: Transferred cash from a personal bank account to an account to be used for the business, $18,000. Purchased used automobile for $19,500, paying $2,500 cash and giving a note payable for the remainder. Paid April rent for office and workroom, $3,150. Paid cash for supplies, $1,450. Purchased office and computer equipment on account, $6,500. Paid cash for annual insurance policies on automobile and equipment, $2,400. Received cash from a client for plans delivered, $12,000. Paid cash to creditors on account, $1,800. Paid cash for miscellaneous expenses, $375. Received invoice for blueprint service, due in May, $2,500. Recorded fees earned on plans delivered, payment to be received in May, $15,650. Paid salary of assistant, $2,800. Paid cash for miscellaneous expenses, $200. Paid…arrow_forwardTransactions; Financial Statements On April 1, 2016, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April: Opened a business bank account with a deposit of $24,000 from personal funds. Paid rent on office and equipment for the month, $3,600. Paid automobile expenses (including rental charge) for month, $1,350, and miscellaneous expenses, $600. Purchased office supplies on account, $1,200. Earned sales commissions, receiving cash, $19,800. Paid creditor on account, $750. Paid office salaries, $2,500. Withdrew cash for personal use, $3,500. Determined that the cost of supplies on hand was $300; therefore, the cost of supplies used was $900. 1. Prepare a statement of owner's equity for April. If an amount is zero, enter "0".arrow_forwardTransactions; Financial Statements On April 1, 2016, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April: Opened a business bank account with a deposit of $24,000 from personal funds. Paid rent on office and equipment for the month, $3,600. Paid automobile expenses (including rental charge) for month, $1,350, and miscellaneous expenses, $600. Purchased office supplies on account, $1,200. Earned sales commissions, receiving cash, $19,800. Paid creditor on account, $750. Paid office salaries, $2,500. Withdrew cash for personal use, $3,500. Determined that the cost of supplies on hand was $300; therefore, the cost of supplies used was $900. Required: 1. Indicate the effect of each transaction and the balances after each transaction. For those boxes in which no entry is required, leave the box blank. If required, enter negative values as negative numbers. Assets = Liabilities + Owner's Equity Cash + Supplies =…arrow_forward
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