Journal: Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect. Rules of debit and credit: “An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited. Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”. Net income: The net income is the difference between the total revenue, and the total expenses. The net income can be computed as: Net income = Total revenues – Total expenses To prepare: The correct journal entry for S incorporation.

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Answer 1

Question

Chapter 3, Problem 3.7EYCT

(a)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

Net income:

The net income is the difference between the total revenue, and the total expenses. The net income can be computed as:

Net income = Total revenues – Total expenses

To prepare: The correct journal entry for S incorporation.

(b)

To determine

The incorrect entries that would prevent the trial balance from balancing.

(c)

To determine

To compute: The correct net income for the month of May.

(d)

To determine

The correct cash balance at May, 31.

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The following are brief descriptions of two companies in different lines of business. 1. Company A is a retailer. It makes sales on a daily basis for cash and on credit cards. 2. Company B is a health spa. It has recently signed contracts with numerous individuals to use its facilities over a two-year period. The contract price was collected in advance. Describe when revenue should be recognized by each company. If revenue should not be recognized at the time of sale, indicate what method should be used to recognize the revenue. Justify your decision.

Part of the Fry’s Electronics, Inc. ’s experience involves providing technical support to its customers. This includes in-home installations of electronics and also computer support at their retail store locations. Requirements Suppose Fry’s Electronics, Inc. provides $10,500 of computer support at the Dallas-Fort Worth store during the month of November. How would Fry's Electronics record this transaction? Assume all customers paid in cash. What financial statement(s) would this transaction affect? Assume Fry’s Electronics, Inc.’s Modesto, California, location received $24,000 for an annual contract to provide computer support to the local city government. How would Fry’s Electronics record this transaction? What financial statement(s) would this transaction affect? What is the difference in how revenue is recorded in requirements 1 and 2? Clearly state when revenue is recorded in each requirement.

Before you begin this assignment, review the Tying It All Together feature in the chapter. Part of Fry’s Electronics, Inc.'s experience involves providing technical support to its customers. This includes in-home installations of electronics and also computer support at their retail store locations. Requirements Suppose Fry’s Electronics, Inc. provides $10,500 of computer support at the Dallas-Fort Worth store during the month of November. How would Fry's Electronics record this transaction? Assume all customers paid in cash. What financial statement(s) would this transaction affect? Assume Fry’s Electronics, Inc.’s Modesto, California, location received $24,000 for an annual contract to provide computer support to the local city government. How would Fry’s Electronics record this transaction? What financial statement(s) would this transaction affect? What is the difference in how revenue is recorded in requirements 1 and 2? Clearly state when revenue is recorded in each requirement.

Answer 2

Question

Chapter 3, Problem 3.7EYCT

(a)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

Net income:

The net income is the difference between the total revenue, and the total expenses. The net income can be computed as:

Net income = Total revenues – Total expenses

To prepare: The correct journal entry for S incorporation.

(b)

To determine

The incorrect entries that would prevent the trial balance from balancing.

(c)

To determine

To compute: The correct net income for the month of May.

(d)

To determine

The correct cash balance at May, 31.

Expert Solution & Answer

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Answer 3

Question

Chapter 3, Problem 3.7EYCT

(a)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

Net income:

The net income is the difference between the total revenue, and the total expenses. The net income can be computed as:

Net income = Total revenues – Total expenses

To prepare: The correct journal entry for S incorporation.

(b)

To determine

The incorrect entries that would prevent the trial balance from balancing.

(c)

To determine

To compute: The correct net income for the month of May.

(d)

To determine

The correct cash balance at May, 31.

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Answer 4

Question

Chapter 3, Problem 3.7EYCT

(a)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

Net income:

The net income is the difference between the total revenue, and the total expenses. The net income can be computed as:

Net income = Total revenues – Total expenses

To prepare: The correct journal entry for S incorporation.

(b)

To determine

The incorrect entries that would prevent the trial balance from balancing.

(c)

To determine

To compute: The correct net income for the month of May.

(d)

To determine

The correct cash balance at May, 31.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 3.7EYCT

(a)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

Net income:

The net income is the difference between the total revenue, and the total expenses. The net income can be computed as:

Net income = Total revenues – Total expenses

To prepare: The correct journal entry for S incorporation.

(b)

To determine

The incorrect entries that would prevent the trial balance from balancing.

(c)

To determine

To compute: The correct net income for the month of May.

(d)

To determine

The correct cash balance at May, 31.

Answer 6

Chapter 3, Problem 3.7EYCT

(a)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

Net income:

The net income is the difference between the total revenue, and the total expenses. The net income can be computed as:

Net income = Total revenues – Total expenses

To prepare: The correct journal entry for S incorporation.

Answer 7

Chapter 3, Problem 3.7EYCT

(a)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

Net income:

The net income is the difference between the total revenue, and the total expenses. The net income can be computed as:

Net income = Total revenues – Total expenses

To prepare: The correct journal entry for S incorporation.

Answer 8

(b)

To determine

The incorrect entries that would prevent the trial balance from balancing.

Answer 9

(b)

To determine

The incorrect entries that would prevent the trial balance from balancing.

Answer 10

(c)

To determine

To compute: The correct net income for the month of May.

Answer 11

(c)

To determine

To compute: The correct net income for the month of May.

Answer 12

(d)

To determine

The correct cash balance at May, 31.

Answer 13

(d)

To determine

The correct cash balance at May, 31.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 3 - Prob. 1Q Ch. 3 - Can a business enter into a transaction that...Ch. 3 - Are the followingevents recorded in the accounting...Ch. 3 - Prob. 4Q Ch. 3 - Prob. 5Q Ch. 3 - Prob. 6Q Ch. 3 - Prob. 7Q Ch. 3 - Misty Reno, a beginning accounting student,...Ch. 3 - Prob. 9Q Ch. 3 - What is the normal balance for each of these...

Solution Summary: The author explains that the journal is the book of original entry and consists of the day-to-day financial transactions in a chronological order.

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The incorrect entries that would prevent the trial balance from balancing.

To compute: The correct net income for the month of May.

The correct cash balance at May, 31.

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Chapter 3 Solutions