Financial Accounting (Connect NOT Included)
Financial Accounting (Connect NOT Included)
4th Edition
ISBN: 9781259930492
Author: SPICELAND
Publisher: MCG
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Chapter 2, Problem 8PB

1

To determine

Prepare the journal entry to record the transactions for Incorporation BE.

1

Expert Solution
Check Mark

Answer to Problem 8PB

Prepare the journal entry to record the transactions for Incorporation BE.

DateAccount Title and ExplanationDebit ($)Credit ($)
November 1Cash13,000 
  Common stock 13,000
 (To record the entry for issue of common stock  for cash)  
November 2Equipment3,500 
  Notes payable 3,500
 (To record the entry for purchase of land with note payable)  
November 4Supplies1,000 
  Accounts payable 1,000
 (To record the entry for purchase of supplies on account)  
November 10Accounts receivable9,000 
  Service Revenue 9,000
 (To record the entry for providing service on account )  
November 15Accounts payable1,100 
  Cash 1,100
 (To record the entry for payment made to creditors)  
November 20Salaries expense3,000 
  Cash 3,000
 (To record the entry for payment of salaries expenses)  
November 22Cash11,000 
  Service revenue 11,000
 (To record the entry for providing service on account)  
November 24Notes payable1,400 
  Cash 1,400
 (To record the entry for payment of  notes payable)  
November 26Cash7,000 
  Accounts receivable 7,000
 (To record the entry for receiving cash on account)  
November 28utilities expense1,100 
  Cash 1,100
 (To record the entry for payment of utility expense)  
November 30Rent expense5,000 
  Cash 5,000
 (To record the payment of rent expense)  

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.

November 1

  • Cash is an asset. There is an increase in the asset. So debit the cash account with $13,000.
  • Common stock is a component of stockholders’ equity. There is an increase in the common stock which increases the stockholders’ equity. So credit the common stock with $13,000.

November 2

  • Equipment is an asset. There is an increase in the asset. So debit the equipment account with.$3,500
  • Notes payable is a liability. There is an increase in the liability. So credit the cash account with $3,500.

November 4

  • Supplies are an asset. There is an increase in the asset. So debit supplies account with $1,000.
  • Accounts payable is a liability. There is an increase in the liability. So credit accounts payable account with $1,000.

November 10

  • Accounts receivable is an asset. There is an increase in the asset. So debit accounts receivable with $9,000.
  • Service revenue is a revenue account and it is the component of stockholders’ equity. There is an increase in the revenue account which increases the stockholders’ equity. So credit service revenue with $9,000.

November 15

  • Accounts payable is a liability. There is an increase in the liability. So debit accounts payable with $1,100.
  • Cash is an asset. There is a decrease in the asset. So credit cash account with $1,100.

November 20

  • Salaries expenses are an expense account and it is a component of the stockholders’ equity. There is an increase in expenses which reduces the stockholders’ equity. So debit salaries expense account with $3,000.
  • Cash is an asset. There is a decrease in the asset. So credit cash account with $3,000.

November 22

  • Cash is an asset. There is an increase in the asset. So debit cash account with $11,000.
  • Service revenue is a revenue account and it is a component of stockholders’ equity. There is an increase in the revenue account which increases the stockholders’ equity. So credit service revenue account with $11,000.

November 24

  • Notes payable is a liability. There is a decrease in the liability. So debit notes payable with $1,400.
  • Cash is an asset. There is a decrease in the asset. So credit cash account with $1,400.

November 26

  • Cash is an asset account. There is an increase in the asset. So debit cash account with $7,000.
  • Accounts receivable is an asset. There is a decrease in the asset. So credit accounts receivable with $7,000.

November 28

  • Utilities expense is an expense account and it is a component of stockholders’ equity. There is an increase in the expense and it will decrease the stockholders’ equity. So debit utilities expense with $1,100.
  • Cash is an asset. There is a decrease in the asset. So credit cash account with $1,100.

November 30

  • Rent expense is an expense account and it is a component of stockholders’ equity. There is an increase in the expense and it will decrease the stockholders’ equity. So debit rent expense with $5,000.
  • Cash is an asset. There is a decrease in the asset. So credit cash account with $5,000.

2, 3

To determine

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

2, 3

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 balance6,000
Service revenue9,000Cash7,000
Total15,000Total15,000
Balance November 302,600

Service revenue account:

Service revenue
Accounts receivable9,000
cash11,000
Balance November 3020,000

Equipment account:

Equipment
Opening balance9,400
Notes payable3,500
Balance November 3012,900

Cash account:

Cash
Opening balance3,200Accounts  payable1,100
Common stock13,000salaries expense3,000
Service revenue11,000Notes payable1,400
utilities expense1,100
Rent expense5,000
Total34,200Total34,200
Balance November 3022,600

Supplies account:

supplies
Opening balance700
Accounts payable1,000
Balance November 301,700

Accounts payable:

Accounts payable
Opening balance2,000
Cash1,100Supplies1,000
Balance November 301,900

Salaries expense account:

Salaries expense
Opening balance0
Cash3,000
Balance November 303,000

Rent expense:

Rent expense
Opening balance0
cash5,000
Balance November 305,000

Notes payable account:

Notes payable
Opening balance4,000
Cash1,400Equipment3,500
Total7,500Total7,500
Balance November 306,100

Common stock account:

Common stock
Opening balance7,000
Cash13,000
Balance November 3020,000

Retained earnings account:

Retained earnings account
Opening balance900
Balance November 30900

4

To determine

Prepare a trial balance of Incorporation BE.

4

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 Incorporation BE:

Incorporation BE
Trial balance
For the month end November 30
AccountsDebit($)Credit($)
Cash22,600
Accounts receivable2,600
supplies1,700
Equipment12,900
Accounts payable1,900
Notes payable6,100
Common stock20,000
Retained earnings900
Service revenue20,000
Salaries expense3,000
Rent expense5,000
Utilities expense1,100
Total48,90048,900

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 $48,900.

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Chapter 2 Solutions

Financial Accounting (Connect NOT Included)

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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