Question 1: Accounting Equation Determine the missing amount in each of the following cases:
Assets Libilities stockholders' Equity
a. $200,000 $85,000 $28,000
b. ? $32,000 $52,000
c. $93,000 ? $52,000
Question 2: Tansaction Analysis Following the example shown in (a) below, indicate the accounting effects of the listed transactions on the assets, liabilities, and stockholders' equity of Martin & Company. a corporation:
a. Purchased, for cash, a desktop computer for use in the office.
ANSWER:
Increase assets (Office Equipment)
Decrease assets (Cash)
b. Rendered services and billed the client.
c. Paid rent for the month.
d. Rendered services to a client for cash.
e. Received amount due from a client in Transaction (b).
f. Purchased an office desk on account.
g. Paid employees' salaries for the month.
h. Paid for desk purchased in Transaction (f).
i. The company paid a dividend.
Question 3: Analysis of Accounts - Calculate the unknown amount in each of the following five independent situations. The answer to situation (a) is given as an example.
|
a.
|
Cash.....................................
|
$ 6,100
|
$ 5,250
|
Total cash disbursed, $5,400.
|
|
b.
|
Accounts receivable............
|
8,500
|
9,300
|
Services on account, $16,500.
|
|
C.
|
Notes payable ..............
|
15,000
|
20,000
|
Borrowed funds by issuing a note, $30.000.
|
|
d.
|
Accounts payable................
|
3,280
|
1,720
|
Payments on account, $2,900.
|
|
e.
|
Stockholders' equity .....
|
32,000
|
46,000
|
Capital contribution, $5,000.
|
Unknown Amounts required
a. Total cash received $4550
b. Total cash collected from credit customers
c. Notes payable repaid during the period ..........
d. Goods and services received from suppliers on account ....
e. Net income, assuming that no dividends were paid
Question 4:
Transactions Analysis and Trial Balance
Make T-accounts for the following accounts that appear in the general ledger of mead pet hospital, owned by R. Mead, a veterinarian: Cash: Accounts Receivable:Supplies:office Equipment:Accounts payble: Common Stock: Dividends : Professional fees Earned: Salaries Expense: and Rent Expense. Prepare journal entries and record the following December transactions in the T-accounts and key all entries with the number identifying the transaction. Finally, determine the balance in each account and prepare a trail balance as of December 31.
Dec. 1. Mead opened a checking, account on December 1 at United Bank in the name of mead pet Hospital and deposited $20,000 cash. Mead received common stock for his investment.
2 Paid rent for December, $1.100.
3 Purchased office equipment on account. $2,900.
4 Purchased supplies for cash. 51.700.
5 Billed clients for services rendered $7.300.
6 Paid secretary's salary $1.950.
7 Paid $1,500 on account for the equipment purchased on December 3.
8 Collected $5.800 from clients previously billed for services.
9 The Company paid stockholders $2.200 as a cash dividend.
Question 5:
Transactions Analysis Match each of the following transactions of Lesch and Company with the appropriate letters, indicating the debits and credits to be made. The key for the letters follows the list of transactions.
The correct answer for transaction (1) is given as an illustration :
1. Purchased supplies on account.
2. Paid interest on note payable.
3. Cash dividend was paid to stockholders.
4. Returned some defective supplies and received a reduction in the amount owed.
5. Made payment to settle note payable.
6. Received an invoice for utilities used.
7. Received payment in advance from client for work to be done next month.
8. The stockholders contributed addition capital to the business.
Financial Effect of Transaction
a. Debit an asset g. Debit dividends
b. Credit an asset h. Credit dividends
c. Debit a liability i. Debit a revenue
d. Credit a liability j. Credit a revenue
e. Debit common stock k. Debit an expense
f. Credit common stock I. Credit an expense
Question 6:
Transaction Entries Creative Designs. a firm providing art services for advertisers, began business on June 1. The following accounts in its general ledger are needed to record the transactions for June: Cash; Accounts Receivable: Supplies; Office Equipment; Accounts Payable; Common Stock; Dividends; Service Fees Earned; Rent Expense; Utilities Expense; and Salaries Expense. Use journai entries to record the following transactions for June in the general journal:
June 1 Lisa Ryan invested $12,000 cash to begin the business; she received common stock for her investment.
2 Paid rent for June, $950.
3 Purchased office equipment on account, $6,400.
6 Purchased art materials and other supplies costing $3,800; paid $1,800 down with the remainder due within 30 days.
II Billed clients for services, $4,700.
17 Collected $3,250 from clients on account.
19 Paid $3,000 on account to office equipment company (see June 3 transaction).
25 Lisa Ryan received a $2,000 dividend. 30 Paid utility bill for June. $350.
30 Paid salaries for June, $2,500.
Question 7:
Nature of accounts, Debit and credit Rules: For each of the accounts listed below, indicate whether the account is increased by a debit or a credit:
Accounts payable Dividends
Advertising Expense Equipment
Cash Land
Common Stock Service Fees Earned
Question 8:
Nature of Accounts, Debit and Credit Rules
In columns, enter debit or credit to describe the journal entry necessary to increase and decrease the account shown on the left, and which side of the account reprints its normal balance.
Question 9:
Nature of Accounts, Debit and Credit Rules For each of the accounts listed below, indicate whether L04, 5 the account is increased by a debit or a credit:
Accounts Receivable Notes Payable
Advertising Revenue Retained Earnings
Building Supplies
Common Stock Utilities Expense
Question 10:
Transaction Analysis Grant Appraisal Service provides commercial and industrial appraisals and feasibility studies. On January 1, the assets and liabilities of the business were the following: Cash $9,700; Accounts Receivable. $14.800: Accounts Payable, $600: and Notes Payable, $2,500 Common Stock had a balance of $18.400. Assume that Retained Earnings as of January 1, were $3,000.
The following transactions occurred during the month of January:
Jan. 1. Paid rent for January, $950.
2. Received $8.800 payment on customers' accounts.
Jan. 3 Paid $500 on accounts payable.
4 Received $1,600 for services performed for cash customers.
5 Borrowed $5,000 from a bank and signed a note payable for that amount.
6 Billed the city $6,200 for a feasibility study performed; billed various other credit customers, $1,900.
7 Paid the salary of an assistant, $4,000.
8 Received invoice for January utilities, $410.
9 Paid $6,000 cash for employee salaries.
10 Purchased a van (on January 31) for business use, $9,800.
11 Paid $50 to bank as January interest on the outstanding notes payable.
Required
a. Set up an accounting equation in columnar form with the following individual assets, liabilities, and stockholders' equity accounts: Cash, Accounts Receivable, Van, Accounts Payable, Notes Payable, Common Stock, and Retained Earnings. Enter the January 1 balances below each item.
b. Show the impact (increase or decrease) of transactions 1-11 on the beginning balances, and total the columns to show that assets equal liabilities plus stockholders' equity as of January 31.