Financial Accounting
Financial Accounting
3rd Edition
ISBN: 9780078025549
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2.9BP

1.

To determine

To Record: Each transaction of T Cat Services for the month of December.

1.

Expert Solution
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Answer to Problem 2.9BP

Journalize the transactions of T Cat Services for the month of December.

Date Account Title and Explanation Debit($) Credit($)
December 1 Cash 27,400  
Service Revenue   27,400
  (To record the service revenue for cash)    
       
December 4 Pet Supplies 2,900  
Accounts Payable   2,900
  (To record the purchase of office supplies on Accounts Payable)    
       
December 8 Advertising Expenses 3,200  
  Accounts Payable   3,200
  (To record the advertising expenses on account)    
       
December 9 Accounts payable 2,900  
Cash   2,900
  (To record the payment of cash )    
       
December 12 Cash 5,000  
Common Stock   5,000
  (To record the issuance of common stock)    
       
December 16 Accounts payable 6,300  
Cash   6,300
  (To record the payment of cash )    
       
December 19 Equipment 7,700  
Cash   7,700
  (To record the purchase of equipment)    
       
December 22 Utilities expenses 4,500  
Cash   4,500
  (To record the payment of utility expenses)    
       
December 24 Cash 2,300  
  Deferred Revenue   2,300
  (To record the receipt of cash in advance for deferred service revenue)    
       
December 27 No entry    
       
       
December 30 Salaries Expense 7,000  
Cash   7,000
  (To record the payment of salary expenses)    
       
December 31 Dividends 3,000  
Cash   3,000
  (To record the payment of cash dividends)    

Table (1)

Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Accounting rules for Journal entries:

  • To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
  • To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

2. and 3.

To determine

To Calculate: The balance of each account by posting each transaction to the appropriate T-accounts.

2. and 3.

Expert Solution
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Explanation of Solution

T-account:

An account is referred to as a T-account, because the alignment of the components of the account resembles the capital letter ‘T’. An account consists of the three main components which are as follows:

  • The title of the account
  • The left or debit side
  • The right or credit side

Post the journal entries into T-accounts and determine the balance of each account.

Cash Account

Cash Account
Date Details Debit ($)   Date Details Credit ($)
December 1 Beginning Balance 19,400 December 8 Advertising 3,200
December 1 Cash Sales 27,400 December 9 Accounts payable 2,900
December 12 Common stock 5,000 December 16 Accounts payable 6,300
December 24 Cash collection 2,300   December 19 Equipment 7,700
        December 22 Utilities 4,500
        December 30 Salaries 7,000
        December 31 Dividends 3,000
        December 31 Closing balance 19,500
  Total 54,100     Total 54,100
December 31 Balance 19,500      

Table (2)

Supplies

Supplies Account
Date Details Debit ($)   Date Details Credit ($)
December 1 Beginning balance 1,500 December 31 Closing balance 4,400
December 4 Accounts payable 2,900    
  Total 4,400   Total 4,400
December 31 Balance 4,400        

Table (3)

Prepaid Rent

Prepaid Rent Account
Date Details

Debit

($)

  Date Details

Credit

($)

December 1 Beginning Balance 7,200 December 31 Closing Balance 7,200
July 31 Total 7,200   Total 7,200

Table (4)

Equipment

Equipment Account
Date Details

Debit

($)

  Date Details

Credit

($)

December 1 Beginning balance 83,700 December 31 Closing Balance 91,400
December 19 Cash 7,700    
December 31 Total 91,400   Total 91,400

Table (5)

Building

Building Account
Date Details Debit ($)   Date Details Credit ($)
December 1 Beginning balance 240,000 December 31 Closing balance 240,000
  Total 240,000 Total 240,000
December 31 Balance 240,000

Table (6)

Accounts Payable

Accounts Payable Account
Date Details Debit ($)   Date Details Credit ($)
December 9 Cash paid 2,900 December 1 Beginning Balance 9,800
December 16 Cash paid 6,300 December 4 Supplies 2,900
December 31 Closing balance 3,500    
  Total 12,700   Total 12,700
        December 31 Balance 3,500

Table (7)

Unearned Service revenue

Unearned Service revenue Account
Date Details

Debit

($)

  Date Details

Credit

($)

June 30 Closing Balance 4,300 December 1 Beginning balance 2,000
    December 24 Cash 2,300
  Total 4,300   Total 4,300

Table (8)

Common Stock

Common Stock Account
Date Details Debit ($)   Date Details Credit ($)
December 31 Closing balance 130,000 December 1 Beginning balance 125,000
    December 12 Issued 5,000
  Total 130,000   Total 130,000
        December 31 Balance 130,000

Table (9)

Retained earnings

Retained earnings Account
Date Details Debit ($)   Date Details Credit ($)
December 31 Closing balance 75,500 December 1 Beginning balance 75,500
  Total 75,500   Total 75,500
        December 31 Balance 75,500

Table (10)

Dividends

Dividends Account
Date Details Debit ($)   Date Details Credit ($)
December 1 Beginning balance 9,000 December 31 Closing balance 12,000
December 31 Cash 3,000    
  Total 12,000 Total 12,000
December 31 Balance 12,000

Table (11)

Service revenue

Service revenue
Date Details Debit ($)   Date Details Credit ($)
December 31 Closing balance 291,400 December 1 Beginning balance 264,000
    December 1 Cash 27,400
  Total 291,400   Total 291,400
        December 31 Balance 291,400

Table (12)

Salaries Expense

Salaries Expense Account
Date Details Debit ($)   Date Details Credit ($)
December 1 Beginning balance 65,000 December 31 Closing balance 72,000
December 31 Cash 7,000        
  Total 72,000 Total 72,000
December 31 Balance 72,000

Table (13)

Advertising Expense

Advertising Expense Account
Date Details Debit ($)   Date Details Credit ($)
December 1 Beginning balance 18,200 December 31 Closing balance 21,400
December 8 cash 3,200    
Total   21,400 Total   21,400
December 31 Balance 21,400

Table (14)

Utilities Expense

Utilities Expense Account
Date Details Debit ($)   Date Details Credit ($)
December 1 Beginning balance 32,300 December 31 Closing balance 36,800
December 31 Cash 4,500    
Total   36,800 Total   36,800
December 31 Balance 36,800

Table (15)

4.

To determine

To Prepare: A trial balance as of December.

4.

Expert Solution
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Explanation of Solution

Trial balance:

A trial balance is the summary of all the ledger accounts. Debit balances are listed in left column and credit balances are listed in right column of the trial balance. The totals of debit and credit column should be equal. The trial balance is usually prepared to check the accuracy of ledger accounts balances, before the preparation of financial statements.

Prepare the trial balance of T Cat Services for the month of December.

T Cat Services
Trial Balance
For the Month Ended December 31
Accounts Debit ($) Credit ($)
Cash 19,500
Prepaid Rent 4,400
Supplies 7,200
Equipment 91,400
Building 240,000
Accounts Payable 3,500
Unearned Service Revenue 4,300
Common Stock 130,000
Retained Earnings 75,500
Dividends 12,000
Service Revenue 291,400
Salaries Expense 72,000
Advertising Expense 21,400
Utilities Expense 36,800
Total 504,700 504,700

Table (16)

Conclusion

Hence, the trial balance is prepared, and the debit column and credit column of the trial balance are agreed, both having balance of $504,700.

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Chapter 2 Solutions

Financial Accounting

Ch. 2 - 11.What is a journal? What is a journal entry?Ch. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - Prob. 14RQCh. 2 - 15.Describe the events that correspond to the...Ch. 2 - 16.What does a T-account represent? What is the...Ch. 2 - Prob. 17RQCh. 2 - Prob. 18RQCh. 2 - Prob. 19RQCh. 2 - 20.If total debits equal total credits in the...Ch. 2 - List steps in the measurement process (LO21) Below...Ch. 2 - Balance the accounting equation (LO22) Using the...Ch. 2 - Suppose a local company has the following balance...Ch. 2 - Analyze the Impact of transactions on the...Ch. 2 - Understand the effect of debits and credits on...Ch. 2 - Prob. 2.6BECh. 2 - Record transactions (LO24) The following...Ch. 2 - Prob. 2.8BECh. 2 - Analyze T-accounts (LO25) Consider the following...Ch. 2 - Prob. 2.10BECh. 2 - Prob. 2.11BECh. 2 - Correct a trial balance (LO26) Your study partner...Ch. 2 - Listed below are several terms and phrases...Ch. 2 - Prob. 2.2ECh. 2 - Analyze the Impact of transactions on the...Ch. 2 - Analyze the Impact of transactions on the...Ch. 2 - Understand the components of retained earnings...Ch. 2 - Indicate the debit or credit balance of accounts...Ch. 2 - Associate debits and credits with external...Ch. 2 - Prob. 2.8ECh. 2 - Identify transactions (LO24) Below are recorded...Ch. 2 - Prob. 2.10ECh. 2 - Record transactions (LO24) Bearcat Construction...Ch. 2 - Correct recorded transactions (LO24) Below are...Ch. 2 - Correct recorded transactions (LO24) Below are...Ch. 2 - Prob. 2.14ECh. 2 - Post transactions to T-accounts (LO25) Consider...Ch. 2 - Identify transaction (LO25) Below are T-accounts....Ch. 2 - Prob. 2.17ECh. 2 - Prepare o trial balance (LO26) Below is the...Ch. 2 - Prob. 2.19ECh. 2 - Prob. 2.20ECh. 2 - Below is a list of activities for Jayhawk...Ch. 2 - Prob. 2.2APCh. 2 - Prob. 2.3APCh. 2 - Prob. 2.4APCh. 2 - Refer to the transactions described in P24A. Keep...Ch. 2 - Prob. 2.6APCh. 2 - Prob. 2.7APCh. 2 - Prob. 2.8APCh. 2 - Prob. 2.9APCh. 2 - Analyze the impact of transactions on the...Ch. 2 - Prob. 2.2BPCh. 2 - Prob. 2.3BPCh. 2 - Record transactions (LO24) Flip Side of P25B Eli...Ch. 2 - Prob. 2.5BPCh. 2 - Prob. 2.6BPCh. 2 - Prob. 2.7BPCh. 2 - Prob. 2.8BPCh. 2 - Prob. 2.9BPCh. 2 - Prob. 2.1APCPCh. 2 - Prob. 2.2APFACh. 2 - Prob. 2.3APFACh. 2 - Prob. 2.4APCACh. 2 - Prob. 2.5APECh. 2 - Prob. 2.6APIRCh. 2 - Prob. 2.7APWC
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