Financial and Managerial Accounting
Financial and Managerial Accounting
7th Edition
ISBN: 9781259726705
Author: John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2PSB

1.

To determine

To prepare: journal entry for September transactions.

1.

Expert Solution
Check Mark

Explanation of Solution

Journal entries to record the transactions

a.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Cash

65,000

Office equipment

5,750

Computer equipment

30,000

Capital account

100,750

( Being Cash and equipment has been invested by the owner.)

Table (1)

  • Cash is an asset account. Here, asset balance has increased. Hence cash account is debited.
  • Office Equipment is an asset account. Here, asset balance has increased. Hence office equipment account is debited.
  • Computer Equipment is an asset account. Here, asset balance has increased. Hence computer equipment account is debited
  • As the equity is raised by investing cash and equipment resulted in increased equity so increased in equity account is credited.

b.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Land

22,000

Cash

5,000

Notes payable

17,000

( Being land has been purchased for cash and by issuing notes payable.)

Table (2)

  • Land belongs to asset accounts it has been debited as their purchase resulted in increase in assets.
  • Cash is an asset account it has been credited for the purchase of land as it resulted in decrease in asset account.
  • Notes payable are the part of liabilities they have been credited which signifies increase in liabilities so credited.

c.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Building

2,000

Cash

2,000

( Being building has been purchased for cash.)

Table (3)

  • Building belongs to asset accounts it has been debited as their purchase resulted in increase in assets.
  • Cash is an asset account it has been credited for the purchase of building as it resulted in decrease in asset account.

d.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Prepaid Insurance

5,000

Cash

5,000

( Being premium for insurance has been paid in advance)

Table (4)

  • Prepaid expense belongs to asset account so there is an increase in asset account so it is debited.
  • While cash is also a part of asset account it is credited because there is decrease in cash account for the payment of premium.

e.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Cash

4,600

Services fees earned

4,600

( Being cash earned for providing services.)

Table (5)

  • Cash is belongs to current asset account so providing services in cash causes increase in asset account so debited.
  • Services have been provided so it will be credited as they will decrease the stock account.

f.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Computer Equipment

4,500

Cash

800

Notes Payable

3,700

( Being computer equipment has been purchased for cash and by issuing notes payable.)

Table (6)

  • Computer equipment belongs to asset accounts it has been debited as their purchase resulted in increase in assets.
  • Cash is an asset account it has been credited for the purchase of computer equipment as it resulted in decrease in asset account.
  • Notes payable are the part of liabilities they have been credited which signifies increase in liabilities.

g.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Accounts receivable

4,250

Service fees earned

4,250

( Being amount is going to receive later on.)

Table (7)

  • Account receivable is belonging to asset account so providing services causes increase in asset account so debited.
  • Services have been provided so it recorded in credited account as they will decrease the stock account.

h.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Office equipment

950

Accounts payable

950

( Being purchased on credit.)

Table (8)

  • Equipment belongs to asset account they increase the asset account so debited.
  • While accounts payable is a current liability account so purchasing supplies on credit will increase them so credited.

i.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Accounts receivables

10,200

Services fees earned

10,200

( Being billed client for completed work.)

Table (9)

  • Accounts receivable is an asset account as the amount due and not received so it causes increase in asset account so debited.
  • Services have been provided so it recorded in credited account as they will decrease the stock account.

j.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Equipment rental expense

580

Accounts payable

580

( Being rented on credit.)

Table (10)

  • Equipment rent belongs to current asset account they increase the asset account so debited.
  • While accounts payable is a liability account so renting equipment on credit will increase them so credited.

k.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Cash

5,100

Account Receivable

5,100

( Being cash for previously provided services)

Table (11)

  • Cash account is a current asset account. Since cash is earned, so it is to be increased. Therefore, cash account is to be debited.
  • Account receivable is also belongs to asset account so receiving cash will decrease it so credited.

l.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Wages expense

1,800

Cash

1,800

( Being wages paid on cash.)

Table (12)

  • Wages expense account is an expense account. Since wages expense is increased, expense is to be increased. So, debit the wages expense account.
  • Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.

m.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Accounts payable

950

Cash

950

( Being amount paid due.)

Table (13)

  • Accounts payable is a current liability account so payment of amount due will increase the liability account so debited.
  • Cash belongs to current asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.

n.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Repairs expense

608

Cash

608

( Being wages paid on cash.)

Table (14)

  • Repairs expense account is an expense account. Since repairs expense is increased, expense is to be increased. So, debit the wages expense account.
  • Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.

o.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Dividends

6,230

Cash

6,230

( Being cash is paid in form of dividend..)

Table (15)

  • Since dividends has been paid which will increase equity so debited.
  • Cash is credited as dividends have been paid in cash which decrease the cash account so credited.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Wages expense

1,800

Cash

1,800

( Being wages paid on cash.)

Table (16)

  • Wages expense account is an expense account. Since wages expense is increased, expense is to be increased. So, debit the wages expense account.
  • Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.

q.

Date

Account Title and Explanation

Post.

ref

Debit

($)

Credit

($)

Advertising expense

750

Cash

750

( Being advertising expense paid on cash.)

Table (17)

  • Advertising expense account is an expense account. Since wages expense is increased, expense is to be increased. So, debit the wages expense account.
  • Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.
2.

To determine

To prepare: ledger account.

2.

Expert Solution
Check Mark

Explanation of Solution

Cash No.101

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Capital

65,000

65,000

Land

5,000

60,000

Building

34,500

25,500

Prepaid Insurance

5,000

20,500

Fees earned

4,600

25,100

Computer equipment

800

24,300

Accounts receivable

5,100

29,400

Wages

1,800

27,600

Accounts payable

950

26,650

Repair expense

608

26.042

Dividends

6,230

19,812

Wages

1,800

18,012

Advertising expense

750

17,262

Table (18)

So the ending balance is $17,262.

Account receivable No.106

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Fees earned

4,250

4,250

Fees earned

10,200

14,450

Cash

5,100

9,350

Table (19)

So the ending balance is $9,350

Prepaid Insurance No.108

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Accounts payable

5,000

5,000

Table (20)

So the ending balance is $5,000.

Office Equipment No.163

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Capital account

5,750

5,750

Accounts payable

950

6.700

Table (21)

So the ending balance is $6,700.

Computer Equipment No.164

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

30,000

30,000

Cash

4,500

34,500

Table (22)

So the ending balance is $34,500.

Building No.170

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

34,500

34,500

Table (23)

So the ending balance is $34,500.

Land No.172

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

22,000

22,000

Table (24)

So the ending balance is $22,000.

Accounts payable No.201

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Office Equipment

950

950

Equipment rental expense

580

1,530

Cash

950

580

Table (25)

So the ending balance is $580.

Notes payable No.250

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Land

17,000

17,000

Computer equipment

3,700

20,700

Table (26)

So the ending balance is $20,700.

Capital No.307

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

101,750

101,750

Table (27)

So the ending balance is $101,750.

Dividends No.319

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

6,230

6,230

Table (28)

So the ending balance is $6,230.

Fees Earned No.402

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

4,600

4,600

Accounts receivable

4,250

8,850

Accounts receivable

10,200

19,050

Table (29)

So the ending balance is $19,050.

Equipment Rental Expense .602

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Accounts payable

580

580

Table (27)

So the ending balance is $580.

Wages expense No.601

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

1,800

1,800

Cash

1,800

3,600

Table (28)

So the ending balance is $3,600.

Repair expense No.604

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

608

608

Table (29)

So the ending balance is $608.

Advertising expense No.106

Date

Account Title and Explanation

Post ref

Debit

($)

Credit

($)

Balance

($)

Cash

750

750

Table (30)

So the ending balance is $750.

3.

To determine

To prepare: Trial balance.

3.

Expert Solution
Check Mark

Explanation of Solution

S Works

Trial Balance

April 30, 20XX

Accounts Title

Amount

($)

Amount

($)

Cash

17,262

Accounts payable

580

Accounts receivable

9,350

Computer equipment

34,500

Office equipment

6,700

Notes payable

20,700

Building

34,500

Land

22,000

Equipment rental expense

580

Capital

100,750

Dividends

6,230

Fees earned

19,050

Salaries expenses

3,600

Repair expenses

608

Advertising expense

750

Prepaid insurance

5,000

Totals

141,080

141,080

Table (29)

So, total trial balance is $141,080.

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Chapter 2 Solutions

Financial and Managerial Accounting

Ch. 2 - Prob. 6DQCh. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQCh. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Prob. 13DQCh. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - APPLE Review the Apple balance sheet in Appendix...Ch. 2 - Prob. 17DQCh. 2 - Prob. 18DQCh. 2 - QS 2-1 Identifying source documents C1 Identifying...Ch. 2 - Prob. 2QSCh. 2 - Reading a chart of accounts C3 A chart of accounts...Ch. 2 - Prob. 4QSCh. 2 - Prob. 5QSCh. 2 - Prob. 6QSCh. 2 - Prob. 7QSCh. 2 - identifying a posting error P2 A trial balance has...Ch. 2 - Prob. 9QSCh. 2 - Prob. 10QSCh. 2 - Prob. 11QSCh. 2 - Prob. 12QSCh. 2 - Exercise 2-1 Steps in analyzing and recording...Ch. 2 - Prob. 2ECh. 2 - Prob. 3ECh. 2 - Prob. 4ECh. 2 - Prob. 5ECh. 2 - Prob. 6ECh. 2 - Prob. 7ECh. 2 - Prob. 8ECh. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - Prob. 12ECh. 2 - Prob. 13ECh. 2 - Prob. 14ECh. 2 - Prob. 15ECh. 2 - Prob. 16ECh. 2 - Prob. 17ECh. 2 - Prob. 18ECh. 2 - Exercise 2-19 Analyzing changes in a company’s...Ch. 2 - Exercise 2-20 Identifying effects of posting...Ch. 2 - Prob. 21ECh. 2 - Prob. 22ECh. 2 - Prob. 23ECh. 2 - Prob. 1PSACh. 2 - Problem 2-2A Preparing and posting journal...Ch. 2 - Prob. 3PSACh. 2 - Prob. 4PSACh. 2 - Prob. 5PSACh. 2 - Prob. 6PSACh. 2 - Prob. 1PSBCh. 2 - Prob. 2PSBCh. 2 - Prob. 3PSBCh. 2 - Prob. 4PSBCh. 2 - Prob. 5PSBCh. 2 - Prob. 6PSBCh. 2 - Prob. 2SPCh. 2 - Prob. 1GLPCh. 2 - Prob. 2GLPCh. 2 - Prob. 3GLPCh. 2 - Prob. 1BTNCh. 2 - Prob. 2BTNCh. 2 - Prob. 3BTNCh. 2 - Prob. 4BTNCh. 2 - Prob. 5BTNCh. 2 - Prob. 6BTNCh. 2 - Prob. 7BTNCh. 2 - Prob. 8BTNCh. 2 - Prob. 9BTNCh. 2 - Prob. 10BTN
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