T-account: T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue and expenditure items are recorded. This account is referred to as the 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: (a) The title of the account (b) The left or debit side (c) The right or credit side To prepare: The T-accounts to enter the opening balances of HLS Incorporation as on July 31, 2017.

Question

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Answer 1

Question

Chapter 3, Problem 3.9AP

(a)

To determine

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue and expenditure items are recorded.

This account is referred to as the 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:

(a) The title of the account

(b) The left or debit side

(c) The right or credit side

To prepare: The T-accounts to enter the opening balances of HLS Incorporation as on July 31, 2017.

(a)

Expert Solution

Explanation of Solution

Cash account:

Cash
Jul, 31	$4,000
Bal.	$4,000

Account receivable account:

Accounts receivable
Jul, 31	$1,500
Bal.	$1,500

Supplies account:

Supplies
Jul, 31	$500
Bal.	$500

Equipment account:

Equipment
Jul, 31	$5,000
Bal.	$5,000

Accounts payable account:

Accounts payable
	Jul, 31	$4,100
	Bal.	$4,100

Common stock account:

Common stock
	Jul, 31	$3,500
	Bal.	$3,500

Retained earnings account:

Retained earnings
	Jul, 31	$3,400
	Bal.	$3,400

(b)

To determine

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.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To journalize: the transaction as given.

(b)

Expert Solution

Answer to Problem 3.9AP

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 3, 2017	Cash	1,200
	Accounts receivable		1,200
	(To record the cash received from customer )

Table-1

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 5, 2017	Cash	1,300
	Common stock		1,300
	(To record the issuance of common stock)

Table-2

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 6, 2017	Accounts payable	2,700
	Cash		2,700
	(To record the cash paid to creditors)

Table-3

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 7, 2017	Accounts receivable	3,500
	Cash	3,000
	Service revenue		6,500
	(To record the service provided in cash to customer )

Table-4

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 12, 2017	Equipment	1,200
	Accounts payable		800
	Cash		400
	(To record the purchase of equipment on account and in cash )

Table-5

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 14, 2017	Salaries and wages expenses	3,500
	Rent expenses	900
	Advertising expenses	275
	Cash		4,675
	(To record the payment of salaries, rent and advertising expenses for the month August )

Table-6

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 18, 2017	Cash	3,500
	Accounts receivable		3,500
	(To record the cash received from the customer )

Table-7

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 20, 2017	Dividend	500
	Cash		500
	(To record the dividend paid in cash)

Table-8

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 24, 2017	Accounts receivable	1,000
	Service revenue		1,000
	(To record the service performed on account )

Table-9

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 26, 2017	Cash	2,000
	Notes payable		2,000
	(To record the cash received on note payable )

Table-10

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 28, 2017	Utilities	275
	Accounts payable		275
	(To record the utilities expenses on account for the month of August )

Table-11

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 31, 2017	Income tax expenses	500
	Cash		500
	(To record the payment of income tax expenses for the month of August)

Table-12

Explanation of Solution

Aug 3, 2017

Cash is an asset and increased, hence debit cash for $1,200.
Accounts receivable is an asset and decreased, hence credit account receivable for $1,200.

Aug 5, 2017

Cash is an asset and increased, hence debit the cash for $1,300.
Common stock is a component of shareholders’ equity and has increased, hence credit the common stock for $1,300.

Aug 6, 2017

Accounts Payable is a liability and has decreased, hence debit accounts payable for $2,700.
Cash is an asset and has decreased, hence credit cash for $2,700.

Aug 7, 2017

Accounts receivable is an asset and increased, hence debit the account receivable for $3,500.
Cash is an asset and increased, hence debit the cash for $3,000.
Service revenue is a component of shareholders’ equity and has increased, hence credit the service revenue for $6,500.

Aug 12, 2017

Equipment is an asset and has increased, hence debit equipment for $1,200.
Accounts payable is a liability and has increased, hence credit the accounts payable for $800.
Cash is an asset and has decreased, hence credit cash for $400.

Aug 14, 2017

Salary, rent and advertising expenses are component of stockholders’ equity and they are increased, hence debit the salaries and wages expenses, rent and advertising expenses for $3500, $900 and $275 respectively.
Cash is an asset and has decreased, hence credit cash for $4,675.

Aug 18, 2017

Cash is an asset and has increased, hence debit cash for $3,500.
Accounts receivable is an asset and has decreased, hence credit accounts receivable for $3,500.

Aug 20, 2017

Dividend is a component of stockholders’ equity and has increased, hence debit dividend for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Aug 24, 2017

Account receivable is an asset and has increased, hence debit account receivable for $1,000.
Service revenue is a component of stockholders’ equity and has increased, hence credit service revenue for $1,000.

Aug 26, 2017

Cash is an asset and has increased, hence debit cash for $2,000.
Notes payable is a liability and has increased, hence credit the note payable for $2,000.

Aug 27, 2017 - Agree to performed legal services for a client. No entry because no financial transaction has occurred.

Aug 28, 2017

Utilities expense is a component of stockholders’ equity and has increased; hence debit the utilities for $275.
Accounts payable is a liability and has increased, hence credit accounts receivable for $275.

Aug 31, 2017

Income tax expense is a component of stockholders’ equity and has increased; hence debit the income tax expenses for $500.
Cash is an asset and has decreased, hence credit cash for $500.

(c)

To determine

Trial balance:

Trial balance is the list 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.

To post: the transaction to the ledger accounts of HLS Incorporation as on August 31, 2017

(c)

Expert Solution

Explanation of Solution

Account receivable account:

Accounts receivable
Aug, 1 Bal.	$1,500	Aug, 8 Aug, 18	$1,200 $3,500
Aug, 7 Aug, 24	$3,500 $1,000
Total	$6,000	Total	$4,700
Bal.	$1,300

Common stock account:

Common stock
	Aug, 01 Bal.	$3,500
	Aug, 5	$1,300
	Bal.	$4,800

Accounts payable account:

Accounts payable
Aug, 8	$2,700	Aug, 1 Bal. Aug, 12 Aug, 28	$4,100 $800 $275
Total	$2,700	Total	$5,175
		Bal.	$2,475

Service revenue account:

Service revenue

Aug, 7

Aug, 24

$6,500

$1,000

Bal.

$7,500

Equipment account:

Equipment

Aug, 1

Aug, 12

$5,000

$1,200

Bal.

$6,200

Salaries and wages expenses account:

Salaries and wages expenses
Aug, 14	$3,500
Bal.	$3,500

Rent expenses account:

Rent expenses
Aug, 14	$900
Bal.	$900

Advertising expenses account:

Advertising expenses
Aug, 14	$275
Bal.	$275

Dividend account:

Dividend
Aug, 20	$500
Bal.	$500

Dividend account:

Dividends
	Aug, 26	$500
	Bal.	$500

Utilities account:

Utilities
Aug, 28	$275
Bal.	$275

Income tax expenses account:

Income tax expenses
Aug, 31	$500
Bal.	$500

Cash account:

Cash
Aug, 1 Bal.	$4,000	Aug, 6	$2,700
Aug, 3	$1,200	Aug, 12	$ 400
Aug, 5	$ 1,300	Aug, 14	$4,675
Aug, 7 Aug, 18	$3,000 $3,500	Aug, 20 Aug, 31	$ 500 $ 500
Aug, 26	$2,000
Total	$15,000	Total	$8,775
Bal.	$6,225

(d)

To determine

To prepare: a trial balance of HLS Incorporation as on August 31, 2017.

(d)

Expert Solution

Explanation of Solution

Trial balance
HLS Incorporation
August 31, 2017
Particulars	Debit $	Credit $
Common stock		4,800
Equipment	6,200
Retained earnings		3,400
Supplies	500
Accounts payable		2,475
Notes payable		2,000
Dividends	500
Service revenue		7,500
Salaries and wages expenses	3,500
Utilities expenses	275
Rent expenses	900
Advertising expenses	275
Income tax expenses	500
Accounts receivable	1,300
Cash	6,225
	20,175	20,175

Table-13

Conclusion

Thus, the total of debit, and credit columns of a trial balance are $20,175 and agree.

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Students have asked these similar questions

What is the accounts receivable balance?

Question: Perform the following accounting for the receivables of A & G, an accounting firm, at December 31, 2014. 1. Start with the beginning balances for these T-accounts: Accounts Receivable, $80,000 Allowance for Uncollectible Accounts, $9,000 Post the following 2014 transactions to the T-accounts: a. Service revenue of $850,000, all on account b. Collections on account, $790,000 c. Write-offs of uncollectible accounts, $7,000 d. Bad debt expense (allowance method), $8,000 2. What are the ending balances of Accounts Receivable and Allowance for Uncollectible Accounts? 3. Show two ways A & G could report accounts receivable on its balance sheet at December 31, 2014. Please explain & show steps, thank you.

On September 30, Valerian Co. had a $111,500 balance in Accounts Receivable. During October, the company collected $111,890 from its credit customers. The October 31 balance in Accounts Receivable was $107,000. Determine the amount of sales on account that occurred in October.

Answer 2

Question

Chapter 3, Problem 3.9AP

(a)

To determine

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue and expenditure items are recorded.

This account is referred to as the 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:

(a) The title of the account

(b) The left or debit side

(c) The right or credit side

To prepare: The T-accounts to enter the opening balances of HLS Incorporation as on July 31, 2017.

(a)

Expert Solution

Explanation of Solution

Cash account:

Cash
Jul, 31	$4,000
Bal.	$4,000

Account receivable account:

Accounts receivable
Jul, 31	$1,500
Bal.	$1,500

Supplies account:

Supplies
Jul, 31	$500
Bal.	$500

Equipment account:

Equipment
Jul, 31	$5,000
Bal.	$5,000

Accounts payable account:

Accounts payable
	Jul, 31	$4,100
	Bal.	$4,100

Common stock account:

Common stock
	Jul, 31	$3,500
	Bal.	$3,500

Retained earnings account:

Retained earnings
	Jul, 31	$3,400
	Bal.	$3,400

(b)

To determine

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.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To journalize: the transaction as given.

(b)

Expert Solution

Answer to Problem 3.9AP

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 3, 2017	Cash	1,200
	Accounts receivable		1,200
	(To record the cash received from customer )

Table-1

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 5, 2017	Cash	1,300
	Common stock		1,300
	(To record the issuance of common stock)

Table-2

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 6, 2017	Accounts payable	2,700
	Cash		2,700
	(To record the cash paid to creditors)

Table-3

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 7, 2017	Accounts receivable	3,500
	Cash	3,000
	Service revenue		6,500
	(To record the service provided in cash to customer )

Table-4

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 12, 2017	Equipment	1,200
	Accounts payable		800
	Cash		400
	(To record the purchase of equipment on account and in cash )

Table-5

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 14, 2017	Salaries and wages expenses	3,500
	Rent expenses	900
	Advertising expenses	275
	Cash		4,675
	(To record the payment of salaries, rent and advertising expenses for the month August )

Table-6

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 18, 2017	Cash	3,500
	Accounts receivable		3,500
	(To record the cash received from the customer )

Table-7

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 20, 2017	Dividend	500
	Cash		500
	(To record the dividend paid in cash)

Table-8

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 24, 2017	Accounts receivable	1,000
	Service revenue		1,000
	(To record the service performed on account )

Table-9

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 26, 2017	Cash	2,000
	Notes payable		2,000
	(To record the cash received on note payable )

Table-10

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 28, 2017	Utilities	275
	Accounts payable		275
	(To record the utilities expenses on account for the month of August )

Table-11

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 31, 2017	Income tax expenses	500
	Cash		500
	(To record the payment of income tax expenses for the month of August)

Table-12

Explanation of Solution

Aug 3, 2017

Cash is an asset and increased, hence debit cash for $1,200.
Accounts receivable is an asset and decreased, hence credit account receivable for $1,200.

Aug 5, 2017

Cash is an asset and increased, hence debit the cash for $1,300.
Common stock is a component of shareholders’ equity and has increased, hence credit the common stock for $1,300.

Aug 6, 2017

Accounts Payable is a liability and has decreased, hence debit accounts payable for $2,700.
Cash is an asset and has decreased, hence credit cash for $2,700.

Aug 7, 2017

Accounts receivable is an asset and increased, hence debit the account receivable for $3,500.
Cash is an asset and increased, hence debit the cash for $3,000.
Service revenue is a component of shareholders’ equity and has increased, hence credit the service revenue for $6,500.

Aug 12, 2017

Equipment is an asset and has increased, hence debit equipment for $1,200.
Accounts payable is a liability and has increased, hence credit the accounts payable for $800.
Cash is an asset and has decreased, hence credit cash for $400.

Aug 14, 2017

Salary, rent and advertising expenses are component of stockholders’ equity and they are increased, hence debit the salaries and wages expenses, rent and advertising expenses for $3500, $900 and $275 respectively.
Cash is an asset and has decreased, hence credit cash for $4,675.

Aug 18, 2017

Cash is an asset and has increased, hence debit cash for $3,500.
Accounts receivable is an asset and has decreased, hence credit accounts receivable for $3,500.

Aug 20, 2017

Dividend is a component of stockholders’ equity and has increased, hence debit dividend for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Aug 24, 2017

Account receivable is an asset and has increased, hence debit account receivable for $1,000.
Service revenue is a component of stockholders’ equity and has increased, hence credit service revenue for $1,000.

Aug 26, 2017

Cash is an asset and has increased, hence debit cash for $2,000.
Notes payable is a liability and has increased, hence credit the note payable for $2,000.

Aug 27, 2017 - Agree to performed legal services for a client. No entry because no financial transaction has occurred.

Aug 28, 2017

Utilities expense is a component of stockholders’ equity and has increased; hence debit the utilities for $275.
Accounts payable is a liability and has increased, hence credit accounts receivable for $275.

Aug 31, 2017

Income tax expense is a component of stockholders’ equity and has increased; hence debit the income tax expenses for $500.
Cash is an asset and has decreased, hence credit cash for $500.

(c)

To determine

Trial balance:

Trial balance is the list 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.

To post: the transaction to the ledger accounts of HLS Incorporation as on August 31, 2017

(c)

Expert Solution

Explanation of Solution

Account receivable account:

Accounts receivable
Aug, 1 Bal.	$1,500	Aug, 8 Aug, 18	$1,200 $3,500
Aug, 7 Aug, 24	$3,500 $1,000
Total	$6,000	Total	$4,700
Bal.	$1,300

Common stock account:

Common stock
	Aug, 01 Bal.	$3,500
	Aug, 5	$1,300
	Bal.	$4,800

Accounts payable account:

Accounts payable
Aug, 8	$2,700	Aug, 1 Bal. Aug, 12 Aug, 28	$4,100 $800 $275
Total	$2,700	Total	$5,175
		Bal.	$2,475

Service revenue account:

Service revenue

Aug, 7

Aug, 24

$6,500

$1,000

Bal.

$7,500

Equipment account:

Equipment

Aug, 1

Aug, 12

$5,000

$1,200

Bal.

$6,200

Salaries and wages expenses account:

Salaries and wages expenses
Aug, 14	$3,500
Bal.	$3,500

Rent expenses account:

Rent expenses
Aug, 14	$900
Bal.	$900

Advertising expenses account:

Advertising expenses
Aug, 14	$275
Bal.	$275

Dividend account:

Dividend
Aug, 20	$500
Bal.	$500

Dividend account:

Dividends
	Aug, 26	$500
	Bal.	$500

Utilities account:

Utilities
Aug, 28	$275
Bal.	$275

Income tax expenses account:

Income tax expenses
Aug, 31	$500
Bal.	$500

Cash account:

Cash
Aug, 1 Bal.	$4,000	Aug, 6	$2,700
Aug, 3	$1,200	Aug, 12	$ 400
Aug, 5	$ 1,300	Aug, 14	$4,675
Aug, 7 Aug, 18	$3,000 $3,500	Aug, 20 Aug, 31	$ 500 $ 500
Aug, 26	$2,000
Total	$15,000	Total	$8,775
Bal.	$6,225

(d)

To determine

To prepare: a trial balance of HLS Incorporation as on August 31, 2017.

(d)

Expert Solution

Explanation of Solution

Trial balance
HLS Incorporation
August 31, 2017
Particulars	Debit $	Credit $
Common stock		4,800
Equipment	6,200
Retained earnings		3,400
Supplies	500
Accounts payable		2,475
Notes payable		2,000
Dividends	500
Service revenue		7,500
Salaries and wages expenses	3,500
Utilities expenses	275
Rent expenses	900
Advertising expenses	275
Income tax expenses	500
Accounts receivable	1,300
Cash	6,225
	20,175	20,175

Table-13

Conclusion

Thus, the total of debit, and credit columns of a trial balance are $20,175 and agree.

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Answer 3

Question

Chapter 3, Problem 3.9AP

(a)

To determine

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue and expenditure items are recorded.

This account is referred to as the 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:

(a) The title of the account

(b) The left or debit side

(c) The right or credit side

To prepare: The T-accounts to enter the opening balances of HLS Incorporation as on July 31, 2017.

(a)

Expert Solution

Explanation of Solution

Cash account:

Cash
Jul, 31	$4,000
Bal.	$4,000

Account receivable account:

Accounts receivable
Jul, 31	$1,500
Bal.	$1,500

Supplies account:

Supplies
Jul, 31	$500
Bal.	$500

Equipment account:

Equipment
Jul, 31	$5,000
Bal.	$5,000

Accounts payable account:

Accounts payable
	Jul, 31	$4,100
	Bal.	$4,100

Common stock account:

Common stock
	Jul, 31	$3,500
	Bal.	$3,500

Retained earnings account:

Retained earnings
	Jul, 31	$3,400
	Bal.	$3,400

(b)

To determine

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.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To journalize: the transaction as given.

(b)

Expert Solution

Answer to Problem 3.9AP

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 3, 2017	Cash	1,200
	Accounts receivable		1,200
	(To record the cash received from customer )

Table-1

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 5, 2017	Cash	1,300
	Common stock		1,300
	(To record the issuance of common stock)

Table-2

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 6, 2017	Accounts payable	2,700
	Cash		2,700
	(To record the cash paid to creditors)

Table-3

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 7, 2017	Accounts receivable	3,500
	Cash	3,000
	Service revenue		6,500
	(To record the service provided in cash to customer )

Table-4

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 12, 2017	Equipment	1,200
	Accounts payable		800
	Cash		400
	(To record the purchase of equipment on account and in cash )

Table-5

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 14, 2017	Salaries and wages expenses	3,500
	Rent expenses	900
	Advertising expenses	275
	Cash		4,675
	(To record the payment of salaries, rent and advertising expenses for the month August )

Table-6

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 18, 2017	Cash	3,500
	Accounts receivable		3,500
	(To record the cash received from the customer )

Table-7

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 20, 2017	Dividend	500
	Cash		500
	(To record the dividend paid in cash)

Table-8

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 24, 2017	Accounts receivable	1,000
	Service revenue		1,000
	(To record the service performed on account )

Table-9

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 26, 2017	Cash	2,000
	Notes payable		2,000
	(To record the cash received on note payable )

Table-10

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 28, 2017	Utilities	275
	Accounts payable		275
	(To record the utilities expenses on account for the month of August )

Table-11

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 31, 2017	Income tax expenses	500
	Cash		500
	(To record the payment of income tax expenses for the month of August)

Table-12

Explanation of Solution

Aug 3, 2017

Cash is an asset and increased, hence debit cash for $1,200.
Accounts receivable is an asset and decreased, hence credit account receivable for $1,200.

Aug 5, 2017

Cash is an asset and increased, hence debit the cash for $1,300.
Common stock is a component of shareholders’ equity and has increased, hence credit the common stock for $1,300.

Aug 6, 2017

Accounts Payable is a liability and has decreased, hence debit accounts payable for $2,700.
Cash is an asset and has decreased, hence credit cash for $2,700.

Aug 7, 2017

Accounts receivable is an asset and increased, hence debit the account receivable for $3,500.
Cash is an asset and increased, hence debit the cash for $3,000.
Service revenue is a component of shareholders’ equity and has increased, hence credit the service revenue for $6,500.

Aug 12, 2017

Equipment is an asset and has increased, hence debit equipment for $1,200.
Accounts payable is a liability and has increased, hence credit the accounts payable for $800.
Cash is an asset and has decreased, hence credit cash for $400.

Aug 14, 2017

Salary, rent and advertising expenses are component of stockholders’ equity and they are increased, hence debit the salaries and wages expenses, rent and advertising expenses for $3500, $900 and $275 respectively.
Cash is an asset and has decreased, hence credit cash for $4,675.

Aug 18, 2017

Cash is an asset and has increased, hence debit cash for $3,500.
Accounts receivable is an asset and has decreased, hence credit accounts receivable for $3,500.

Aug 20, 2017

Dividend is a component of stockholders’ equity and has increased, hence debit dividend for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Aug 24, 2017

Account receivable is an asset and has increased, hence debit account receivable for $1,000.
Service revenue is a component of stockholders’ equity and has increased, hence credit service revenue for $1,000.

Aug 26, 2017

Cash is an asset and has increased, hence debit cash for $2,000.
Notes payable is a liability and has increased, hence credit the note payable for $2,000.

Aug 27, 2017 - Agree to performed legal services for a client. No entry because no financial transaction has occurred.

Aug 28, 2017

Utilities expense is a component of stockholders’ equity and has increased; hence debit the utilities for $275.
Accounts payable is a liability and has increased, hence credit accounts receivable for $275.

Aug 31, 2017

Income tax expense is a component of stockholders’ equity and has increased; hence debit the income tax expenses for $500.
Cash is an asset and has decreased, hence credit cash for $500.

(c)

To determine

Trial balance:

Trial balance is the list 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.

To post: the transaction to the ledger accounts of HLS Incorporation as on August 31, 2017

(c)

Expert Solution

Explanation of Solution

Account receivable account:

Accounts receivable
Aug, 1 Bal.	$1,500	Aug, 8 Aug, 18	$1,200 $3,500
Aug, 7 Aug, 24	$3,500 $1,000
Total	$6,000	Total	$4,700
Bal.	$1,300

Common stock account:

Common stock
	Aug, 01 Bal.	$3,500
	Aug, 5	$1,300
	Bal.	$4,800

Accounts payable account:

Accounts payable
Aug, 8	$2,700	Aug, 1 Bal. Aug, 12 Aug, 28	$4,100 $800 $275
Total	$2,700	Total	$5,175
		Bal.	$2,475

Service revenue account:

Service revenue

Aug, 7

Aug, 24

$6,500

$1,000

Bal.

$7,500

Equipment account:

Equipment

Aug, 1

Aug, 12

$5,000

$1,200

Bal.

$6,200

Salaries and wages expenses account:

Salaries and wages expenses
Aug, 14	$3,500
Bal.	$3,500

Rent expenses account:

Rent expenses
Aug, 14	$900
Bal.	$900

Advertising expenses account:

Advertising expenses
Aug, 14	$275
Bal.	$275

Dividend account:

Dividend
Aug, 20	$500
Bal.	$500

Dividend account:

Dividends
	Aug, 26	$500
	Bal.	$500

Utilities account:

Utilities
Aug, 28	$275
Bal.	$275

Income tax expenses account:

Income tax expenses
Aug, 31	$500
Bal.	$500

Cash account:

Cash
Aug, 1 Bal.	$4,000	Aug, 6	$2,700
Aug, 3	$1,200	Aug, 12	$ 400
Aug, 5	$ 1,300	Aug, 14	$4,675
Aug, 7 Aug, 18	$3,000 $3,500	Aug, 20 Aug, 31	$ 500 $ 500
Aug, 26	$2,000
Total	$15,000	Total	$8,775
Bal.	$6,225

(d)

To determine

To prepare: a trial balance of HLS Incorporation as on August 31, 2017.

(d)

Expert Solution

Explanation of Solution

Trial balance
HLS Incorporation
August 31, 2017
Particulars	Debit $	Credit $
Common stock		4,800
Equipment	6,200
Retained earnings		3,400
Supplies	500
Accounts payable		2,475
Notes payable		2,000
Dividends	500
Service revenue		7,500
Salaries and wages expenses	3,500
Utilities expenses	275
Rent expenses	900
Advertising expenses	275
Income tax expenses	500
Accounts receivable	1,300
Cash	6,225
	20,175	20,175

Table-13

Conclusion

Thus, the total of debit, and credit columns of a trial balance are $20,175 and agree.

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Answer 4

Question

Chapter 3, Problem 3.9AP

(a)

To determine

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue and expenditure items are recorded.

This account is referred to as the 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:

(a) The title of the account

(b) The left or debit side

(c) The right or credit side

To prepare: The T-accounts to enter the opening balances of HLS Incorporation as on July 31, 2017.

(a)

Expert Solution

Explanation of Solution

Cash account:

Cash
Jul, 31	$4,000
Bal.	$4,000

Account receivable account:

Accounts receivable
Jul, 31	$1,500
Bal.	$1,500

Supplies account:

Supplies
Jul, 31	$500
Bal.	$500

Equipment account:

Equipment
Jul, 31	$5,000
Bal.	$5,000

Accounts payable account:

Accounts payable
	Jul, 31	$4,100
	Bal.	$4,100

Common stock account:

Common stock
	Jul, 31	$3,500
	Bal.	$3,500

Retained earnings account:

Retained earnings
	Jul, 31	$3,400
	Bal.	$3,400

(b)

To determine

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.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To journalize: the transaction as given.

(b)

Expert Solution

Answer to Problem 3.9AP

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 3, 2017	Cash	1,200
	Accounts receivable		1,200
	(To record the cash received from customer )

Table-1

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 5, 2017	Cash	1,300
	Common stock		1,300
	(To record the issuance of common stock)

Table-2

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 6, 2017	Accounts payable	2,700
	Cash		2,700
	(To record the cash paid to creditors)

Table-3

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 7, 2017	Accounts receivable	3,500
	Cash	3,000
	Service revenue		6,500
	(To record the service provided in cash to customer )

Table-4

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 12, 2017	Equipment	1,200
	Accounts payable		800
	Cash		400
	(To record the purchase of equipment on account and in cash )

Table-5

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 14, 2017	Salaries and wages expenses	3,500
	Rent expenses	900
	Advertising expenses	275
	Cash		4,675
	(To record the payment of salaries, rent and advertising expenses for the month August )

Table-6

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 18, 2017	Cash	3,500
	Accounts receivable		3,500
	(To record the cash received from the customer )

Table-7

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 20, 2017	Dividend	500
	Cash		500
	(To record the dividend paid in cash)

Table-8

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 24, 2017	Accounts receivable	1,000
	Service revenue		1,000
	(To record the service performed on account )

Table-9

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 26, 2017	Cash	2,000
	Notes payable		2,000
	(To record the cash received on note payable )

Table-10

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 28, 2017	Utilities	275
	Accounts payable		275
	(To record the utilities expenses on account for the month of August )

Table-11

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 31, 2017	Income tax expenses	500
	Cash		500
	(To record the payment of income tax expenses for the month of August)

Table-12

Explanation of Solution

Aug 3, 2017

Cash is an asset and increased, hence debit cash for $1,200.
Accounts receivable is an asset and decreased, hence credit account receivable for $1,200.

Aug 5, 2017

Cash is an asset and increased, hence debit the cash for $1,300.
Common stock is a component of shareholders’ equity and has increased, hence credit the common stock for $1,300.

Aug 6, 2017

Accounts Payable is a liability and has decreased, hence debit accounts payable for $2,700.
Cash is an asset and has decreased, hence credit cash for $2,700.

Aug 7, 2017

Accounts receivable is an asset and increased, hence debit the account receivable for $3,500.
Cash is an asset and increased, hence debit the cash for $3,000.
Service revenue is a component of shareholders’ equity and has increased, hence credit the service revenue for $6,500.

Aug 12, 2017

Equipment is an asset and has increased, hence debit equipment for $1,200.
Accounts payable is a liability and has increased, hence credit the accounts payable for $800.
Cash is an asset and has decreased, hence credit cash for $400.

Aug 14, 2017

Salary, rent and advertising expenses are component of stockholders’ equity and they are increased, hence debit the salaries and wages expenses, rent and advertising expenses for $3500, $900 and $275 respectively.
Cash is an asset and has decreased, hence credit cash for $4,675.

Aug 18, 2017

Cash is an asset and has increased, hence debit cash for $3,500.
Accounts receivable is an asset and has decreased, hence credit accounts receivable for $3,500.

Aug 20, 2017

Dividend is a component of stockholders’ equity and has increased, hence debit dividend for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Aug 24, 2017

Account receivable is an asset and has increased, hence debit account receivable for $1,000.
Service revenue is a component of stockholders’ equity and has increased, hence credit service revenue for $1,000.

Aug 26, 2017

Cash is an asset and has increased, hence debit cash for $2,000.
Notes payable is a liability and has increased, hence credit the note payable for $2,000.

Aug 27, 2017 - Agree to performed legal services for a client. No entry because no financial transaction has occurred.

Aug 28, 2017

Utilities expense is a component of stockholders’ equity and has increased; hence debit the utilities for $275.
Accounts payable is a liability and has increased, hence credit accounts receivable for $275.

Aug 31, 2017

Income tax expense is a component of stockholders’ equity and has increased; hence debit the income tax expenses for $500.
Cash is an asset and has decreased, hence credit cash for $500.

(c)

To determine

Trial balance:

Trial balance is the list 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.

To post: the transaction to the ledger accounts of HLS Incorporation as on August 31, 2017

(c)

Expert Solution

Explanation of Solution

Account receivable account:

Accounts receivable
Aug, 1 Bal.	$1,500	Aug, 8 Aug, 18	$1,200 $3,500
Aug, 7 Aug, 24	$3,500 $1,000
Total	$6,000	Total	$4,700
Bal.	$1,300

Common stock account:

Common stock
	Aug, 01 Bal.	$3,500
	Aug, 5	$1,300
	Bal.	$4,800

Accounts payable account:

Accounts payable
Aug, 8	$2,700	Aug, 1 Bal. Aug, 12 Aug, 28	$4,100 $800 $275
Total	$2,700	Total	$5,175
		Bal.	$2,475

Service revenue account:

Service revenue

Aug, 7

Aug, 24

$6,500

$1,000

Bal.

$7,500

Equipment account:

Equipment

Aug, 1

Aug, 12

$5,000

$1,200

Bal.

$6,200

Salaries and wages expenses account:

Salaries and wages expenses
Aug, 14	$3,500
Bal.	$3,500

Rent expenses account:

Rent expenses
Aug, 14	$900
Bal.	$900

Advertising expenses account:

Advertising expenses
Aug, 14	$275
Bal.	$275

Dividend account:

Dividend
Aug, 20	$500
Bal.	$500

Dividend account:

Dividends
	Aug, 26	$500
	Bal.	$500

Utilities account:

Utilities
Aug, 28	$275
Bal.	$275

Income tax expenses account:

Income tax expenses
Aug, 31	$500
Bal.	$500

Cash account:

Cash
Aug, 1 Bal.	$4,000	Aug, 6	$2,700
Aug, 3	$1,200	Aug, 12	$ 400
Aug, 5	$ 1,300	Aug, 14	$4,675
Aug, 7 Aug, 18	$3,000 $3,500	Aug, 20 Aug, 31	$ 500 $ 500
Aug, 26	$2,000
Total	$15,000	Total	$8,775
Bal.	$6,225

(d)

To determine

To prepare: a trial balance of HLS Incorporation as on August 31, 2017.

(d)

Expert Solution

Explanation of Solution

Trial balance
HLS Incorporation
August 31, 2017
Particulars	Debit $	Credit $
Common stock		4,800
Equipment	6,200
Retained earnings		3,400
Supplies	500
Accounts payable		2,475
Notes payable		2,000
Dividends	500
Service revenue		7,500
Salaries and wages expenses	3,500
Utilities expenses	275
Rent expenses	900
Advertising expenses	275
Income tax expenses	500
Accounts receivable	1,300
Cash	6,225
	20,175	20,175

Table-13

Conclusion

Thus, the total of debit, and credit columns of a trial balance are $20,175 and agree.

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Answer 5

Chapter 3, Problem 3.9AP

(a)

To determine

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue and expenditure items are recorded.

This account is referred to as the 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:

(a) The title of the account

(b) The left or debit side

(c) The right or credit side

To prepare: The T-accounts to enter the opening balances of HLS Incorporation as on July 31, 2017.

(a)

Expert Solution

Explanation of Solution

Cash account:

Cash
Jul, 31	$4,000
Bal.	$4,000

Account receivable account:

Accounts receivable
Jul, 31	$1,500
Bal.	$1,500

Supplies account:

Supplies
Jul, 31	$500
Bal.	$500

Equipment account:

Equipment
Jul, 31	$5,000
Bal.	$5,000

Accounts payable account:

Accounts payable
	Jul, 31	$4,100
	Bal.	$4,100

Common stock account:

Common stock
	Jul, 31	$3,500
	Bal.	$3,500

Retained earnings account:

Retained earnings
	Jul, 31	$3,400
	Bal.	$3,400

(b)

To determine

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.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To journalize: the transaction as given.

(b)

Expert Solution

Answer to Problem 3.9AP

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 3, 2017	Cash	1,200
	Accounts receivable		1,200
	(To record the cash received from customer )

Table-1

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 5, 2017	Cash	1,300
	Common stock		1,300
	(To record the issuance of common stock)

Table-2

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 6, 2017	Accounts payable	2,700
	Cash		2,700
	(To record the cash paid to creditors)

Table-3

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 7, 2017	Accounts receivable	3,500
	Cash	3,000
	Service revenue		6,500
	(To record the service provided in cash to customer )

Table-4

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 12, 2017	Equipment	1,200
	Accounts payable		800
	Cash		400
	(To record the purchase of equipment on account and in cash )

Table-5

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 14, 2017	Salaries and wages expenses	3,500
	Rent expenses	900
	Advertising expenses	275
	Cash		4,675
	(To record the payment of salaries, rent and advertising expenses for the month August )

Table-6

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 18, 2017	Cash	3,500
	Accounts receivable		3,500
	(To record the cash received from the customer )

Table-7

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 20, 2017	Dividend	500
	Cash		500
	(To record the dividend paid in cash)

Table-8

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 24, 2017	Accounts receivable	1,000
	Service revenue		1,000
	(To record the service performed on account )

Table-9

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 26, 2017	Cash	2,000
	Notes payable		2,000
	(To record the cash received on note payable )

Table-10

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 28, 2017	Utilities	275
	Accounts payable		275
	(To record the utilities expenses on account for the month of August )

Table-11

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 31, 2017	Income tax expenses	500
	Cash		500
	(To record the payment of income tax expenses for the month of August)

Table-12

Explanation of Solution

Aug 3, 2017

Cash is an asset and increased, hence debit cash for $1,200.
Accounts receivable is an asset and decreased, hence credit account receivable for $1,200.

Aug 5, 2017

Cash is an asset and increased, hence debit the cash for $1,300.
Common stock is a component of shareholders’ equity and has increased, hence credit the common stock for $1,300.

Aug 6, 2017

Accounts Payable is a liability and has decreased, hence debit accounts payable for $2,700.
Cash is an asset and has decreased, hence credit cash for $2,700.

Aug 7, 2017

Accounts receivable is an asset and increased, hence debit the account receivable for $3,500.
Cash is an asset and increased, hence debit the cash for $3,000.
Service revenue is a component of shareholders’ equity and has increased, hence credit the service revenue for $6,500.

Aug 12, 2017

Equipment is an asset and has increased, hence debit equipment for $1,200.
Accounts payable is a liability and has increased, hence credit the accounts payable for $800.
Cash is an asset and has decreased, hence credit cash for $400.

Aug 14, 2017

Salary, rent and advertising expenses are component of stockholders’ equity and they are increased, hence debit the salaries and wages expenses, rent and advertising expenses for $3500, $900 and $275 respectively.
Cash is an asset and has decreased, hence credit cash for $4,675.

Aug 18, 2017

Cash is an asset and has increased, hence debit cash for $3,500.
Accounts receivable is an asset and has decreased, hence credit accounts receivable for $3,500.

Aug 20, 2017

Dividend is a component of stockholders’ equity and has increased, hence debit dividend for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Aug 24, 2017

Account receivable is an asset and has increased, hence debit account receivable for $1,000.
Service revenue is a component of stockholders’ equity and has increased, hence credit service revenue for $1,000.

Aug 26, 2017

Cash is an asset and has increased, hence debit cash for $2,000.
Notes payable is a liability and has increased, hence credit the note payable for $2,000.

Aug 27, 2017 - Agree to performed legal services for a client. No entry because no financial transaction has occurred.

Aug 28, 2017

Utilities expense is a component of stockholders’ equity and has increased; hence debit the utilities for $275.
Accounts payable is a liability and has increased, hence credit accounts receivable for $275.

Aug 31, 2017

Income tax expense is a component of stockholders’ equity and has increased; hence debit the income tax expenses for $500.
Cash is an asset and has decreased, hence credit cash for $500.

(c)

To determine

Trial balance:

Trial balance is the list 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.

To post: the transaction to the ledger accounts of HLS Incorporation as on August 31, 2017

(c)

Expert Solution

Explanation of Solution

Account receivable account:

Accounts receivable
Aug, 1 Bal.	$1,500	Aug, 8 Aug, 18	$1,200 $3,500
Aug, 7 Aug, 24	$3,500 $1,000
Total	$6,000	Total	$4,700
Bal.	$1,300

Common stock account:

Common stock
	Aug, 01 Bal.	$3,500
	Aug, 5	$1,300
	Bal.	$4,800

Accounts payable account:

Accounts payable
Aug, 8	$2,700	Aug, 1 Bal. Aug, 12 Aug, 28	$4,100 $800 $275
Total	$2,700	Total	$5,175
		Bal.	$2,475

Service revenue account:

Service revenue

Aug, 7

Aug, 24

$6,500

$1,000

Bal.

$7,500

Equipment account:

Equipment

Aug, 1

Aug, 12

$5,000

$1,200

Bal.

$6,200

Salaries and wages expenses account:

Salaries and wages expenses
Aug, 14	$3,500
Bal.	$3,500

Rent expenses account:

Rent expenses
Aug, 14	$900
Bal.	$900

Advertising expenses account:

Advertising expenses
Aug, 14	$275
Bal.	$275

Dividend account:

Dividend
Aug, 20	$500
Bal.	$500

Dividend account:

Dividends
	Aug, 26	$500
	Bal.	$500

Utilities account:

Utilities
Aug, 28	$275
Bal.	$275

Income tax expenses account:

Income tax expenses
Aug, 31	$500
Bal.	$500

Cash account:

Cash
Aug, 1 Bal.	$4,000	Aug, 6	$2,700
Aug, 3	$1,200	Aug, 12	$ 400
Aug, 5	$ 1,300	Aug, 14	$4,675
Aug, 7 Aug, 18	$3,000 $3,500	Aug, 20 Aug, 31	$ 500 $ 500
Aug, 26	$2,000
Total	$15,000	Total	$8,775
Bal.	$6,225

(d)

To determine

To prepare: a trial balance of HLS Incorporation as on August 31, 2017.

(d)

Expert Solution

Explanation of Solution

Trial balance
HLS Incorporation
August 31, 2017
Particulars	Debit $	Credit $
Common stock		4,800
Equipment	6,200
Retained earnings		3,400
Supplies	500
Accounts payable		2,475
Notes payable		2,000
Dividends	500
Service revenue		7,500
Salaries and wages expenses	3,500
Utilities expenses	275
Rent expenses	900
Advertising expenses	275
Income tax expenses	500
Accounts receivable	1,300
Cash	6,225
	20,175	20,175

Table-13

Conclusion

Thus, the total of debit, and credit columns of a trial balance are $20,175 and agree.

Answer 6

Chapter 3, Problem 3.9AP

(a)

To determine

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue and expenditure items are recorded.

This account is referred to as the 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:

(a) The title of the account

(b) The left or debit side

(c) The right or credit side

To prepare: The T-accounts to enter the opening balances of HLS Incorporation as on July 31, 2017.

(a)

Expert Solution

Explanation of Solution

Cash account:

Cash
Jul, 31	$4,000
Bal.	$4,000

Account receivable account:

Accounts receivable
Jul, 31	$1,500
Bal.	$1,500

Supplies account:

Supplies
Jul, 31	$500
Bal.	$500

Equipment account:

Equipment
Jul, 31	$5,000
Bal.	$5,000

Accounts payable account:

Accounts payable
	Jul, 31	$4,100
	Bal.	$4,100

Common stock account:

Common stock
	Jul, 31	$3,500
	Bal.	$3,500

Retained earnings account:

Retained earnings
	Jul, 31	$3,400
	Bal.	$3,400

Answer 7

Chapter 3, Problem 3.9AP

(a)

To determine

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue and expenditure items are recorded.

This account is referred to as the 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:

(a) The title of the account

(b) The left or debit side

(c) The right or credit side

To prepare: The T-accounts to enter the opening balances of HLS Incorporation as on July 31, 2017.

Answer 8

(a)

Expert Solution

Explanation of Solution

Cash account:

Cash
Jul, 31	$4,000
Bal.	$4,000

Account receivable account:

Accounts receivable
Jul, 31	$1,500
Bal.	$1,500

Supplies account:

Supplies
Jul, 31	$500
Bal.	$500

Equipment account:

Equipment
Jul, 31	$5,000
Bal.	$5,000

Accounts payable account:

Accounts payable
	Jul, 31	$4,100
	Bal.	$4,100

Common stock account:

Common stock
	Jul, 31	$3,500
	Bal.	$3,500

Retained earnings account:

Retained earnings
	Jul, 31	$3,400
	Bal.	$3,400

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

(b)

To determine

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.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To journalize: the transaction as given.

(b)

Expert Solution

Answer to Problem 3.9AP

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 3, 2017	Cash	1,200
	Accounts receivable		1,200
	(To record the cash received from customer )

Table-1

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 5, 2017	Cash	1,300
	Common stock		1,300
	(To record the issuance of common stock)

Table-2

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 6, 2017	Accounts payable	2,700
	Cash		2,700
	(To record the cash paid to creditors)

Table-3

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 7, 2017	Accounts receivable	3,500
	Cash	3,000
	Service revenue		6,500
	(To record the service provided in cash to customer )

Table-4

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 12, 2017	Equipment	1,200
	Accounts payable		800
	Cash		400
	(To record the purchase of equipment on account and in cash )

Table-5

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 14, 2017	Salaries and wages expenses	3,500
	Rent expenses	900
	Advertising expenses	275
	Cash		4,675
	(To record the payment of salaries, rent and advertising expenses for the month August )

Table-6

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 18, 2017	Cash	3,500
	Accounts receivable		3,500
	(To record the cash received from the customer )

Table-7

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 20, 2017	Dividend	500
	Cash		500
	(To record the dividend paid in cash)

Table-8

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 24, 2017	Accounts receivable	1,000
	Service revenue		1,000
	(To record the service performed on account )

Table-9

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 26, 2017	Cash	2,000
	Notes payable		2,000
	(To record the cash received on note payable )

Table-10

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 28, 2017	Utilities	275
	Accounts payable		275
	(To record the utilities expenses on account for the month of August )

Table-11

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 31, 2017	Income tax expenses	500
	Cash		500
	(To record the payment of income tax expenses for the month of August)

Table-12

Explanation of Solution

Aug 3, 2017

Cash is an asset and increased, hence debit cash for $1,200.
Accounts receivable is an asset and decreased, hence credit account receivable for $1,200.

Aug 5, 2017

Cash is an asset and increased, hence debit the cash for $1,300.
Common stock is a component of shareholders’ equity and has increased, hence credit the common stock for $1,300.

Aug 6, 2017

Accounts Payable is a liability and has decreased, hence debit accounts payable for $2,700.
Cash is an asset and has decreased, hence credit cash for $2,700.

Aug 7, 2017

Accounts receivable is an asset and increased, hence debit the account receivable for $3,500.
Cash is an asset and increased, hence debit the cash for $3,000.
Service revenue is a component of shareholders’ equity and has increased, hence credit the service revenue for $6,500.

Aug 12, 2017

Equipment is an asset and has increased, hence debit equipment for $1,200.
Accounts payable is a liability and has increased, hence credit the accounts payable for $800.
Cash is an asset and has decreased, hence credit cash for $400.

Aug 14, 2017

Salary, rent and advertising expenses are component of stockholders’ equity and they are increased, hence debit the salaries and wages expenses, rent and advertising expenses for $3500, $900 and $275 respectively.
Cash is an asset and has decreased, hence credit cash for $4,675.

Aug 18, 2017

Cash is an asset and has increased, hence debit cash for $3,500.
Accounts receivable is an asset and has decreased, hence credit accounts receivable for $3,500.

Aug 20, 2017

Dividend is a component of stockholders’ equity and has increased, hence debit dividend for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Aug 24, 2017

Account receivable is an asset and has increased, hence debit account receivable for $1,000.
Service revenue is a component of stockholders’ equity and has increased, hence credit service revenue for $1,000.

Aug 26, 2017

Cash is an asset and has increased, hence debit cash for $2,000.
Notes payable is a liability and has increased, hence credit the note payable for $2,000.

Aug 27, 2017 - Agree to performed legal services for a client. No entry because no financial transaction has occurred.

Aug 28, 2017

Utilities expense is a component of stockholders’ equity and has increased; hence debit the utilities for $275.
Accounts payable is a liability and has increased, hence credit accounts receivable for $275.

Aug 31, 2017

Income tax expense is a component of stockholders’ equity and has increased; hence debit the income tax expenses for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Answer 13

(b)

To determine

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.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To journalize: the transaction as given.

Answer 14

(b)

Expert Solution

Answer to Problem 3.9AP

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 3, 2017	Cash	1,200
	Accounts receivable		1,200
	(To record the cash received from customer )

Table-1

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 5, 2017	Cash	1,300
	Common stock		1,300
	(To record the issuance of common stock)

Table-2

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 6, 2017	Accounts payable	2,700
	Cash		2,700
	(To record the cash paid to creditors)

Table-3

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 7, 2017	Accounts receivable	3,500
	Cash	3,000
	Service revenue		6,500
	(To record the service provided in cash to customer )

Table-4

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 12, 2017	Equipment	1,200
	Accounts payable		800
	Cash		400
	(To record the purchase of equipment on account and in cash )

Table-5

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 14, 2017	Salaries and wages expenses	3,500
	Rent expenses	900
	Advertising expenses	275
	Cash		4,675
	(To record the payment of salaries, rent and advertising expenses for the month August )

Table-6

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 18, 2017	Cash	3,500
	Accounts receivable		3,500
	(To record the cash received from the customer )

Table-7

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 20, 2017	Dividend	500
	Cash		500
	(To record the dividend paid in cash)

Table-8

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 24, 2017	Accounts receivable	1,000
	Service revenue		1,000
	(To record the service performed on account )

Table-9

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 26, 2017	Cash	2,000
	Notes payable		2,000
	(To record the cash received on note payable )

Table-10

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 28, 2017	Utilities	275
	Accounts payable		275
	(To record the utilities expenses on account for the month of August )

Table-11

Date	Account Title and Explanation	Debit ($)	Credit ($)
Aug 31, 2017	Income tax expenses	500
	Cash		500
	(To record the payment of income tax expenses for the month of August)

Table-12

Answer 15

(b)

Expert Solution

Answer 16

(b)

Expert Solution

Answer 17

Expert Solution

Answer 18

Explanation of Solution

Aug 3, 2017

Cash is an asset and increased, hence debit cash for $1,200.
Accounts receivable is an asset and decreased, hence credit account receivable for $1,200.

Aug 5, 2017

Cash is an asset and increased, hence debit the cash for $1,300.
Common stock is a component of shareholders’ equity and has increased, hence credit the common stock for $1,300.

Aug 6, 2017

Accounts Payable is a liability and has decreased, hence debit accounts payable for $2,700.
Cash is an asset and has decreased, hence credit cash for $2,700.

Aug 7, 2017

Accounts receivable is an asset and increased, hence debit the account receivable for $3,500.
Cash is an asset and increased, hence debit the cash for $3,000.
Service revenue is a component of shareholders’ equity and has increased, hence credit the service revenue for $6,500.

Aug 12, 2017

Equipment is an asset and has increased, hence debit equipment for $1,200.
Accounts payable is a liability and has increased, hence credit the accounts payable for $800.
Cash is an asset and has decreased, hence credit cash for $400.

Aug 14, 2017

Salary, rent and advertising expenses are component of stockholders’ equity and they are increased, hence debit the salaries and wages expenses, rent and advertising expenses for $3500, $900 and $275 respectively.
Cash is an asset and has decreased, hence credit cash for $4,675.

Aug 18, 2017

Cash is an asset and has increased, hence debit cash for $3,500.
Accounts receivable is an asset and has decreased, hence credit accounts receivable for $3,500.

Aug 20, 2017

Dividend is a component of stockholders’ equity and has increased, hence debit dividend for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Aug 24, 2017

Account receivable is an asset and has increased, hence debit account receivable for $1,000.
Service revenue is a component of stockholders’ equity and has increased, hence credit service revenue for $1,000.

Aug 26, 2017

Cash is an asset and has increased, hence debit cash for $2,000.
Notes payable is a liability and has increased, hence credit the note payable for $2,000.

Aug 27, 2017 - Agree to performed legal services for a client. No entry because no financial transaction has occurred.

Aug 28, 2017

Utilities expense is a component of stockholders’ equity and has increased; hence debit the utilities for $275.
Accounts payable is a liability and has increased, hence credit accounts receivable for $275.

Aug 31, 2017

Income tax expense is a component of stockholders’ equity and has increased; hence debit the income tax expenses for $500.
Cash is an asset and has decreased, hence credit cash for $500.

Answer 19

(c)

To determine

Trial balance:

Trial balance is the list 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.

To post: the transaction to the ledger accounts of HLS Incorporation as on August 31, 2017

(c)

Expert Solution

Explanation of Solution

Account receivable account:

Accounts receivable
Aug, 1 Bal.	$1,500	Aug, 8 Aug, 18	$1,200 $3,500
Aug, 7 Aug, 24	$3,500 $1,000
Total	$6,000	Total	$4,700
Bal.	$1,300

Common stock account:

Common stock
	Aug, 01 Bal.	$3,500
	Aug, 5	$1,300
	Bal.	$4,800

Accounts payable account:

Accounts payable
Aug, 8	$2,700	Aug, 1 Bal. Aug, 12 Aug, 28	$4,100 $800 $275
Total	$2,700	Total	$5,175
		Bal.	$2,475

Service revenue account:

Service revenue

Aug, 7

Aug, 24

$6,500

$1,000

Bal.

$7,500

Equipment account:

Equipment

Aug, 1

Aug, 12

$5,000

$1,200

Bal.

$6,200

Salaries and wages expenses account:

Salaries and wages expenses
Aug, 14	$3,500
Bal.	$3,500

Rent expenses account:

Rent expenses
Aug, 14	$900
Bal.	$900

Advertising expenses account:

Advertising expenses
Aug, 14	$275
Bal.	$275

Dividend account:

Dividend
Aug, 20	$500
Bal.	$500

Dividend account:

Dividends
	Aug, 26	$500
	Bal.	$500

Utilities account:

Utilities
Aug, 28	$275
Bal.	$275

Income tax expenses account:

Income tax expenses
Aug, 31	$500
Bal.	$500

Cash account:

Cash
Aug, 1 Bal.	$4,000	Aug, 6	$2,700
Aug, 3	$1,200	Aug, 12	$ 400
Aug, 5	$ 1,300	Aug, 14	$4,675
Aug, 7 Aug, 18	$3,000 $3,500	Aug, 20 Aug, 31	$ 500 $ 500
Aug, 26	$2,000
Total	$15,000	Total	$8,775
Bal.	$6,225

Answer 20

(c)

To determine

Trial balance:

Trial balance is the list 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.

To post: the transaction to the ledger accounts of HLS Incorporation as on August 31, 2017

Answer 21

(c)

Expert Solution

Explanation of Solution

Account receivable account:

Accounts receivable
Aug, 1 Bal.	$1,500	Aug, 8 Aug, 18	$1,200 $3,500
Aug, 7 Aug, 24	$3,500 $1,000
Total	$6,000	Total	$4,700
Bal.	$1,300

Common stock account:

Common stock
	Aug, 01 Bal.	$3,500
	Aug, 5	$1,300
	Bal.	$4,800

Accounts payable account:

Accounts payable
Aug, 8	$2,700	Aug, 1 Bal. Aug, 12 Aug, 28	$4,100 $800 $275
Total	$2,700	Total	$5,175
		Bal.	$2,475

Service revenue account:

Service revenue

Aug, 7

Aug, 24

$6,500

$1,000

Bal.

$7,500

Equipment account:

Equipment

Aug, 1

Aug, 12

$5,000

$1,200

Bal.

$6,200

Salaries and wages expenses account:

Salaries and wages expenses
Aug, 14	$3,500
Bal.	$3,500

Rent expenses account:

Rent expenses
Aug, 14	$900
Bal.	$900

Advertising expenses account:

Advertising expenses
Aug, 14	$275
Bal.	$275

Dividend account:

Dividend
Aug, 20	$500
Bal.	$500

Dividend account:

Dividends
	Aug, 26	$500
	Bal.	$500

Utilities account:

Utilities
Aug, 28	$275
Bal.	$275

Income tax expenses account:

Income tax expenses
Aug, 31	$500
Bal.	$500

Cash account:

Cash
Aug, 1 Bal.	$4,000	Aug, 6	$2,700
Aug, 3	$1,200	Aug, 12	$ 400
Aug, 5	$ 1,300	Aug, 14	$4,675
Aug, 7 Aug, 18	$3,000 $3,500	Aug, 20 Aug, 31	$ 500 $ 500
Aug, 26	$2,000
Total	$15,000	Total	$8,775
Bal.	$6,225

Answer 22

(c)

Expert Solution

Answer 23

(c)

Expert Solution

Answer 24

Expert Solution

Answer 25

(d)

To determine

To prepare: a trial balance of HLS Incorporation as on August 31, 2017.

(d)

Expert Solution

Explanation of Solution

Trial balance
HLS Incorporation
August 31, 2017
Particulars	Debit $	Credit $
Common stock		4,800
Equipment	6,200
Retained earnings		3,400
Supplies	500
Accounts payable		2,475
Notes payable		2,000
Dividends	500
Service revenue		7,500
Salaries and wages expenses	3,500
Utilities expenses	275
Rent expenses	900
Advertising expenses	275
Income tax expenses	500
Accounts receivable	1,300
Cash	6,225
	20,175	20,175

Table-13

Conclusion

Thus, the total of debit, and credit columns of a trial balance are $20,175 and agree.

Answer 26

(d)

To determine

To prepare: a trial balance of HLS Incorporation as on August 31, 2017.

Answer 27

(d)

Expert Solution

Explanation of Solution

Trial balance
HLS Incorporation
August 31, 2017
Particulars	Debit $	Credit $
Common stock		4,800
Equipment	6,200
Retained earnings		3,400
Supplies	500
Accounts payable		2,475
Notes payable		2,000
Dividends	500
Service revenue		7,500
Salaries and wages expenses	3,500
Utilities expenses	275
Rent expenses	900
Advertising expenses	275
Income tax expenses	500
Accounts receivable	1,300
Cash	6,225
	20,175	20,175

Table-13

Answer 28

(d)

Expert Solution

Answer 29

(d)

Expert Solution

Answer 30

Expert Solution

Answer 31

Conclusion

Thus, the total of debit, and credit columns of a trial balance are $20,175 and agree.

Answer 32

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Answer to Problem 3.9AP

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Explanation of Solution

To prepare: a trial balance of HLS Incorporation as on August 31, 2017.

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