Financial and Managerial Accounting (Looseleaf) (Custom Package)
Financial and Managerial Accounting (Looseleaf) (Custom Package)
6th Edition
ISBN: 9781259754883
Author: Wild
Publisher: MCG
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Chapter 2, Problem 4PSA

1.

To determine

To prepare: journal entry for September transactions.

1.

Expert Solution
Check Mark

Explanation of Solution

Journal entries to record the transactions

a.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Cash

    60,000


    Office equipment

    25,000


    Capital account


    85,000

    (Being Cash and equipment has been invested by the owner.)



    Table (1)
  • Cash is an asset account. Here, asset balance has increased. Hence cash account is debited.
  • Office Equipment is an asset account. Here, asset balance has increased. Hence office equipment account is debited.
  • As the equity is raised by investing cash and equipment resulted in increased equity so increased in equity account is credited.

b.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Land

    40,000


    Building

    160,000


    Cash


    30,000

    Notes payable


    170,000

    (Being land and building has been purchased for cash and by issuing notes payable.)



    Table (2)
  • Land belongs to asset accounts it has been debited as its purchase resulted in increase in assets.
  • Building also belongs to asset accounts it has been debited as its purchase resulted in increase in assets.
  • Cash is an asset account it has been credited for the purchase of building as it resulted in decrease in asset account.
  • Notes payable are the part of liabilities they have been credited which signifies increase in liability account.

c.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Office supplies

    $2,000


    Accounts payable


    $2,000

    (Being office supplies has been purchased on credit.)



    Table (3)
  • Since, office supplies belong to asset accounts they have been debited as their purchase resulted in increase in assets.
  • As the purchase is made on credit which causes increased liabilities account so it will record under accounts payable account.

d.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Automobile

    16,500


    Common stock


    16,500

    (Being automobile exchanged for common stock.)



    Table (4)
  • Automobile is an asset account. Here, asset balance has increased. Hence office equipment account is debited.
  • As the equity is raised by investing cash and equipment resulted in increased equity so increased in equity account is credited.

e.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Office equipment

    5,600


    Accounts payable


    5,600

    (Being purchase of office equipment on credit.)



    Table (5)
  • Since, office equipment belongs to asset accounts they have been debited as their purchase resulted in increase in assets.
  • As the purchase is made on credit which causes increased liabilities account so it will record under accounts payable account.

f.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Salary expense

    1,800


    Cash


    1,800

    (Being salary paid to assistant.)



    Table (6)
  • Salary expense account is an expense account. Since salary expense is increased, expense is to be increased. So, debit the salary expense account.
  • Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.

g.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Cash

    8,000


    Fees earned


    8,000

    (Being immediate collection of cash for provided services)



    Table (7)
  • Cash is belonging to asset account so providing services in cash causes increase in asset account so debited.
  • Services have been provided so it will be credited as they will decrease the stock account.

h.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Utility expense

    635


    Cash


    635

    (Being cash paid for utility expenses.)



    Table (8)
  • Utility expense account is an expense account. Since utility expense is increased, expense is to be increased. So, debit the utility expense account.
  • Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.

i.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Accounts payable

    2,000


    Cash


    2,000

    (Being cash paid for amount due for previous purchase.)



    Table (9)
  • Accounts payable is a current liability account so payment of amount due will increase the liability account so debited.
  • Cash belongs to current asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.

j.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Office equipment

    20,300


    Cash


    20,300

    (Being cash paid for purchase of office equipment.)



    Table (10)
  • Purchase of office equipment will increase the asset account as it belongs to asset account so debited.
  • Cash is a part of asset account and purchase of office equipment will decline cash resulted in recording it in credit account.

k.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Accounts Receivable

    $6,250


    Fees earned


    $6,250

    (Being amount will receive after 30 days for providing the services.)



    Table (11)
  • Account receivable is belonging to current asset account so providing services causes increase in asset account so debited.
  • Services have been provided so it recorded in credited account as they will decrease the stock account.

l.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Salary expense

    1,800


    Cash


    1,800

    (Being salary paid to assistant.)



    Table (12)
  • Salary expense account is an expense account. Since salary expense is increased, expense is to be increased. So, debit the salary expense account.
  • Cash account is an asset account. Since cash is shrinked, so it is to be reduced. Therefore, cash account is to be credited.

m.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Cash

    4,000


    Account receivable


    4,000

    (Being part of amount received for the previously completed project.)



    Table (13)
  • Cash account is an asset account. Since cash is earned, so it is to be increased. Therefore, cash account is to be debited.
  • Account receivable is also belongs to asset account so receiving cash will decrease it so credited.

n.

    Date
    Account Title and Explanation
    Post.ref
    Debit($)
    Credit($)

    Dividends

    2,800


    Cash


    2,800

    (Being cash is paid in form of dividend.)



    Table (14)
  • Since dividends has been paid which will increase equity so debited.
  • Cash is credited as dividends have been paid in cash which decrease the cash account so credited.

2.

To determine

To prepare: Ledger accounts.

2.

Expert Solution
Check Mark

Explanation of Solution

    Cash No.101
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Capital account

    60,000

    60,000

    Land and building


    30,000
    30,000

    Salary expense


    1,800
    28,200

    Delivered project

    8,000

    36,200

    Utility expense


    635
    35,565

    Accounts payable


    2,000
    33,565

    Office equipment


    20,300
    13,265

    Salaries Expense


    1,800
    11,465

    Accounts receivable

    4,000

    15,465

    Dividends


    2,800
    12,665
    Table (15)

So the ending balance is $12,665

    Account receivable No.106
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Delivered project

    6,250

    6,250

    Cash


    4,000
    2,250
    Table (16)

So the ending balance is $2,250

    Office supplies No.108
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Accounts payable

    2,000

    2,000
    Table (17)

So the ending balance is $2,000

    Office Equipment No.163
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Capital account

    25,000

    25,000

    Accounts payable

    5,600

    30,600

    Cash

    20,300

    50,900
    Table (18)

So the ending balance is $50,900.

    Automobiles No.164
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Capital

    16,500

    16,500
    Table (19)

So the ending balance is $16,500

    Building No.170
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Cash

    160,000

    160,000
    Table (20)

So the ending balance is $160,000

    Land No.172
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Cash

    40,000

    40,000
    Table (21)

So the ending balance is $40,000

    Accounts payable No.201
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Office supplies


    2,000
    2,000

    Office equipment


    5,600
    7,600

    Cash

    2,000

    5,600
    Table (22)

So the ending balance is $(5,600)

    Notes payable .250
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Land and building


    170,000
    170,000
    Table (23)

So the ending balance is $(170,000)

    Capital No.301
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Cash


    85,000
    85,000

    Automobile


    16,500
    101,500
    Table (24)

So the ending balance is $(101,500)

    Dividends .302
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Dividends

    2,800

    2,800
    Table (25)

So the ending balance is $2,800

    Fees Earned No.402
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Cash


    8,000
    8,000

    Accounts Receivable


    6,250
    14,250
    Table (26)

So the ending balance is $(14,250)

    Utility Expense .602
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)



    635

    635
    Table (27)

So the ending balance is $635

    Salary expense No.601
    Date
    Account Title and Explanation
    Post ref
    Debit($)
    Credit($)
    Balance($)

    Cash

    1,800

    1,800

    Cash

    1,800

    3,600
    Table (28)

So the ending balance is $3,600

3.

To determine

To prepare: Trial balance.

3.

Expert Solution
Check Mark

Explanation of Solution

    Company H
    Trial Balance
    September 30, 20XX
    Accounts Title
    Amount($)
    Amount($)
    Cash
    12,665

    Accounts Payable

    5,600
    Accounts Receivable
    2,250

    Office Supplies
    2,000

    Office Equipment
    50,900

    Notes payable

    170,000
    Building
    160,000

    Land
    40,000

    Automobile
    16,500

    Capital

    101,500
    Dividends
    2,800

    Fees earned

    14,250
    Salaries Expenses
    3,600

    Utility expenses
    635

    Totals
    291,350
    291,350
    Table (29)

So, total trial balance is $291,350.

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Chapter 2 Solutions

Financial and Managerial Accounting (Looseleaf) (Custom Package)

Ch. 2 - Prob. 6DQCh. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQCh. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Prob. 13DQCh. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - APPLE Review the Apple balance sheet in Appendix...Ch. 2 - Prob. 17DQCh. 2 - Prob. 18DQCh. 2 - QS 2-1 Identifying source documents C1 Identifying...Ch. 2 - Prob. 2QSCh. 2 - Reading a chart of accounts C3 A chart of accounts...Ch. 2 - Prob. 4QSCh. 2 - Prob. 5QSCh. 2 - Prob. 6QSCh. 2 - Prob. 7QSCh. 2 - identifying a posting error P2 A trial balance has...Ch. 2 - Prob. 9QSCh. 2 - Prob. 10QSCh. 2 - Exercise 2-1 Steps in analyzing and recording...Ch. 2 - Prob. 2ECh. 2 - Prob. 3ECh. 2 - Prob. 4ECh. 2 - Prob. 5ECh. 2 - Prob. 6ECh. 2 - Prob. 7ECh. 2 - Prob. 8ECh. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - Prob. 12ECh. 2 - Prob. 13ECh. 2 - Prob. 14ECh. 2 - Prob. 15ECh. 2 - Prob. 16ECh. 2 - Prob. 17ECh. 2 - Prob. 18ECh. 2 - Prob. 19ECh. 2 - Exercise 2-20 Identifying effects of posting...Ch. 2 - Prob. 21ECh. 2 - Prob. 22ECh. 2 - Prob. 23ECh. 2 - Prob. 1PSACh. 2 - Problem 2-2A Preparing and posting journal...Ch. 2 - Prob. 3PSACh. 2 - Prob. 4PSACh. 2 - Prob. 5PSACh. 2 - Prob. 6PSACh. 2 - Prob. 1PSBCh. 2 - Prob. 2PSBCh. 2 - Prob. 3PSBCh. 2 - Prob. 4PSBCh. 2 - Prob. 5PSBCh. 2 - Prob. 6PSBCh. 2 - Prob. 2SPCh. 2 - Prob. 1GLPCh. 2 - Prob. 2GLPCh. 2 - Prob. 3GLPCh. 2 - Prob. 1BTNCh. 2 - Prob. 2BTNCh. 2 - Prob. 3BTNCh. 2 - Prob. 4BTNCh. 2 - Prob. 5BTNCh. 2 - Prob. 6BTNCh. 2 - Prob. 7BTNCh. 2 - Prob. 8BTNCh. 2 - Prob. 9BTNCh. 2 - Prob. 10BTN
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