FIANACIAL ACCOUNTING
FIANACIAL ACCOUNTING
5th Edition
ISBN: 9781266704444
Author: SPICELAND
Publisher: MCG
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Chapter 2, Problem 20E

1

To determine

Prepare the journal entry to record the transactions for Company BHP.

1

Expert Solution
Check Mark

Answer to Problem 20E

Prepare the journal entry to record the transactions for Company BHP:

DateAccount Title and ExplanationDebit($)Credit($)
September 3Accounts receivable20,000
Service revenue20,000
(To record the entry for providing painting service on account)
September 821,000
Equipment
Cash21,000
(To record the entry for purchasing painting equipment)
September 123,500
supplies

Accounts payable

3,500
(To record the entry for purchase of supplies on account)
September 154,200
Salaries expense
Cash4,200
(To record the entry for payment of salary for current month)
September 191,000
Advertising expense
Cash1,000
(To record the entry for payment of advertising for the current month)
September 225,400
Rent expense
  Cash5,400
(To record the entry for payment of rent for current month)
September 2615,000
Cash
Accounts receivable15,000
(To record the entry for received cash on account)
September 306,000
Cash
Deferred revenue6,000
(To record the entry for receiving cash in advance for painting)

Table (1)

Explanation of Solution

Journal:

Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

September 3

  • Accounts receivable is an asset account. There is an increase in the asset account. So debit accounts receivable with $20,000.
  • Service revenue is a revenue account which is a component of stockholders’ equity. There is an increase in revenue account this in turns increases stockholders’ equity. So credit revenue account with $20,000.

September 8

  • Equipment is an asset account. There is an increase in the asset account. So debit equipment account with $21,000.
  • Cash is an asset account. There is a decrease in the asset account. So credit account with $21,000.

September 12

  • Supplies are an asset account. There is an increase in the asset account. So debit supplies account with $3,500.
  • Accounts payable is a liability account. There is a decrease in the liability account. So credit accounts payable with $3,500.

September 15

  • Salaries expense is an expense account which is a component of stockholders’ equity. There is an increase in the expense this in turns decreases stockholders’ equity. So debit salaries expense with $4,200.
  • Cash is an asset account. There is a decrease in the asset account. So credit cash account with $4,200.

September 19

  • Advertising expense is an expense account which is a component of stockholders’ equity. There is an increase in the expense this in turns decreases stockholders’ equity. So debit advertising expense with $1,000.
  • Cash is an asset account. There is a decrease in the asset account. So credit cash account with $1,000.

September 22

  • Rent expense is an expense account which is a component of stockholders’ equity. There is an increase in the expense this in turns decreases stockholders’ equity. So debit rent expense with $5,400.
  • Cash is an asset account. There is a decrease in the asset account. So credit cash account with $5,400.

September 26

  • Cash is an asset account. There is an increase in the asset account. So debit cash account with $15,000.
  • Accounts receivable is an asset account. There is a decrease in the asset account. So credit accounts receivable with $15,000.

September 19

  • Cash is an asset account. There is an increase in the asset account. So debit cash account with $6,000.
  • Deferred revenue is a liability account. There is a decrease in the liability account. So credit deferred revenue with $6,000.

2

To determine

Compute the ending balance of each account by posting the transaction to the T-account.

2

Expert Solution
Check Mark

Explanation of Solution

T-account:

T-account is the form of the ledger account, where the journal entries are posted to this account. It is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.

The components of the T-account are as follows:

a) The title of the account

b) The left or debit side

c) The right or credit side

Prepare T-account:

Accounts receivable account:

Accounts receivable
Opening balance1,700
Service revenue20,000Cash15,000
Total21,700Total
Ending balance6,700

Service revenue account:

Service revenue
Opening balance0
Accounts receivable20,000
Ending balance20,000

Equipment account:

Equipment
Opening balance7,400
cash21,000
Ending balance28,400

Cash account:

Cash
Opening balance46,100Equipment21,000
Accounts receivable15,000Salary4,200
Deferred revenue6,000Advertisement1,000
Office rent5,400
Ending balance35,500

Supplies account:

supplies
Opening balance500
Accounts payable3,500
Ending balance4,000

Accounts payable account:

Accounts payable
Opening balance1,200
Purchase3,500
Ending balance4,700

Salaries expense account:

Salaries expense
Opening balance0
Cash4,200
Ending balance4,200

Advertising expense account:

Advertising expense
Opening balance0
Cash1,000
Ending balance1,000

Rent expense account:

Rent expense
Opening balance0
Cash5,400
Ending balance5,400

Deferred revenue account:

Deferred revenue
Opening balance0
cash6,000
Ending balance6,000

Common stock account:

Common stock
Opening balance25,000
Ending balance25,000

Retained earnings account:

Retained earnings
Opening balance29,500
Ending balance29,500

3

To determine

Prepare a trial balance for Company BPH.

3

Expert Solution
Check Mark

Explanation of Solution

Trial balance:

Trial balance is the summary of accounts, and their debit and credit balances at a given time.  It is usually prepared at end of the accounting period.  Debit balances are listed in left column and credit balances are listed in right column.  The totals of debit and credit column should be equal.  Trial balance is useful in the preparation of the financial statements.

Prepare the trial balance of Company BPH:

Company BPH
Trial balance
For the month end September 30
AccountsDebit($)Credit($)
Cash35,500
Accounts receivable

6,700

supplies4,000
Prepaid rent3,000
Equipment28,400
Accounts payable4,700
Deferred revenue6,000
Common stock25,000
Retained earnings29,500
Service revenue20,000
Salaries expense4,200
Rent expense5,400
Advertising expense1,000
Total85,20085,200

Table (2)

Conclusion

Hence, the trial balance is prepared, and the debit column and credit column of the trial balance are agreed, both having balance of $85,200.

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Chapter 2 Solutions

FIANACIAL ACCOUNTING

Ch. 2 - Prob. 11SSQCh. 2 - 12. The payment for utilities of the current month...Ch. 2 - Prob. 13SSQCh. 2 - Prob. 14SSQCh. 2 - 15. A trial balance can best be explained as a...Ch. 2 - Applying Excel #2-1 A company has the following...Ch. 2 - Applying Excel #2-2 A company has the following...Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - 6. What is the normal balance (debit or credit) of...Ch. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - Prob. 10RQCh. 2 - Prob. 11RQCh. 2 - 12. Provide the proper format for recording a...Ch. 2 - Prob. 13RQCh. 2 - Prob. 14RQCh. 2 - Prob. 15RQCh. 2 - Prob. 16RQCh. 2 - Prob. 17RQCh. 2 - Prob. 18RQCh. 2 - Prob. 19RQCh. 2 - Prob. 20RQCh. 2 - BE2-1 Below are the steps in the measurement...Ch. 2 - BE2-2 Using the notion that the accounting...Ch. 2 - BE2-3 Suppose a local company has the following...Ch. 2 - Prob. 4BECh. 2 - Prob. 5BECh. 2 - Prob. 6BECh. 2 - BE2-7 The following transactions occur for the...Ch. 2 - Prob. 8BECh. 2 - BE2-9 Consider the following T-account for...Ch. 2 - BE2-10 The following transactions occur for the...Ch. 2 - BE2-11 Using the following information, prepare a...Ch. 2 - BE2-12 Your study partner is having trouble...Ch. 2 - Prob. 1ECh. 2 - E2-2 Below are the external transactions for...Ch. 2 - Prob. 3ECh. 2 - E2-4 Boilermaker House Painting Company incurs the...Ch. 2 - Prob. 5ECh. 2 - Prob. 6ECh. 2 - Prob. 7ECh. 2 - E2-8 Terrapin Company engages in the following...Ch. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - E2-11 Bearcat Construction begins operations in...Ch. 2 - E2-12 Below are several transactions for Scarlet...Ch. 2 - Prob. 13ECh. 2 - Prob. 14ECh. 2 - E2-15 Consider the recorded transactions...Ch. 2 - Prob. 16ECh. 2 - Prob. 17ECh. 2 - E2-18 Below is the complete list of accounts of...Ch. 2 - Prob. 19ECh. 2 - Prob. 20ECh. 2 - Prob. 1PACh. 2 - Prob. 2PACh. 2 - Prob. 3PACh. 2 - Prob. 4PACh. 2 - Prob. 5PACh. 2 - Prob. 6PACh. 2 - Prob. 7PACh. 2 - Prob. 8PACh. 2 - Prob. 9PACh. 2 - P2-1B Below is a list of activities for Tigers...Ch. 2 - Prob. 2PBCh. 2 - Prob. 3PBCh. 2 - P2-4B Eli owns an insurance office, while Olivia...Ch. 2 - Prob. 5PBCh. 2 - Prob. 6PBCh. 2 - Prob. 7PBCh. 2 - Prob. 8PBCh. 2 - 4. prepare a trial balance as of November...Ch. 2 - Prob. 1APCh. 2 - Prob. 2APCh. 2 - Prob. 3APCh. 2 - American Eagle Outfitters, Inc. vs. The Buckle,...Ch. 2 - Prob. 5APCh. 2 - Prob. 6APCh. 2 - Prob. 7AP
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