CH 2

CHAPTER 2
The Recording Process

ASSIGNMENT CLASSIFICATION TABLE
Study Objectives
Questions
Brief
Exercises
Exercises
Problems
Set A
Problems
Set B
1. Explain what an account is and

how it helps in the recording
process.
2. Define debits and credits and
illustrate how they are used to
record business transactions.
1, 2, 3, 4, 5,
6, 7, 8, 9
1, 2, 3
3. Describe the basic steps in the

recording process.
10, 18
4. Explain what a journal is, how it

helps in the recording process,
and journalize business
transactions.
11, 12, 13,

14, 18
5, 6
5. Explain what a ledger is and how

it helps in the recording process.
14, 15, 18
6. Explain what posting is, and how

it helps in the recording process.
15, 16, 18
7. Explain the purpose of, and

prepare, a trial balance.
17, 18, 19
1, 2
1, 2
10
10
4, 5, 6, 7
2, 3, 4, 5, 6, 7
2, 3, 4, 5, 6, 7
4, 5, 6, 7
12
12
6, 8, 9
3, 4, 5, 6, 7
3, 4, 5, 6, 7
8, 9
7, 8, 9,
10
3, 4, 5, 6, 7,
8, 9, 10, 11,
12
3, 4, 5, 6, 7,
8, 9, 10, 11,
12
2-1
1, 2, 3
ASSIGNMENT CHARACTERISTICS TABLE

Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
1A
Identify increases, decreases, normal balances, and

types of accounts.
Simple
15-20
2A
Journalize a series of transactions.
Simple
20-30
3A
Journalize transactions, post, and prepare trial balance.
Moderate
40-50
4A
Moderate
55-65
5A
Moderate
55-65
6A
Journalize transactions, post, and prepare trial balance

and financial statements.
Moderate
80-90
7A
Journalize transactions, post, prepare trial balance, and

determine elements of financial statements.
Moderate
65-75
8A
Prepare financial statements from trial balance.
Simple
25-35
9A
Prepare trial balance and financial statements.
Simple
30-40
10A
Answer questions about trial balance error and identify

source documents.
Moderate
25-30
11A
Identify errors and prepare correct trial balance.
Moderate
25-35
12A
Prepare correct trial balance.
Complex
30-40
1B
Identify increases, decreases, normal balances, and

types of accounts.
Simple
15-20
2B
Journalize a series of transactions.
Simple
20-30
3B
Moderate
40-50
4B
Moderate
55-65
5B
Moderate
55-65
6B
Journalize transactions, post, and prepare trial balance

and financial statements.
Moderate
80-90
7B
Journalize transactions, post, prepare trial balance, and

determine elements of financial statements.
Moderate
65-75
8B
Prepare financial statements from trial balance.
Simple
25-35
9B
Prepare trial balance and financial statements.
Simple
30-40
10B
Answer questions about trial balance error and identify

source documents.
Moderate
25-30
11B
Identify errors and prepare correct trial balance.
Moderate
25-35
12B
Prepare correct trial balance.
Complex
30-40
2-2
BLOOMS TAXONOMY TABLE
Correlation Chart between Blooms Taxonomy, Study Objectives and End-of-Chapter Material
Study Objective
1. Explain what
an account is
and how it
helps in the
recording
process.
Knowledge
Comprehension
Application
2. Define debits
and credits
and illustrate
how they are
used to record
business
transactions.
Q2-5
Q2-6
Q2-7
BE2-1
BE2-2
BE2-3
E2-1
E2-2
P2-1A
P2-1B
Q2-1
Q2-2
Q2-3
Q2-4
Q2-8
Q2-9
E2-3
P2-2A
P2-2B
BE2-4
Q2-10
Q2-18
Q2-12
Q2-13,
Q2-14
Q2-18
BE2-5
BE2-6
E2-4
E2-5
E2-6
E2-7
P2-2A
P2-3A
Q2-14
Q2-15
Q2-18
P2-4A
P2-5A
P2-6A
P2-7A
P2-2B
P2-3B
P2-4B
P2-5B
P2-6B
P2-7B
Q2-15
Q2-16
Q2-18
BE2-7
E2-6
E2-8
P2-3A
P2-4A
Q2-17
Q2-18
BE2-8
BE2-9
E2-7
E2-8
E2-10
P2-3A
P2-4A
P2-5A
P2-6A
BYP2-3
P2-5A
P2-6A
P2-7A
P2-3B
P2-4B
P2-5B
P2-6B
P2-7B
P2-7A
P2-8A
P2-9A
P2-3B
P2-4B
P2-5B
P2-6B
P2-7B
P2-8B
P2-9B
3. Describe the
basic steps in
the recording
process.
4. Explain what a
journal is, how
it helps in the
recording
process, and
journalize
business
transactions.
Q2-11
5. Explain what a
ledger is and
how it helps in
the recording
process.
6. Explain what
posting is, and
how it helps in
the recording
process.
7. Explain the
purpose of,
and prepare, a
trial balance.
Broadening Your
Perspective
BYP2-1
BYP2-2
2-3
Analysis
Synthesis
Evaluation
P2-10A
P2-10B
P2-12A
P2-12B
E2-9
E2-9
P2-10A
P2-11A
P2-12A
P2-10B
P2-11B
P2-12B
Q2-19
BYP2-4
BYP2-5
BYP2-6
ANSWERS TO QUESTIONS
01. A T account is the shape of the letter T. It has three parts: (1) the
account title across the top of the T; (2) the left side of the T in which
debit entries are recorded; and (3) the right side in which credit entries
are recorded.
02. Disagree. The terms debit and credit are synonymous with the left and
right sides of an account, respectively. Whether they mean increase or
decrease depends on the type of account being considered.
03. Jos is incorrect. The double-entry system merely records the effect of a
transaction on the accounting equation. A transaction is not recorded
twice; it is recorded once, with a dual effect on the equation.
04. Kim is incorrect. A debit balance only means that debit amounts exceed
credit amounts in an account. Conversely, a credit balance only means
that credit amounts are greater than debit amounts in an account.
Whether a debit or credit balance is favourable or unfavourable
depends on the type of account being considered.
05. (a) Asset accounts are increased by debits and decreased by credits.
The normal balance of asset accounts is a debit balance.
(b) Liability accounts are decreased by debits and increased by credits.
The normal balance of liability accounts is a credit balance.
(c) Owner's equity accounts are decreased by debits and increased by
credits. The normal balance of equity accounts is a credit balance.
06. (a)
(b)
(c)
(d)
(e)
(f)
(g)
Accounts Receivabledebit balance.

Cashdebit balance.
Owner's Drawingsdebit balance.
Accounts Payablecredit balance.
Service Revenuecredit balance.
Salaries Expensedebit balance.
Owner's Capitalcredit balance.
2-4
Questions Chapter 2 (Continued)

07. (a)
(b)
(c)
(d)
Accounts Receivableassetdebit balance.

Accounts Payableliabilitycredit balance.
Equipmentassetdebit balance.
Owner's Drawingsowner's equitydebit balance (since it is a
reduction of capital).
(e) Suppliesassetdebit balance.
(f) Unearned Revenueliabilitycredit balance.
08. (a) Debit Supplies and credit Accounts Payable.

(b) Debit Cash and credit Notes Payable.
(c) Debit Salaries Expense and credit Cash.
9. 1.
2.
3.
4.
5.
6.
Accounts Payableboth debit and credit entries.

Accounts Receivableboth debit and credit entries.
Cashboth debit and credit entries.
Owner's Drawingsdebit entries only.
Salaries Expensedebit entries only.
Service Revenuecredit entries only.
10. The basic steps in the recording process are:

(1)Analyse each transaction. In this step, business documents are
examined to determine the effects of the transaction on the
accounts.
(2)Enter each transaction in a journal. This step is called journalizing
and it results in making a chronological record of the transactions.
(3)Transfer journal information to ledger accounts. This step is called
posting. Posting makes it possible to accumulate the effects of
journalized transactions on individual accounts.
11. (a) The debit should be entered first.
(b) The credit should be indented.
12. When three or more accounts are required in one journal entry, the
entry is referred to as a compound entry. An example of a compound
entry is the purchase of equipment, part of which is paid for with cash
and the remainder is on account (Debit Equipment, credit Cash and
credit Accounts Payable).
2-5

13. (a) Cash...............................................................................
Doris Wang, Capital................................................
Invested cash in the business.
9,000
(b) Prepaid Insurance........................................................

Cash........................................................................
Paid one-year insurance policy.
800
(c) Supplies........................................................................
Accounts Payable...................................................
Purchased supplies on account.
1,500
(d) Cash...............................................................................
Service Revenue.....................................................
Received cash for services rendered.
7,500
9,000
800
1,500
7,500
14. (a) Yes, debits and credits could be recorded directly in the ledger.
(b) The benefits of using the journal are:
1. It discloses in one place the complete effect of a transaction.
2. It provides a chronological record of all transactions.
3. It helps to prevent or locate errors, because the debit and credit
amounts for each entry can be readily compared. The advantage
of the last step in the posting process is to indicate that the item
has been posted, and to provide a cross-reference.
15. (a) The entire group of accounts maintained by a company, including all
the asset, liability, and owners' equity accounts, is referred to
collectively as the ledger.
(b) The chart of accounts is important, particularly for a company that
has a large number of accounts, because it helps organize the
accounts and identify their location in the ledger. A chart of
accounts lists the accounts and account numbers that identify their
location in the ledger. The numbering system used to identify the
accounts usually starts with the balance sheet accounts and follows
with the income statement accounts.
2-6

16. The advantage of the last step in the posting process is to indicate that
the item has been posted, and to provide a cross-reference.
17. A trial balance is a list of accounts and their balances at a given time.
The primary purpose of a trial balance is to prove the mathematical
equality of debits and credits, after all journalized transactions have
been posted. A trial balance also facilitates the discovery of errors in
journalizing and posting. In addition, it is useful in preparing financial
statements.
18. The proper sequence is as follows:
1. Business transaction occurs.
2. Information entered in the journal.
3. Debits and credits posted to the ledger.
4. Trial balance is prepared.
5. Financial statements are prepared.
19. (a) The trial balance would balance, because the debits ($600) are equal
to the credits ($600).
(b) The trial balance would not balance, because the debits ($900) and
credits ($90) are not equal.
2-7
SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 2-1
(a)
Debit
Effect
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Accounts Payable
Advertising Expense
Service Revenue
Accounts Receivable
J. Takamoto, Capital
J. Takamoto, Drawings
Prepaid Insurance
Office Equipment
Rent Expense
Unearned Revenue
Advertising Supplies
Notes Payable
Decrease
Increase
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
(a)
Credit
Effect
Increase
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
BRIEF EXERCISE 2-2

June 1
2
3
12
Account Debited
Cash
Equipment
Rent Expense
Accounts Receivable
Account Credited
D. Ing, Capital
Accounts Payable
Cash
Service Revenue
2-8
(b)
Normal
Balance
Credit
Debit
Credit
Debit
Credit
Debit
Debit
Debit
Debit
Credit
Debit
Credit
BRIEF EXERCISE 2-3

(a) Basic Analysis
(b) Debit-Credit Analysis
Aug. 1 The asset Cash is increased;

the owner's equity account
A. Fisher, Capital is
increased.
4 The asset Prepaid Insurance
is increased; the asset Cash
is decreased.
Debits increase assets:

debit Cash $6,000.
Credits increase owner's equity:
credit A. Fisher, Capital $6,000.
debit Prepaid Insurance $1,800.
Credits decrease assets:
credit Cash $1,800.
16 The asset Cash is increased;

the revenue Service Revenue is
increased.

debit Cash $900.
Credits increase revenues:
credit Service Revenue $900.
27 The expense Salaries Expense is

increased; the asset Cash is
decreased.
Debits increase expenses:

debit Salaries Expense $500.
Credits decrease assets:
credit Cash $500.
BRIEF EXERCISE 2-4

The basic steps in the recording process are:
(1)
(2)
(3)
Analyse each transaction. In this step, business documents are

examined to determine the effects of the transaction on the accounts.
Enter each transaction in a journal. This step is called journalizing
and it results in making a chronological record of the transactions.
Transfer journal information to ledger accounts. This step is called
posting. Posting makes it possible to accumulate the effects of
journalized transactions on individual accounts.
2-9
BRIEF EXERCISE 2-5

June 1
Cash..........................................................................
D. Ing, Capital...................................................
2,000
Equipment................................................................
Accounts Payable.............................................
900
Rent Expense...........................................................
Cash..................................................................
500
12
Accounts Receivable...............................................
Service Revenue...............................................
300
2,000
900
500
300
BRIEF EXERCISE 2-6

Aug.
Cash..........................................................................
A. Fisher, Capital..............................................
6,000
Prepaid Insurance....................................................
Cash..................................................................
1,800
16
Cash..........................................................................
Service Revenue...............................................
900
27
Salaries Expense.....................................................
Cash..................................................................
500
2-10
6,000
1,800
900
500
BRIEF EXERCISE 2-7
5/12
5/15
Cash
2,400
2,000
4,400
Service Revenue
5/5
5/15
3,200
2,000
5,200
Accounts Receivable
5/5
3,200 5/12
800
2,400
BRIEF EXERCISE 2-8

BEIRSDORF COMPANY
Trial Balance
June 30, 2003
Debit
Cash.................................................................................
Accounts Receivable......................................................
Equipment.......................................................................
Accounts Payable...........................................................
Beirsdorf, Capital............................................................
Beirsdorf, Drawings........................................................
Service Revenue.............................................................
Salaries Expense............................................................
Rent Expense..................................................................
2-11
$04,800
003,000
017,000
001,200
4,000
001,000
$31,000
Credit
$05,000
020,000
006,000
0000000
$31,000
BRIEF EXERCISE 2-9

BOURQUE COMPANY
Trial Balance
December 31, 2002
Debit
Cash.................................................................................
Prepaid Insurance...........................................................
Unearned Revenue..........................................................
Bourque, Capital.............................................................
Bourque, Drawings.........................................................
Service Revenue.............................................................
Rent Expense..................................................................
2-12
$16,800
003,500
004,500
018,600
002,400
$45,800
Credit
$03,000
002,200
015,000
025,600
0000-00
$45,800
SOLUTIONS TO EXERCISES
EXERCISE 2-1
1. Accounts Payable
2. Accounts Receivable
3. Cash
4. H. Poitras, Drawings
(a)
Normal
Balance
Credit
Debit
Debit
Debit
(b)
Decreased
By
Debit
Credit
Credit
Credit
5. Interest Revenue
6. Office Equipment
7. Prepaid Insurance
8. Rent Expense
Credit
Debit
Debit
Debit
Debit
Credit
Credit
Credit
Account
2-13
(c)
Financial
Statement
Balance Sheet
Balance Sheet
Balance Sheet
Statement of Owners
Equity
Income Statement
Balance Sheet
Balance Sheet
Income Statement
EXERCISE 2-2
Account Debited
Transaction
Mar. 3
6
(a)
Basic
Type
(b)
Specific
Account
(c)
Account Credited
Effect
(d)
Normal
Balance
(a)
Basic
Type
Owners
Equity
Capital
Asset
Cash
Increase
Debit
Asset
Equipment
(or Vehicle)
Increase
Debit
Asset
Supplies
Increase
Debit
Asset
Accounts
Receivable
Increase
Debit
7
12
21
Advertising
Expense
25
Owners
Equity
Expense
Increase
28
Asset
Cash
31
Liability
Accounts
Payable
Decrease
Credit
Owners
Equity
Drawings
L. Visser,
Drawings
Increase
Debit
Effect
(d)
Normal
Balance
L. Visser,
Capital
Increase
Credit
Asset
Cash
Decrease
Debit
Liability
Accounts
Payable
Increase
Credit
Owners
Equity
Revenue
Service
Revenue
Increase
Credit
Asset
Cash
Decrease
Debit
Decrease
Debit
Decrease
Debit
Decrease
Debit
Debit
Asset
Increase
Debit
Asset
Asset
2-14
(b)
Specific
Account
Accounts
Receivable
Cash
Cash
(c)
EXERCISE 2-3
Oct.
Debits increase assets: debit Cash $15,000.

Credits increase owner's equity: credit Lynn Gardiner, Capital
$15,000.
No transaction at this point in time (see Oct. 30).
Debits increase assets: debit Office Furniture $1,900.

Credits increase liabilities: credit Accounts Payable $1,900.
Debits increase assets: debit Accounts Receivable $3,200.

Credits increase revenues: credit Fees Earned $3,200.
10
Debits increase assets: debit Cash $140.

Credits increase revenues: credit Fees Earned $140.
27
Debits decrease liabilities: debit Accounts Payable $700.

Credits decrease assets: credit Cash $700.
30
Debits increase expenses: debit Salaries Expense $960.

Credits decrease assets: credit Cash $960.
2-15
EXERCISE 2-4
GENERAL JOURNAL
Date
Account Titles and Explanation
J1
Ref.
Debit
March 3 Cash.......................................................
L. Visser, Capital.............................
8,000
6 Equipment (or Vehicle)..........................

Cash.................................................
04,000
7 Supplies.................................................
Accounts Payable...........................
00,500
12 Accounts Receivable............................
Service Revenue.............................
01,800
21 Advertising Expense.............................
Cash.................................................
00,200
25 Cash.......................................................
Accounts Receivable......................
00,700
28 Accounts Payable..................................
Cash.................................................
00,300
31 L. Visser, Drawings................................
Cash.................................................
00,500
Credit
8,000
04,000
00,500
01,800
00,200
00,700
00,300
00,500
Note: Explanations have not been reproduced from the text in this exercise.
Students should recognize, however, that explanations are a critical part of
the journal entry in real life.
2-16
EXERCISE 2-5
GENERAL JOURNAL
Date
Oct.
Ref.
Debit
Cash.....................................................
Lynn Gardner, Capital...................
15,000
No entry.
Office Furniture....................................
Accounts Payable.........................
01,900
Accounts Receivable...........................
Fees Earned..................................
03,200
10
Cash.....................................................
Fees Earned..................................
00,140
27
Accounts Payable................................
Cash...............................................
00,700
30
Salaries Expense.................................
Cash...............................................
00,960
Credit
15,000
01,900
03,200
00,140
00,700
00,960
2-17
EXERCISE 2-6
(a)
GENERAL JOURNAL
J1
Date
Ref.
Debit
Sept. 1
Cash......................................................
Shirley Basler, Capital...................
101
301
12,000
Equipment............................................
Cash...............................................
Accounts Payable.........................
157
101
201
10,000
25
Accounts Payable................................
Cash...............................................
201
101
03,000
30
Shirley Basler, Drawings.....................

Cash...............................................
306
101
00,500
Credit
12,000
04,000
06,000
03,000
00,500
2-18
EXERCISE 2-6 (Continued)

(b)
Cash
Date
Sept.
Explanation
1
5
25
30
Ref.
J1
J1
J1
J1
No. 101
Debit
12,000
Credit
04,000
03,000
00,500
Equipment
Date
Sept.
Explanation
5
Ref.
J1
Sept.
Explanation
5
25
Ref.
J1
J1
Debit
Credit
10,000
Sept.
Explanation
1
Ref.
No. 201
Debit
03,000
Credit
6,000
Debit
J1
Sept. 30
Explanation
Ref.
Credit
12,000
J1
2-19
Debit
00,500
Balance
6,000
3,000
No. 301
Shirley Basler, Drawings

Date
Balance
10,000
Shirley Basler, Capital

Date
12,000
8,000
05,000
04,500
No. 157
Accounts Payable
Date
Balance
Balance
12,000
No. 306
Credit
Balance
00,500
EXERCISE 2-7
(a) Oct.
Cash...............................................................
A. Fortin, Capital....................................
Invested cash in business.
5,000
Furniture........................................................
Accounts Payable..................................
Purchased furniture on account.
2,000
Supplies.........................................................
Cash.......................................................
Purchased supplies.
400
Accounts Receivable....................................
Service Revenue....................................
Billed clients for services rendered.
800
10
Cash...............................................................
Service Revenue....................................
Received cash for services rendered.
650
10
Cash...............................................................
Notes Payable........................................
Obtained loan from bank.
5,000
12
Accounts Payable.........................................
Cash.......................................................
Paid cash on account.
1,500
20
Cash...............................................................
Accounts Receivable.............................
Received cash in payment of account.
500
20
Accounts Receivable....................................
Service Revenue....................................
Billed clients for services provided.
940
25
Cash...............................................................
A. Fortin, Capital....................................
2,000
EXERCISE 2-7 (Continued)

2-20
5,000
2,000
400
800
650
5,000
1,500
500
940
2,000
(a) (Continued)
(b)
Oct. 30
A. Fortin, Drawings.......................................
Cash.......................................................
Withdrew cash for personal use.
300
31
Rent Expense................................................
Cash.......................................................
Paid rent for month.
250
31
Store Wages Expense...................................

Cash.......................................................
Paid store wages.
500
300
250
500
FORTIN CO.
Trial Balance
October 31, 2003
Debit
Cash.........................................................................
Accounts Receivable..............................................
Supplies...................................................................
Furniture..................................................................
Notes Payable..........................................................
Accounts Payable....................................................
A. Fortin, Capital......................................................
A. Fortin, Drawings.................................................
Service Revenue......................................................
Store Wages Expense.............................................
Rent Expense..........................................................
2-21
$10,200
001,240
000,400
002,000
000,300
000,500
250
$14,890
Credit
$05,000
000,500
007,000
002,390
000000
$14,890
EXERCISE 2-8
(a)
Cash
Aug. 01
10
31
Notes Payable
2,600 Aug. 12
2,400
900
4,900
1,000
Aug. 12
3,000
L. Meche, Capital
Accounts Receivable
Aug. 25
1,400 Aug. 31
900
Aug.
500
Service Revenue
4,000
Aug. 10
25
4,000
(b)
2,600
2,600
Office Equipment
Aug. 12
3,000
2,400
1,400
3,800
L. MECHE, INVESTMENT BROKER

Trial Balance
August 31, 2003
Debit
Credit
Cash.............................................................................. $4,900
Accounts Receivable.................................................... 00,500
Office Equipment.......................................................... 04,000
Notes Payable...............................................................
L. Meche, Capital..........................................................
Service Revenue........................................................... 00000
$9,400
$3,000
02,600
03,800
$9,400
2-22
EXERCISE 2-9
Error
(a)
In Balance
(b)
Difference
(c)
Larger Column
1.
2.
3.
4.
5.
6.
No
Yes
Yes
No
Yes
No
$400
00
00
0300
00
180
Debit
Credit
Debit
EXERCISE 2-10
EXPRESS DELIVERY SERVICE
Trial Balance
July 31, 2003
Debit
Cash ($81,907 $67,340 total debits without Cash)
Accounts Receivable.....................................................
Prepaid Insurance..........................................................
Delivery Equipment.........................................................
Notes Payable..................................................................
Salaries Payable..............................................................
T. Weld, Capital................................................................
T. Weld, Drawings............................................................
Service Revenue.............................................................
Gas and Oil Expense......................................................
Repair Expense...............................................................
Insurance Expense.........................................................
2-23
$14,567
008,642
001,968
049,360
000,700
004,428
000,758
000,961
000,523
$81,907
Credit
$18,450
007,396
000,815
044,636
010,610
000,000
$81,907
SOLUTIONS TO PROBLEMS
PROBLEM 2-1A
Account
1. Cash
2. Accounts
Receivable
3. Drawings
4. Interest
Expense
5. Land
6. Office
Supplies
7. Salary
Expense
8. Service
Revenue
(1)
Type of
Account
Asset
Asset
Owners
Equity
Drawings
Expense
Asset
Asset
Owners
Equity
Expense
Owners
Equity
Revenue
(2)
Financial
Statement
Balance
Sheet
Balance
Sheet
Statement of
Owners
Equity
Income
Statement
Balance
Sheet
Balance
Sheet
Income
Statement
(3)
Normal
Balance
Debit
Debit
Credit
Debit
Debit
Credit
Debit
Debit
Credit
Debit
Debit
Credit
Debit
Debit
Credit
Debit
Debit
Credit
Debit
Debit
Credit
Income
Statement
Credit
Credit
Debit
2-24
(4)
Increase
(5)
Decrease
PROBLEM 2-2A
GENERAL JOURNAL
Date
May
J1
Ref. Debit
1 Cash.............................................................................. 45,000
Amod Phatarpeker, Capital..................................
3 Land.............................................................................. 23,000
Building........................................................................ 09,000
Equipment....................................................................06,000
Cash.......................................................................
Purchased Lee's Golf Land.
Credit
45,000
38,000
5 Advertising Expense...................................................01,600
Cash.......................................................................
Paid for advertising.
01,600
6 Prepaid Insurance........................................................ 01,480

Cash.......................................................................
Paid for one-year insurance policy.
01,480
10 Equipment....................................................................01,600
Accounts Payable.................................................
Purchased equipment on account.
01,600
18 Cash.............................................................................. 00,800
Golf Fees Earned..................................................
Received cash for fees earned.
00,800
19 Cash.............................................................................. 01,500
Unearned Golf Fees..............................................
Received cash for coupon books
sold.
2-25
01,500
PROBLEM 2-2A (Continued)

Date
Ref.
Debit
Credit
May 25 Amod Phatarpeker, Drawings..................................... 0,500

Cash.......................................................................
0,500
30 Salaries Expense......................................................... 0,600

Cash.......................................................................
Paid salaries expense.
0,600
30 Accounts Payable........................................................ 1,600

Cash.......................................................................
Paid creditor on account.
1,600
31 Cash............................................................................... 0,500
Golf Fees Earned..................................................
0,500
2-26
PROBLEM 2-3A
(a)
GENERAL JOURNAL
Date
Apr.
J1
Ref.
1 Cash.........................................................................
101
Maria Rojas, Capital.........................................
301
Debit
15,000
Credit
15,000
1 No entrynot a transaction.
2 Rent Expense..........................................................
729
Cash..................................................................
101
Paid monthly office rent.
00,800
3 Supplies...................................................................
126
Accounts Payable.............................................
201
Purchased supplies on account
from Halo Company.
01,500
10 Accounts Receivable..............................................
112
Service Revenue...............................................
400
Billed clients for services
rendered.
00,900
11 Cash.........................................................................
101
Unearned Revenue...........................................
209
Received cash advance for
future service.
00,500
20 Cash.........................................................................
101
Service Revenue...............................................
400
Received cash for services
rendered.
01,500
2-27
00,800
01,500
00,900
00,500
01,500

(a) (Continued)
Date
Ref.
Debit
Apr. 30 Salaries Expense....................................................

726
Cash..................................................................
101
Paid monthly salary.
0
1,200
30 Accounts Payable...................................................
201
Cash..................................................................
101
Paid Halo Company on account.
600
Credit
01,200
600
(b)
Cash
Date
Explanation
Apr. 1
2
11
20
30
30
No. 101
Ref.
J1
J1
J1
J1
J1
J1
Debit
15,000
00,500
01,500
Credit
0,800
1,200
0,600
Accounts Receivable
Date
Explanation
Apr. 10
Ref.
J1
Apr. 3
Explanation
15,000
14,200
14,700
16,200
15,000
14,400
No. 112
Debit
Credit
00,900
Balance
00,900
Supplies
Date
Balance
No. 126
Ref.
J1
2-28
Debit
01,500
Credit
Balance
01,500

(b) (Continued)
Accounts Payable
Date
Explanation
Apr. 3
30
No. 201
Ref.
J1
J1
Debit
00,600
Credit
1,500
Unearned Revenue
Date
Explanation
Apr. 11
Ref.
Debit
J1
Explanation
Apr. 1
Credit
0,500
Ref.
Debit
J1
Explanation
Apr. 10
20
Credit
15,000
Ref.
Debit
J1
J1
Explanation
Apr. 30
Credit
00,900
01,500
Ref.
J1
Apr. 2
Explanation
Balance
15,000
Balance
00,900
02,400
No. 726
Debit
Credit
01,200
Balance
01,200
Rent Expense
Date
00,500
No. 400
Salaries Expense
Date
Balance
No. 301
Service Revenue
Date
01,500
00,900
No. 209
Maria Rojas, Capital

Date
Balance
No. 729
Ref.
J1
2-29
Debit
00,800
Credit
Balance
00,800

(c)
MARIA ROJAS, ARCHITECT

Trial Balance
April 30, 2003
Debit
Cash.........................................................................
Supplies...................................................................
Unearned Revenue..................................................
Maria Rojas, Capital................................................
Service Revenue......................................................
Rent Expense..........................................................
2-30
$14,400
000,900
001,500
001,200
000,800
$18,800
Credit
$00,900
000,500
015,000
002,400
000,000
$18,800
PROBLEM 2-4A
(a) & (c)
Cash
Date
Oct.
Explanation
1
5
15
20
22
29
31
Balance
No. 101
Ref.
J1
J1
J1
J1
J1
J1
Debit
0,800
200
Credit
1,200
1,600
0,
500
0,600
Accounts Receivable
Date
Explanation
Oct. 1
5
10
Balance
Explanation
Oct. 1
26
Balance
Ref.
J1
J1
Debit
5,500
Credit
0,800
Explanation
Oct. 1
Balance
Balance
2,200
1,400
6,900
No. 126
Ref.
J1
Debit
Credit
Balance
1,700
2,000
300
Equipment
Date
7,500
8,300
7,100
5,500
5,700
5,200
4,600
No. 112
Supplies
Date
Balance
No. 157
Ref.
2-31
Debit
Credit
Balance
8,000

(a) & (c) (Continued)
Accounts Payable
Date
Explanation
Oct. 1
20
26
Balance
No. 201
Ref.
J1
J1
Debit
Credit
1,600
300
Unearned Revenue
Date
Explanation
Oct. 1
17
Balance
Explanation
Oct. 1
Balance
Ref.
J1
Debit
Credit
Explanation
Oct. 29
0,400
No. 301
Ref.
Debit
Credit
No. 306
Ref.
J1
Explanation
Oct. 10
17
22
Debit
Credit
0,500
No. 426
Ref.
Debit
J1
J1
J1
Oct. 15
Explanation
Balance
00,500
Credit
5,500
0,400
200
Salaries Expense
Date
Balance
14,700
Laundry Revenue
Date
Balance
00,700
00,300
Jane Kent, Drawings

Date
4,000
2,400
2,700
No. 209
Jane Kent, Capital

Date
Balance
Balance
05,500
05,900
6,100
No. 726
Ref.
J1
2-32
Debit
1,200
Credit
Balance
01,200

Utilities Expense
Date
Explanation
Oct. 31
No. 732
Ref.
J1
Debit
Credit
0,600
Balance
00,600
(b)
GENERAL JOURNAL
Date
Oct.
J1
Ref.
Debit
0
,800
5 Cash.............................................................
Accounts Receivable............................
Received collections from
customers on account.
101
112
10 Accounts Receivable...................................
Laundry Revenue..................................
Billed customers for services
performed.
112
426
5,500
15 Salaries Expense.........................................
Cash.......................................................
Paid employee salaries.
726
101
1,200
17 Unearned Revenue......................................
Laundry Revenue..................................
Performed services for customers
who paid in advance.
209
426
0,400
20 Accounts Payable........................................
Cash.......................................................
Paid creditors on account.
201
101
1,600
2-33
Credit
0
,800
5,500
1,200
0,400
1,600

(b) (Continued)
GENERAL JOURNAL
Date
Oct. 22
J1
Ref.
Debit
Cash.............................................................
Laundry Revenue.................................
Performed services for cash.
101
426
200
26 Supplies.......................................................
Accounts Payable.................................
126
201
300
29 Jane Kent, Drawings...................................

Cash.......................................................
306
101
0,500
31 Utilities Expense..........................................
Cash.......................................................
Paid utilities.
732
101
0,600
2-34
Credit
200
0,
300
0,500
0,600

(d)
SPEEDY LAUNDRY
Trial Balance
October 31, 2003
Debit
Cash.........................................................................
Supplies...................................................................
Equipment................................................................
Jane Kent, Capital...................................................
Jane Kent, Drawings...............................................
Laundry Revenue....................................................
Utilities Expense......................................................
2-35
$04,600
006,900
002,000
008,000
000,500
001,200
600
$23,800
Credit
$02,700
000,300
014,700
006,100
000000
$23,800
PROBLEM 2-5A
(a) & (c)
Cash
Date
Explanation
Mar. 1
2
9
10
12
20
21
31
31
31
Balance
No. 101
Ref.
J2
J2
J2
J2
J2
J2
J2
J2
J2
Debit
6,500
7,200
0,0600
12,500
Credit
03,000
9,000
800
3,000
3,800
Accounts Receivable
Date
Explanation
Mar. 31
Ref.
Debit
Credit
0,0600
Mar. 1
Balance
No. 140
Ref.
Debit
Credit
Explanation
Mar. 1
Balance
No. 145
Ref.
Debit
Credit
Explanation
Mar. 1
Balance
Balance
018,000
Equipment
Date
Balance
42,000
Buildings
Date
Balance
00,0600
Land
Explanation
16,000
13,000
19,500
10,500
9,700
16,900
13,900
10,100
10,700
23,200
No. 112
J2
Date
Balance
No. 157
Ref.
2-36
Debit
Credit
Balance
016,000

Accounts Payable
Date
Explanation
Mar. 1
2
10
Balance
No. 201
Ref.
J2
J2
Debit
9,000
Credit
6,000
L. Baroni, Capital
Date
Explanation
Mar. 1
Balance
Explanation
Mar. 9
20
31
Ref.
Debit
Credit
No. 405
Ref.
Debit
J2
J2
J2
Explanation
Mar. 31
Credit
6,500
7,200
12,500
Ref.
Debit
J2
Explanation
Mar. 12
Credit
0,1,200
Ref.
J2
Mar. 2
21
Explanation
06,500
13,700
26,200
Balance
00,1,200
No. 610
Debit
Credit
0,800
Balance
0,800
Film Rental Expense

Date
Balance
No. 406
Advertising Expense
Date
Balance
80,000
Concession Revenue
Date
012,000
18,000
9,000
No. 301
Admission Revenue
Date
Balance
No. 632
Ref.
J2
J2
2-37
Debit
9,000
3,000
Credit
Balance
9,000
12,000

Salaries Expense
Date
Explanation
Mar. 31
No. 726
Ref.
J2
Debit
Credit
Balance
3,800
3,800
(b)
GENERAL JOURNAL
Date
Mar.

2 Film Rental Expense....................................
Cash.......................................................
Paid film rental.
J2
Ref.
Debit
632
101
201
0,9,000
101
405
6,500
Credit
0,3,000
6,000
9 Cash..............................................................
Admission Revenue..............................
Received cash for admissions.
10 Accounts Payable ($6,000 + $3,000).......... 201

Cash...................................................... 101
Paid balance due on Star Wars and
$3,000 on account.
9,000
6,500
9,000
11 No entryNot a transaction.
12 Advertising Expense..................................
Cash.....................................................
Paid advertising expenses.
2-38
610
101
800
800

(b) (Continued)
Date
Mar. 20
Ref.
Debit
Cash............................................................
Admission Revenue............................
101
405
7,200
21 Film Rental Expense..................................

Cash.....................................................
Paid for Scream films.
632
101
3,000
31 Salaries Expense.......................................
Cash.....................................................
726
101
3,800
31 Cash............................................................
Accounts Receivable.................................
Concession Revenue..........................
Received cash and balance on
account for concession revenue.
101
112
406
0,0600
0,0600
31 Cash............................................................
Admission Revenue............................
101
405
12,500
2-39
Credit
7,200
3,000
3,800
0,1,200
12,500

(d)
STARLITE THEATRE
Trial Balance
March 31, 2003
Debit
Cash ........................................................................ $ 23,200
Accounts Receivable .............................................
0,0600
Land.......................................................................... 042,000
Buildings.................................................................. 018,000
Equipment................................................................ 016,000
L. Baroni, Capital.....................................................
Admission Revenue................................................
Concession Revenue..............................................
Advertising Expense............................................... 000,800
Film Rental Expense...............................................
12,000
Salaries Expense..................................................... 0003,800
$116,400
2-40
Credit
$ 9,000
080,000
026,200
001,200
0000000
$116,400
PROBLEM 2-6A
(a)
Date
May 1
Debit
Cash.............................................................. 120,000
Jacob Bablad, Capital...........................
No entry at this time.
Prepaid Rent................................................. 4433,000

Rent Expense ($36,000 12 mos.)..............
3,000
Cash.......................................................
036,000
Furniture & Equipment................................ 00,70,000

Cash.......................................................
20,000
50,000
Prepaid Insurance........................................
Insurance Expense ($3,000 12 mos.).......
Cash.......................................................
02,750
250
03,000
12
Office Supplies.............................................
Cash.......................................................
11,000
15
Office Supplies.............................................
02,000
20
Cash.............................................................. 010,000
Accounts Receivable................................... 20,000
Brokerage Fees Earned........................
22
Accounts Payable........................................
Cash.......................................................
26
00, 800
Cash.............................................................. 00, 5,000

2-41
Credit
120,000
01,000
02,000
030,000
00,800
00,5,000

(a) (Continued)
Date
Debit
Credit
00
May 30 Utility Expense................................................................
, 400
Accounts Payable................................................... 00,400
30 Salaries Expense
00, 2,000
Cash......................................................................... 00,2,000
(b)
Cash
Debit
Credit
120,000
36,000
20,000
3,000
1,000
10,000
5,000
800
2,000
72,200
Accounts Receivable
Debit
Credit
020,000
5,000
15,000
Office Supplies
2-42
Debit
Credit
01,000
2,000
3,000
Prepaid Insurance
Debit
Credit
0,2,750
Prepaid Rent
Debit
Credit
33,000
2-43

(b) (Continued)
Furniture & Equipment
Debit
Credit
0,70,000
Accounts Payable
Debit
Credit
00,800
50,000
2,000
400
51,600
J. Bablad, Capital
Debit
Credit
0120,000
Brokerage Fees Earned

Debit
Credit
0,
30,000
Salaries Expense
Debit
Credit
2,000
Rent Expense
Debit
Credit
3,000
2-44
Utilities Expense
Debit
Credit
0,400
Insurance Expense
Debit
Credit
0,250
2-45

(c)
BABLAD BROKERAGE SERVICES

Trial Balance
May 31, 2003
Debit
Cash.........................................................................
Office Supplies........................................................
Prepaid Insurance ..................................................
Prepaid Rent ...........................................................
Furniture and Equipment........................................
J. Bablad, Capital....................................................
Brokerage Fees Earned..........................................
Rent Expense..........................................................
Insurance Expense..................................................
$ 72,200
15,000
3,000
2,750
33,000
70,000
2,000
3,000
400
0000250
0$201,600
Credit
$ 51,600
120,000
30,000
,51
000,0600
$201,600

(d)

Income Statement
For the Month Ended May 31, 2003
Revenues
Brokerage fees earned.........................................................
Expenses
Salaries expense.................................................
$2,000
Rent expense.......................................................
3,000
Insurance expense..............................................
250
Utilities expense..................................................
00,400
Total expenses..............................................................
Net income...................................................................................
$30,000
0 5,650
$24,350

Statement of Owner's Equity
For the Month Ended May 31, 2003
Capital, May 1, 2003...................................................
Add: Investment......................................................
Net income......................................................
Capital, May 31, 2003.................................................
0
120,000
24,350
$144,350

(d) (Continued)
Balance Sheet
May 31, 2003
Assets
Cash..............................................................................................
Accounts receivable....................................................................
Office supplies.............................................................................
Prepaid insurance........................................................................
Prepaid rent..................................................................................
Furniture & equipment.................................................................
$ 72,200
15,000
3,000
0442,750
0033,000
0070,000
Total assets...........................................................................
$195,950
Liabilities and Owner's Equity

Liabilities
Accounts payable................................................................. 0$ 51,600
Owner's Equity
Jacob Bablad, Capital.......................................................... 00144,350
Total liabilities and owner's equity..............................
$195,950
PROBLEM 2-7A
(a) As indicated in item (9), $4,500 was paid for three months in advance
on December 1. One month has passed, so 1/3 X $4,500 = $1,500 of
rent has expired and become an expense. Two months are still to
come, so 2/3 x $4,500 = $3,000 remains in the prepaid rent account as
an asset.
(b) & (d)
Cash
10,000
(4) 13,000
(7) 4,000
1,500
(1)
(3)
500
2,000
(5) 15,000
(8) 3,000
(10) 5,000
Accounts Receivable
15,000
(7) 9,000
(4) 13,000
11,000
Repair Parts Inventory

13,000
(2) 2,000
(6) 4,000
11,000
Prepaid Rent
3,000
1,500
(9) 1,500

(b) & (d) (Continued)
Shop Equipment
21,000
Accounts Payable
(5) 15,000
19,000
(2) 2,000
6,000
Leo Mataruka, Capital

43,000
Leo Mataruka, Drawings
(10) 5,000
5,000
Repair Services Revenue
(7) 13,000
Advertising Expense
(1) 500
Miscellaneous Expense
(3) 2,000
Repair Parts Expense
(6) 4,000
Wages Expense
(8) 3,000
Rent Expense
(9) 1,500
(c)
GENERAL JOURNAL
1.
Advertising Expense
Cash
2.

Accounts Payable
3.
Cash
4.
Cash
Accounts Receivable
5.
Accounts Payable
Cash
6.

7.
Cash
Accounts Receivable
Repair Services Revenues
8.
Wages Expense
Cash
9.
Rent Expense
Prepaid Rent
10.
Leo Mataruka, Drawings

Cash
Debit
500
2,000
0
2,000
0
13,000
0
15,000
0
4,000
4,000
9,000
0
3,000
0
1,500
0
5,000
Credit
500
2,000
0
2,000
0
13,000
0
15,000
0
4,000
0
13,000
0
3,000
0
1,500
0
5,000

(e)
CYBERDYNE REPAIR SERVICE

Trial Balance
January 31, 2003
Debit
Cash.................................................................................
$01,500
011,000
Repair Parts Inventory....................................................
011,000
Prepaid Rent....................................................................
001,500
Shop Equipment.............................................................
0021,000
Leo Mataruka, Capital.....................................................
Leo Mataruka, Drawings.................................................
5,000
Repair Services Revenue...............................................
Advertising Expense.......................................................
500
Miscellaneous Expense..................................................
2,000
Repair Parts Expense.....................................................
4,000
Rent Expense..................................................................
1,500
Wages Expense............................................................... 0 3,000
$62,000
(f)
Cash
Accounts Receivable
Prepaid Rent
Shop Equipment
Total Assets
$ 1,500
11,000
11,000
1,500
21,000
$46,000
(g) Repairs Services Revenue $13,000

Advertising Expense
(500)
(2,000)
(4,000)
Rent Expense
(1,500)
Wages Expense
(3,000)
Net Income
$2,000
Credit
$06,000
043,000
0
13,000
0000 00
$62,000
PROBLEM 2-8A
(a)
(b)

Income Statement
For the Month Ended January 31, 2003
Revenues
Repair services revenue......................................................
$13,000
Expenses
Wages expense...................................................
$3,000
Rent expense.......................................................
1,500
Repair parts expense..........................................
4,000
Miscellaneous expense...................................... 00,2,000
Advertising expense........................................... 00, 500
Total expenses..............................................................
11,000
Net income...................................................................................
$ 2,000

For the Month Ended January 31, 2003
Leo Mataruka, Capital, January 1, 2003...................
Add: Net income......................................................
Less: Drawings.........................................................
$43,000
2,000
45,000
5,000
Leo Mataruka, Capital, January 31, 2003.................
$40,000

(c)

Balance Sheet
January 31, 2003
Assets
Cash.............................................................................................. $ 1,500
11,000
Repair parts inventory.................................................................
11,000
Prepaid rent..................................................................................
001,500
Shop equipment........................................................................... 04421,000
Total assets...........................................................................
$46,000

Liabilities
Accounts payable................................................................. 0 $ 6,000
Owner's Equity
Leo Mataruka, Capital..........................................................
040,000
$46,000
PROBLEM 2-9A
(a)
KIA TAGGAR ENTERPRISES

Trial Balance
June 30, 2003
Cash
Accounts receivable
Supplies
Prepaid insurance
Long-term investment
Land
Equipment
Notes payable, current
Long-term debt
Taggar, Capital
Service revenue
Operating expense
Insurance expense
Interest expense
Debit
$ 180
500
510
90
495
800
1,200
870
130
225
$5,000
Credit
$1,000
1,200
800
2,000
00000
$5,000

(b)

Income Statement
For the Year Ended June 30, 2003
Revenue
Service revenue.............................................................
Expenses
Insurance expense..................................................
Interest expense......................................................
Operating expense..................................................
Total expenses.................................................
Net income.......................................................................
$2,000
$130
225
870
01,225
$ 775

For the Year Ended June 30, 2003
Taggar, Capital, July 1, 2002...........................................
Add: Net income............................................................
$ 800
775
Taggar, Capital, June 30, 2003........................................
$1,575

(b) (Continued)
Balance Sheet
June 30, 2003
Assets
Cash..............................................................................................
Prepaid insurance........................................................................
Supplies........................................................................................
Long-term investment.................................................................
Land..............................................................................................
Equipment....................................................................................
Total assets...........................................................................
$ 180
500
00990
510
495
800
0441,200
$3,775
Liabilities
Note payable.........................................................................
Long-term debt.....................................................................
Total liabilities...............................................................
$1,000
1,200
2,200
Owner's Equity
Taggar, Capital......................................................................
01,575
$3,775
PROBLEM 2-10A
(a)
(b)
1. Correctly stated
2. Understated
3. Correctly stated (the debit posting was to a credit balance account,
Accounts Payable)
4. Understated
5. $374,000 ($360,000 + $7,000 to reverse debit to Accounts Payable
account + $7,000 to record credit to Accounts Payable account)
1.
3.
4.
Invoice from supplier

Utility bill
Sales ticket
PROBLEM 2-11A
(a)
Errors in the trial balance are:

1. The trial balance should be dated at a specific point in time, not for
the year ended.
2.
Machinery and equipment should be a debit.
3.
Accounts Payable should be a credit.
4.
Prepaid Rent should be a debit.
5.
Capital should be a credit.
6.
Advertising Expenses should be a debit.
7.
Notes Payable should be a credit.
8.
Accounts Receivable should be a debit.
9. They are not arranged in the proper sequence: 1) assets; 2)
liabilities; 3) owners equity (capital and drawings); and 4) income
statement accounts (revenues and expenses).
10. The totals should be equal.
(b)
MEHTA AUTOMOTIVE SERVICES

Trial Balance
December 31, 2002
Debit
Cash................................................................................. $ 24
31
Prepaid Rent....................................................................
5
Prepaid Insurance...........................................................
3
Machinery and Equipment..............................................
89
Note Payable...................................................................
Capital..............................................................................
Drawings..........................................................................
20
Service Revenues...........................................................
49
Wages Expense...............................................................
76
Advertising Expense....................................................... 30
$327
Credit
$ 38
45
42
202
0000
$327
PROBLEM 2-12A
WINAU CO.
Trial Balance
June 30, 2003
Debit
Cash ($2,840 + $180).......................................................
Accounts Receivable ($3,231 $180)............................
Supplies ($800 $340)....................................................
Equipment ($3,000 + $340).............................................
Accounts Payable ($2,666 $206 $260)......................
Unearned Fees................................................................
T. Winau, Capital..............................................................
T. Winau, Drawings ($800 + $400)..................................
Fees Earned ($2,380 + $801)..........................................
Salaries Expense ($3,400 + $600 $400)......................
Office Expense................................................................
$ 3,020
003,051
000,460
003,340
001,200
003,600
910
$15,581
Credit
$02,200
001,200
009,000
003,181
000000
$15,581
PROBLEM 2-1B
Account
1. Cash
2. Accounts
Payable
3. Kobiashi,
Capital
4. Kobiashi,
Drawings
5. Office
Equipment
6. Office
Supplies
7. Rent Expense
8. Service
Revenue
(1)
Type of
Account
Asset
Liability
(2)
(3)
(4)
(5)
Financial
Normal
Increase Decrease
Statement
Balance
Balance Sheet Debit
Debit
Credit
Balance Sheet Credit
Credit
Debit
Owners
Equity
Capital
Balance Sheet Credit

and Statement
of Owners
Equity
Owners Statement of
Debit
Equity Owners
Drawings Equity
Asset
Balance Sheet Debit
Credit
Debit
Debit
Credit
Debit
Credit
Asset
Balance Sheet Debit
Debit
Credit
Expense
Income
Statement
Income
Statement
Debit
Debit
Credit
Credit
Credit
Debit
Revenue
PROBLEM 2-2B
GENERAL JOURNAL
Date
J1
Ref.
Debit
April 1
Cash..................................................................
Al Rossy, Capital.......................................
50,000
Land..................................................................
Cash...........................................................
Purchased land.
30,000
Advertising Expense.......................................
Accounts Payable.....................................
Purchased advertising on account.
01,800
11 Salaries Expense.............................................
Cash...........................................................
Paid employees salaries.
1,1,500
5
Credit
50,000
30,000
01,800
1,500
12 No entry required
13 Prepaid Insurance............................................
Cash...........................................................
Paid for one-year insurance policy.
01,500
17 Al Rossy, Drawings...........................................
Cash...........................................................
600600
20 Cash..................................................................
Admissions Revenue................................
05,700
01,500
00
600
05,700
PROBLEM 2-2B (Continued)

Date
Ref.
Debit
April 25
Cash..................................................................
Unearned Admissions Revenue..............
Received cash for coupon books
sold.
02,500
30
Cash.................................................................
Admissions Revenue...............................
00,5,900
30
Accounts Payable...........................................
Cash..........................................................
Made payment on account.
0700
Credit
02,500
5,900
0700
PROBLEM 2-3B
(a)
Date
May
GENERAL JOURNAL
1 Cash..........................................................
Lisa Heins, Capital............................
J1
Ref.
Debit
101
301
32,000
3 Supplies....................................................
Accounts Payable..............................
126
201
01,200
7 Rent Expense...........................................
Cash...................................................
Paid monthly office rent.
729
101
00,900
11 Accounts Receivable...............................
Service Revenue................................
Billed clients for tax services.
112
400
00,1,100
12 Cash..........................................................
Unearned Revenue............................
Received cash advance for
future service.
101
209
033,500
17 Cash..........................................................
Service Revenue................................
101
400
01,200
31 Salaries Expense.....................................
Cash...................................................
Paid monthly salary.
726
101
01,000
31 Accounts Payable....................................
Cash...................................................
Paid Read Supply 40% of amount
owing.
201
101
480
Credit
32,000
01,200
00,900
001,100
03,500
01,200
01,000
480

(b)
Cash
Date
Explanation
May 1
7
12
17
31
31
No. 101
Ref.
J1
J1
J1
J1
J1
J1
Debit
32,000
03,500
01,200
Credit
0,9900
1,000
0,480
Accounts Receivable
Date
Explanation
May 11
Ref.
J1
Explanation
May 3
Debit
Credit
00,1,100
No. 126
Ref.
J1
Explanation
May 3
31
Debit
Credit
01,200
No. 201
Ref.
J1
J1
May 12
Explanation
Balance
01,200
Debit
00,480
Credit
1,200
Unearned Revenue
Date
Balance
00,1,100
Accounts Payable
Date
32,000
31,100
34,600
35,800
34,800
34,320
No. 112
Supplies
Date
Balance
Balance
01,200
00,720
No. 209
Ref.
J1
Debit
Credit
0,3,500
Balance
00,3,500

(b) (Continued)
Lisa Heins, Capital
Date
Explanation
May 1
No. 301
Ref.
Debit
J1
Credit
32,000
Service Revenue
Date
Explanation
May 11
17
Ref.
Debit
J1
J1
Explanation
Credit
0,1,100
01,200
Ref.
Debit
Credit
01,000
May 7
Explanation
01,100
02,300
Balance
01,000
Rent Expense
Date
Balance
No. 726
J1
May 31
32,000
No. 400
Salaries Expense
Date
Balance
No. 729
Ref.
J1
Debit
00,9900
Credit
Balance
00,900

(c)
LISA HEINS, CGA

Trial Balance
May 31, 2003
Debit
Cash.........................................................................
Supplies...................................................................
Lisa Heins, Capital..................................................
Service Revenue......................................................
Rent Expense..........................................................
$34,320
001,100
001,200
001,000
000,900
$38,520
Credit
$00,720
003,500
032,000
002,300
00 000
$38,520
PROBLEM 2-4B
(a) & (c)
Cash
Date
Explanation
July 1
8
9
11
14
30
31
Balance
No. 101
Ref.
J1
J1
J1
J1
J1
J1
Debit
0,5,936
4,325
Credit
2,100
10,750
, 5,190
0700
Accounts Receivable
Date
Explanation
July 1
8
22
Balance
Explanation
July 1
17
Balance
Ref.
J1
J1
Debit
5,700
Credit
0,5,936
Explanation
July 1
Balance
Balance
10,536
4,600
10,300
No. 126
Ref.
J1
Debit
Credit
Balance
4,844
5,398
554
Equipment
Date
12,532
18,468
16,368
20,693
9,943
4,753
4,053
No. 112
Supplies
Date
Balance
No. 157
Ref.
Debit
Credit
Balance
25,950

Accounts Payable
Date
Explanation
July 1
14
17
Balance
No. 201
Ref.
J1
J1
Debit
Credit
10,750
554
Unearned Revenue
Date
Explanation
July 1
Balance
Explanation
July 1
Balance
Ref.
Debit
Credit
Explanation
July 31
No. 301
Ref.
Debit
Credit
No. 306
Ref.
J1
Explanation
July 11
22
Debit
Credit
0,700
No. 428
Ref.
Debit
J1
J1
July 30
Explanation
Balance
00,700
Credit
4,325
5,700
Repair Expense
Date
Balance
36,254
Dry Cleaning Revenue

Date
Balance
1,730
C. Steiner, Drawings
Date
15,878
5,128
5,682
No. 209
C. Steiner, Capital
Date
Balance
Balance
04,325
010,025
No. 622
Ref.
J1
Debit
0,692
Credit
Balance
00,692

Salaries Expense
Date
Explanation
July 9
30
No. 726
Ref.
J1
J1
Debit
Credit
2,100
3,114
02,100
5,214
Utilities Expense
Date
July 31
Explanation
Balance
No. 732
Ref.
J1
Debit
0,1,384
Credit
Balance
00,1,384

(b)
GENERAL JOURNAL
Date
July
J1
Ref.
Debit
0
5,936
8 Cash.............................................................
Received collections from
customers on account.
101
112
9 Salaries Expense.........................................
Cash.......................................................
Paid employee salaries.
726
101
2,100
11 Cash.............................................................
Dry Cleaning Revenue..........................
Performed services for cash.
101
428
4,325
14 Accounts Payable........................................
Cash.......................................................
Paid creditors on account.
201
101
10,750
17 Supplies.......................................................
126
201
0,554
22 Accounts Receivable...................................
Dry Cleaning Revenue..........................
Billed customers for services
rendered.
112
428
5,700
Credit
0
5,936
2,100
4,325
10,750
0,
554
5,700

(b) (Continued)
Date
Ref.
July 30 Salaries Expense..........................................

Utilities Expense..........................................
Repair Expense...........................................
Cash.......................................................
Paid salaries, utilities and repairs in
cash.
726
732
622
101
31 C. Steiner, Drawings....................................
Cash.......................................................
306
101
(d)
Debit
0,
3,114
1,384
692
0,7700
Credit
0,5,190
0,700
STEINER DRY CLEANERS

Trial Balance
July 31, 2003
Debit
Cash.........................................................................
Supplies...................................................................
Equipment................................................................
C. Steiner, Capital....................................................
C. Steiner, Drawings................................................
Dry Cleaning Revenue............................................
Repair Expense.......................................................
$04,053
0010,300
005,398
025,950
000,700
692
5,214
1,384
$53,691
Credit
$ 5,682
1,730
36,254
10,025
000000
$53,691
PROBLEM 2-5B
(a) & (c)
Cash
Date
Explanation
Apr. 1
2
9
10
12
25
29
30
30
Balance
No. 101
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
Debit
Credit
800
1,800
5,200
8855
0,3,000
300
1,600
700,
Accounts Receivable
Date
Explanation
Apr. 30
Ref.
Debit
J1
Explanation
Apr. 30
Credit
85
85,
Ref.
Debit
Credit
03,700
Apr. 1
Balance
Balance
00,700
Land
Explanation
Balance
No. 136
J1
Date
6,000
5,200
7,000
4,000
3,700
8,900
7,300
7,385
6,685
No. 112
Prepaid Rentals
Date
Balance
No. 140
Ref.
Debit
Credit
Balance
10,000

Buildings
Date
Explanation
Apr. 1
Balance
No. 145
Ref.
Debit
Credit
0 8,000
Equipment
Date
Explanation
Apr. 1
Balance
No. 157
Ref.
Debit
Credit
Explanation
Apr. 1
20
20
Balance
No. 201
Ref.
J1
J1
Debit
Credit
1,000
500
Mortgage Payable
Date
Explanation
Apr. 1
10
Balance
Explanation
Apr. 1
Balance
Ref.
J1
Debit
Credit
Apr. 9
25
Explanation
2,000
1,000
1,500
Balance
8,000
6,000
2,000
No. 301
Ref.
Debit
Credit
Balance
20,000
Admissions Revenue
Date
Balance
No. 275
Fran Holley, Capital

Date
Balance
0 6,000
Accounts Payable
Date
Balance
No. 405
Ref.
J1
J1
Debit
Credit
1,800
5,200
Balance
01,800
7,000

Concession Revenue
Date
Explanation
Apr. 30
No. 406
Ref.
Debit
Credit
J1
0,170
Advertising Expense
Date
Explanation
Apr. 12
Ref.
Debit
Credit
0,300
Apr. 2
20
No. 632
Ref.
J1
J1
Debit
,
Credit
0,800
500
Apr. 29
Explanation
Balance
800
1,300
Salaries Expense
Date
Balance
0,300
Film Rental Expense

Explanation
00,170
No. 610
J1
Date
Balance
No. 726
Ref.
J1
Debit
Credit
01,600
Balance
1,600
(b)
GENERAL JOURNAL
Date
Apr.

Cash.......................................................
Paid film rental.
J1
Ref.
Debit
632
101
0,800
101
405
1,800
Credit
0,800
9 Cash..............................................................
Admissions Revenue............................
1,800

(b) (Continued)
Date
Apr. 10 Mortgage Payable........................................

Accounts Payable........................................
Cash
Made payments on mortgage and
accounts payable.
Ref.
Debit
275
201
101
0,2,000
1,000
12 Advertising Expense....................................
Cash.......................................................
Paid advertising expenses.
610
101
0,300

Received film and billed on account.
632
201
0,500
25 Cash..............................................................
Admissions Revenue............................
101
405
5,200
29 Salaries Expense
Cash.......................................................
726
101
1,600
30 Cash..............................................................
Accounts Receivable...................................
Concession Revenue............................
Received cash and balance on
account for concession revenue.
101
112
406
0,085
0,085
30 Prepaid Rentals............................................
Cash.......................................................
Paid for film to be shown next
month.
136
101
700
Credit
0,3,000

(d)
0,300
0,500
5,200
1,600
0,170
700
GRAND THEATRE
Trial Balance
April 30, 2003
Debit
Cash ........................................................................
Prepaid Rentals.......................................................
Land..........................................................................
Buildings..................................................................
Equipment................................................................
Mortgage Payable....................................................
Fran Holley, Capital.................................................
Admissions Revenue..............................................
Concession Revenue..............................................
Advertising Expense...............................................
Film Rental Expense...............................................
$ 6,685
0,085
0,700
01110,000
08,000
06,000
000
300
001,300
1,600
$34,670
Credit
$ 1,500
6,000
020,000
07,000
00170
000000
$34,670
PROBLEM 2-6B
(a)
GENERAL JOURNAL
Date
Sept.
J1
Debit
1 Cash............................................................... 125,000
B. Rowland, Capital...............................
Credit
125,000
1 No entry.
5 Rent Expense............................................... 443,750
Cash.......................................................
8 Furniture & Equipment................................
00,75,000
Cash.......................................................
Accounts Payable
10 Insurance Expense......................................
Cash.......................................................
0320
3,75
0
25,000
50,000
320
12 Office Supplies............................................. 11,100

Cash.......................................................
01,100
19 Office Supplies............................................. 01,900

Accounts Payable ................................
01,900
24 Cash.............................................................. 015,000
Accounts Receivable................................... 25,000
Brokerage Fees Earned........................
040,000
26 Accounts Payable....................................... 00, 750

Cash.......................................................
00,750
29 Cash..............................................................00, 6,500
00,6,500

(a) (Continued)
Date
Debit
00,
Sept. 30 Utility Expense..............................................
450
30
Credit
0
0,450
Salaries Expense..........................................................
, 3,600
Cash......................................................................... 0,3,600
Note: Journal entry explanations have not been reproduced from the text in
part (a). Students should recognize, however, that explanations are a critical
part of the journal entry in real life.
(b)
Cash
Debit
125,000
15,000
6,500
Credit
3,750
25,000
320
1,100
750
3,600
111,980
Accounts Receivable
Debit
Credit
025,000
6,500
18,500
Office Supplies
Debit
Credit
1,100
1,900
3,000
Furniture & Equipment
Debit
Credit
0,75,000
Accounts Payable
Debit
00,750
Credit
50,000
1,900
450
51,600

(b) (Continued)
B. Rowland, Capital
Debit
Credit
125,000
Brokerage Fees Earned

Debit
0,
Credit
40,000
Salaries Expense
Debit
Credit
3,600
Rent Expense
Debit
Credit
3,750
Utilities Expense
Debit
Credit
0,450
Insurance Expense
Debit
0,320
Credit

(c)
ROWLAND BROKERAGE SERVICES

Trial Balance
September 30, 2003
Debit
Cash ........................................................................
Office Supplies........................................................
Furniture and Equipment........................................
B. Rowland, Capital.................................................
Brokerage Fees Earned..........................................
Rent Expense..........................................................
Insurance Expense..................................................
$111,980
18,500
3,000
75,000
3,600
3,750
450
320
0$216,600
Credit
$ 51,600
125,000
40,000
51
000,0600
$216,600

(d)

Income Statement
For the Month Ended September 30, 2003
Revenues
Brokerage fees earned.........................................................
Expenses
Salaries expense.................................................
$3,600
Rent expense.......................................................
3,750
Insurance expense..............................................
320
Utilities expense..................................................
00,450
Total expenses..............................................................
Net income...................................................................................
$40,000
008,120
$31,880

For the Month Ended September 30, 2003
Capital, September 1, 2003.......................................
Add: Investment......................................................
Net income......................................................
Capital, September 30, 2003.....................................
$
0
125,000
31,880
$156,880

(d) (Continued)
Balance Sheet
September 30, 2003
Assets
Cash..............................................................................................
Office supplies.............................................................................
Furniture and equipment.............................................................
$111,980
18,500
3,000
0075,000
Total assets...........................................................................
$208,480

Liabilities
Accounts payable................................................................. 0$ 51,600
Owner's Equity
B. Rowland, Capital..............................................................
0156,880
$208,480
PROBLEM 2-7B
(a)
As indicated in item (9), $4,800 was paid for three months in advance
on March 1. One month has passed, so 1/3 X $4,800 = $1,600 of rent
has expired and become an expense. Two months are still to come, so
2/3 x $4,800 = $3,200 remains in the Prepaid Rent account as an asset.
(b) & (d)
Cash
7,000
(1)
(3)
(4) 9,000
(5)
(7) 3,000
(8)
(10)
900
2,100
Accounts Receivable
12,000
(4) 9,000
(7) 9,000
8,000
4,000
1,000
3,000
15,000
(2) 3,200
(6) 3,000
15,200
Shop Equipment
21,000
12,000
Prepaid Rent
3,200
(9) 1,600
1,600
Accounts Payable
21,000
(2) 3,200
(5) 8,000
16,200
Gary Hobson, Capital

37,200
Gary Hobson, Drawings

(10) 1,000

(b) & (d) (Continued)
Repair Services Revenue
(7) 12,000
Advertising Expense
(1) 900
(3) 2,100

(6) 3,000
Rent Expense
(9) 1,600
Wages Expense
(8) 4,000

(c)
GENERAL JOURNAL
Debit
1.
Advertising Expense........................................
Cash..........................................................
900
2.
Repair Parts Inventory.....................................

3,200
3.
Miscellaneous Expense...................................
Cash..........................................................
4.
Cash..................................................................
Accounts Receivable...............................
5.
Accounts Payable............................................
Cash..........................................................
6.
Repair Parts Expense......................................

Repair Parts Inventory.............................
7.
Cash..................................................................
Accounts Receivable.......................................
Repair Services Revenue.........................
8.
Wages Expense................................................
Cash
9.
Rent Expense...................................................
Prepaid Rent.............................................
10.
Gary Hobson, Drawings..................................

Cash..........................................................
0
2,100
0
9,000
0
8,000
0
3,000
3,000
9,000
0
4,000
0
1,600
0
1,000
Credit
900
3,200
0
2,100
0
9,000
0
8,000
0
3,000
0
12,000
0
4,000
0
1,600
0
1,000
Note: Journal entry explanations have not been reproduced from the text in
this part of the problem. Students should recognize, however, that
explanations are a critical part of the journal entry in real life.

(e)
SOFT-Q REPAIR SERVICE

Trial Balance
April 30, 2003
Debit
Cash.................................................................................
Repair Parts Inventory....................................................
Prepaid Rent....................................................................
Shop Equipment.............................................................
Gary Hobson, Capital......................................................
Gary Hobson, Drawings..................................................
Repair Services Revenue...............................................
Advertising Expense.......................................................
Repair Parts Expense.....................................................
Rent Expense..................................................................
Wages Expense...............................................................
(f)
Cash
Accounts Receivable
Prepaid Rent
Shop Equipment
Total Assets
(g) Repair Services Revenue

Advertising Expense
Rent Expense
Wages Expense
Net Income
$ 3,000
12,000
15,200
1,600
21,000
$52,800
$12,000
(900)
(2,100)
(3,000)
(1,600)
(4,000)
$ 400
$03,000
012,000
015,200
001,600
0021,000
1,000
900
2,100
3,000
1,600
004,000
$65,400
Credit
$16,200
037,200
0
12,000
000000
$65,400
PROBLEM 2-8B
(a)
(b)

Income Statement
For the Month Ended April 30, 2003
Revenues
Repair services revenue......................................................
$12,000
Expenses
Wages expense...................................................
$4,000
Rent expense.......................................................
1,600
Repair parts expense..........................................
3,000
Miscellaneous expense...................................... 00,2,100
Advertising expense........................................... 00, 900
Total expenses..............................................................
011,600
Net income...................................................................................
$ 400

For the Month Ended April 30, 2003
Gary Hobson, Capital, April 1, 2003............................................
Add: Net income........................................................................
Less: Drawings...........................................................................
$37,200
400
37,600
1,000
Gary Hobson, Capital, April 30, 2003..........................................
$36,600

(c)

Balance Sheet
April 30, 2003
Assets
Cash..............................................................................................
Repair parts inventory.................................................................
Prepaid rent..................................................................................
Shop equipment...........................................................................
$ 3,000
12,000
15,200
001,600
0421,000
Total assets...........................................................................
$52,800

Liabilities
Accounts payable.................................................................
$16,200
Owner's Equity
Gary Hobson, Capital...........................................................
0036,600
$52,800
PROBLEM 2-9B
(a)
HUDSONS BAY COMPANY

Trial Balance
January 31, 2000
(thousands)
Cash in stores
Short-term deposits
Credit card receivables
Other accounts receivable
Merchandise inventories
Prepaid expenses
Income taxes recoverable
Investments
Long-term receivables
Capital assets
Other assets
Trade accounts payable
Short-term borrowings
Other accounts payable and accrued
expenses
Long-term debt due within one year
Long-term debt
Future income taxes payable
Other long-term liabilities
Shareholders equity
Sales and revenue
Operating expenses
Interest expense
Income tax expense
Totals
Debit
$
8,480
41,792
483,940
127,522
1,598,695
44,606
25,445
49,264
29,348
1,447,200
378,970
7,024,207
79,140
96,369
$11,434,978
Credit
$ 384,804
29,597
584,644
151,695
700,184
54,368
64,445
2,169,490
7,295,751
0000000000
$11,434,978

(b)
HUDSONS BAY COMPANY

Income Statement
For the Year Ended January 31, 2000
(thousands)
Revenues
Sales and revenue
Expenses
Operating expenses
Interest expense
Income tax expense
Net income
$7,295,751
$7,024,207
79,140
96,369
7,199,716
$
96,035

(b) (Continued)
HUDSONS BAY COMPANY
Balance Sheet
January 31, 2000
(thousands)
Current assets
Cash in stores
Short-term deposits
Credit card receivables
Other accounts receivable
Merchandise inventories
Prepaid expenses
Income taxes recoverable
Total current assets
Investments
Long-term receivables
Capital assets
Other assets
Total assets
Assets
$
8,480
41,792
483,940
127,522
1,598,695
44,606
25,445
2,330,480
49,264
29,348
1,447,200
378,970
$4,235,262
Liabilities and Shareholders Equity

Current liabilities
Short-term borrowings
Trade accounts payable
Other accounts payable and accrued expenses
Long-term debt due within one year
Total current liabilities
Long-term debt
Future income taxes payable
Other long-term liabilities
Total liabilities
Shareholders equity ($2,169,490 + $96,035)
Total liabilities and shareholders equity
29,597
384,804
584,644
151,695
1,150,740
700,184
54,368
64,445
1,969,737
2,265,525
$4,235,262
PROBLEM 2-10B
(a)
(b)
1. Understated by $10,000 ($5,000 to reverse the incorrect entry and

$5,000 for the correct entry)
2. Correctly stated
3. Understated
4. Correct
5. $360,000 ($350,000 debit column + $5,000 debit to reverse credit to
Accounts Receivable + $5,000 debit to record Accounts Receivable)
1.
3.
4.
7.
Cheque
Property tax bill
Sales slip
Cash register tape
PROBLEM 2-11B
(a)
Errors in the trial balance are:

1.The trial balance should be dated at a specific point in time, not for
the year ended.
2.Machinery and equipment should be a debit.
3.Accounts Payable should be a credit.
4.Capital should be a credit.
5.Note Payable should be a credit.
6.Accounts Receivable should be a debit.
7.They are not arranged in the proper sequence: 1) assets; 2)
liabilities; 3) owners equity (capital and drawings); and 4) income
statement accounts (revenues and expenses).
8.The totals should be equal.
(b)
CHRISTOPHERS SMALL ENGINE REPAIRS

Trial Balance
December 31, 2002
Debit
Credit
Cash................................................................................. $ 29
Accounts Receivable...................................................... 40
Prepaid Rent....................................................................
5
Prepaid Insurance........................................................... 25
Machinery and Equipment.............................................. 91
Note Payable...................................................................
Capital..............................................................................
Drawings.......................................................................... 30
Service Revenue.............................................................
Miscellaneous Expense.................................................. 47
Wages Expense............................................................... 71
$338
$ 41
50
45
202
0000
$338
PROBLEM 2-12B
SHAWNEE COMPANY
Trial Balance
May 31, 2003
Debit
Cash ($5,850 + $520 + $25 - $250)..................................
Accounts Receivable ($2,570 $210)............................
Prepaid Insurance ($700 +$100).....................................
Equipment ($8,000 - $520)..............................................
Supplies ($520)................................................................
Accounts Payable ($4,600 + $100 + $520 - $210)..........
Property Taxes Payable ($560).......................................
M. Flynn, Capital ($11,700 + $700)..................................
M. Flynn, Drawings ($700)..............................................
Service Revenue ($6,960)...............................................
Salaries Expense ($4,200 + $200)..................................
Advertising Expense ($1,100 - $25 + $250)....................
Property Tax Expense ($1,100 + $100)...........................
$06,145
002,360
000,800
007,480
520
700
044,400
1,325
1,200
$24,930
Credit
$05,010
00 560
012,400
6, 6,960
000000
$24,930
BYP 2-1 FINANCIAL REPORTING PROBLEM

(a)
(1)
Increase
Side
(1)
Decrease
Side
Accounts Payable and

Accrued Liabilities
Credit
Debit
Credit
Accounts Receivable
Debit
Credit
Debit
Capital Assets
Debit
Credit
Debit
Franchise Revenue
Credit
Debit
Credit
Income Taxes Expense
Debit
Credit
Debit
Interest and Other

Investment Expense
Debit
Credit
Debit
Debit
Credit
Debit
Account
Prepaid Expenses and

Sundry Assets
(b)
1.
2.
3.
4.
5.
6.
Cash is increased.
Cash is decreased and/or long-term debt is increased.
Cash is increased (or Accounts Receivable).
Income Tax Payable is increased or Cash is decreased.
Cash is decreased or Interest Payable increased.
Cash is decreased.
(2)
Normal
Balance
BYP 2-2 INTERPRETING FINANCIAL STATEMENTS

(a)
UNITED GRAIN GROWERS LIMITED

Trial Balance
July 31, 2000
(in thousands)
Debit
Cash........................................................................ $ 13,340
Accounts receivable and prepaid expenses........
128,126
Inventories.............................................................
106,604
Capital assets........................................................
307,202
Other assets...........................................................
44,159
Bank and other loans............................................
Accounts payable and accrued expenses...........
Dividends payable.................................................
Long-term debt......................................................
Shareholders (owners) equity.............................
Sales and revenue from services.........................
Cost of goods sold expense................................. 1,576,718
Operating, general and administrative expense..
154,250
Depreciation and amortization expense..............
26,380
Interest expense....................................................
17,350
Other expense........................................................
595
Income tax expense...............................................
2,313
Totals.............................................................. $2,377,037
Credit
66,352
91,440
5,315
210,051
224,090
1,779,789
000000000
$2,377,037
BYP 2-2 (Continued)

(b)
Assets =
Cash $13,340 +
Accounts Receivable
and Prepaid Expenses
$128,126 +
Inventories $106,604 +
Capital Assets
$307,202 +
Other Assets $44,159
$599,431 =
Liabilities +
Bank and Other Loans
$66,352 + Accounts
Payable and Accrued
Expenses $91,440 +
Dividends Payable
$5,315 + Long-term
Debt $210,051
$373,158 +
Owners Equity
Shareholders (owners)
Equity $224,090 + Sales
and Revenue from
Services $1,779,789 Cost of Goods Sold
Expense $1,576,718 Operating, General
and Administrative
Expense $154,250 Depreciation and
Amortization Expense
$26,380 - Interest Expense
$17,350 - Other Expenses
$595 - Income Tax
Expense $2,313
$226,273
BYP 2-3 ACCOUNTING ON THE WEB

Due to the frequency of change with regard to information available on the
world wide web, the Accounting on the Web cases are updated as required.
Their suggested solutions are also updated whenever necessary, and can be
found on-line in the Instructor Resources section of our home page
[www.wiley.com/canada/weygandt2].
BYP 2-4 COLLABORATIVE LEARNING ACTIVITY

(a) May
Correct.
Cash..................................................................
Lesson Fees Earned.................................
250
Cash..................................................................
Unearned Boarding Fees.........................
1,500
Hay and Feed Supplies....................................

1,700
14
Office Equipment..............................................
Cash...........................................................
800
15
A. Boudreau, Drawings....................................
Cash...........................................................
400
20
Cash..................................................................
Riding Fees Earned..................................
154
31
Correct.
31
Hay and Feed Expense....................................

Hay and Feed Supplies.............................
1,000
250
1,500
1,700
800
400
154
1,000
(b) The errors in the entries of May 14, 20, and May 31 second entry would
prevent the trial balance from balancing.
(c) Net income as reported..................................................
Add: 5/9, Hay and feed expense...................................
5/15, Salaries expense (A. Boudreau,
Drawings)...........................................................
Less: 5/7, Boarding fees unearned...............................
Correct net income..........................................................
$1,700
00,400
$4,500
02,100
6,600
00,131 1,500
$5,100
BYP 2-4 (Continued)

(d) Cash as reported...........................................................
Add: 5/9, Purchase on account.................................
$1,700
5/20, Transposition error....................................
9
5/31, Hay and feed used..................................... 00,0100
$12,475
001,809
$14,284
BYP 2-5
COMMUNICATION ACTIVITY
MEMORANDUM
To:
Instructor
From: Student
Date:
Subject: Steps in the Recording Process
As requested, following is an explanation and illustration of the steps in the
recording process as they relate to the March 15 transactions for Merry Maid
Company:
(1) In the first transaction, bills totaling $6,000 were sent to customers for
services rendered. Therefore, the asset Accounts Receivable is
increased $6,000 and the revenue Cleaning Services Revenue is
increased $6,000. Debits increase assets and credits increase revenues,
so the journal entry is:
Accounts Receivable.......................................................
Cleaning Services Revenue....................................
Billed customer for services rendered.
6,000
6,000
The $6,000 amount is then posted to the debit side of the general ledger
account Accounts Receivable and to the credit side of the general ledger
account Cleaning Services Revenue.
(2) In the second transaction, $2,000 was paid in salaries to employees.
Therefore, the expense Salaries Expense is increased $2,000 and the
asset Cash is decreased $2,000. Debits increase expenses and credits
decrease assets, so the journal entry is:
Salaries Expense.............................................................
Cash..........................................................................
Paid salaries.
2,000
2,000
The $2,000 amount is then posted to the debit side of the general ledger
account Salaries Expense and to the credit side of the general ledger
account Cash.
BYP 2-5 (Continued)

I trust that the foregoing is satisfactory. Please let me know if anything
further is required.
BYP 2-6
ETHICS CASE
(a) The stakeholders in this situation are:

Vu Hung, assistant chief accountant.
Users of the company's financial statements (internal and external).
Her supervisor (the chief accountant, who evaluates her).
(b) By adding $1,000 to the Equipment account, that account total is
intentionally misstated. By not locating the error causing the imbalance,
some other account(s) may also be misstated. If the amount of $1,000 is
determined to be immaterial, and the intent is not to commit fraud
(cover up an embezzlement or other misappropriation of assets), Vus
action might not be considered unethical in the preparation of interim
financial statements. However, she should disclose what she has done.
Otherwise, if Vu is violating a company accounting policy by her action,
then she is acting unethically.
(c) Vu's alternatives are:
1.
Miss the deadline but find the error causing the imbalance.
2.
Tell her supervisor of the imbalance and suffer the consequences.
3.
Do as she did and locate the error later, making the adjustment (if
any) in the next quarter.

CH 2

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CH 2

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CHAPTER 2

The Recording Process

1. Explain what an account is and

3. Describe the basic steps in the

4. Explain what a journal is, how it

11, 12, 13,

5. Explain what a ledger is and how

6. Explain what posting is, and how

7. Explain the purpose of, and

ASSIGNMENT CHARACTERISTICS TABLE

Identify increases, decreases, normal balances, and

Journalize a series of transactions.

Journalize transactions, post, and prepare trial balance.

Journalize transactions, post, and prepare trial balance.

Journalize transactions, post, and prepare trial balance.

Journalize transactions, post, and prepare trial balance

Journalize transactions, post, prepare trial balance, and

Prepare financial statements from trial balance.

Prepare trial balance and financial statements.

Answer questions about trial balance error and identify

Identify errors and prepare correct trial balance.

Prepare correct trial balance.

Identify increases, decreases, normal balances, and

Journalize a series of transactions.

Journalize transactions, post, and prepare trial balance.

Journalize transactions, post, and prepare trial balance.

Journalize transactions, post, and prepare trial balance.

Journalize transactions, post, and prepare trial balance

Journalize transactions, post, prepare trial balance, and

Prepare financial statements from trial balance.

Prepare trial balance and financial statements.

Answer questions about trial balance error and identify

Identify errors and prepare correct trial balance.

Prepare correct trial balance.

BLOOMS TAXONOMY TABLE

Accounts Receivabledebit balance.

Questions Chapter 2 (Continued)

Accounts Receivableassetdebit balance.

08. (a) Debit Supplies and credit Accounts Payable.

Accounts Payableboth debit and credit entries.

10. The basic steps in the recording process are:

Questions Chapter 2 (Continued)

(b) Prepaid Insurance........................................................

Questions Chapter 2 (Continued)

SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 2-2

BRIEF EXERCISE 2-3

(b) Debit-Credit Analysis

Aug. 1 The asset Cash is increased;

Debits increase assets:

16 The asset Cash is increased;

Debits increase assets:

27 The expense Salaries Expense is

Debits increase expenses:

BRIEF EXERCISE 2-4

Analyse each transaction. In this step, business documents are

BRIEF EXERCISE 2-5

BRIEF EXERCISE 2-6

BRIEF EXERCISE 2-7

BRIEF EXERCISE 2-8

BRIEF EXERCISE 2-9

Debits increase assets: debit Cash $15,000.