Body Firm Trial Balance April 30, 20

Transcription

1 SOLUTION (continued) Body Firm Trial Balance April 30, NAME Cash 9,076 Land 64,000 Building 96,000 Equipment 31,550 Accounts Payable 2,840 Mortgage Payable 99,000 C. Bela, Capital 100,000 C. Bela, Drawing 600 Income from Services 1,152 Wages Expense 833 Utilities Expense 129 Advertising Expense 708 Repair Expense , ,992 DISCUSSION QUESTIONS Suggested Responses 1. The journal is called a book of original entry because transactions are recorded first in the journal in chronological order chronological, like a diary. 2. The journal contains transactions recorded chronologically. The ledger contains the amounts posted from the journal in accounts listed in chart of accounts order. 3. The purpose of providing a ledger account for each account is to maintain a complete record summarizing the transactions affecting each account. 4. The order of account classifications in the general ledger is Assets, Liabilities, Owner s Equity, Revenues, Expenses. 5. The order of the steps in the posting process is c, b, d, a. 6. Cross-referencing in the posting process means that the page number listed in the Post. Ref. column of the ledger account indicates where the posted number came from and the ledger account number listed in the Post. Ref. column of the journal indicates where the number in the journal was posted. 7. The source document is proof that a transaction happened; source documents include checks, invoices, receipts, letters, and memos. 8. (a) 4, (b) 5, (c) 3, (d) 1, (e) Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 67

2 EXERCISES Exercise G 5. P H 6. M L 7. I J 8. K Exercise 3-2 GENERAL JOURNAL PAGE DESCRIPTION Oct. 7 Cash Accounts Receivable Received on account from 4 5 Ron Hoyt, Inv. No Accounts Payable Cash Paid on account to Modern 9 10 Ideas, Ck. No B. Bunge, Drawing Cash Withdrew for personal use, Ck. No Store Supplies Expense Office Supplies Expense Accounts Payable Bought on account from Wegner Office Supply, Inv. No Cash 4, Equipment 2, B. Bunge, Capital 7, Investments by owner Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

3 Exercise 3-3 GENERAL JOURNAL PAGE DESCRIPTION Mar. 1 Equipment 5, Cash 3, Accounts Payable 2, Bought equipment 5 6 from Teaching Suppliers, 6 7 Ck. No Wages Expense 1, Cash 1, Paid first week's wages, Ck. No Cash 1, Service Income 1, Sold services to Mason District, Sales Inv. No Accounts Receivable 1, Service Income 1, Sold services on account to Tempe School, Sales Inv No Accounts Payable Cash Paid on account to Teaching Suppliers, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 69

4 Exercise 3-4 Cash NO. 111 GENERAL LEDGER May 1 6 8, , , , , , , , , , , , , , , Exercise 3-5 d, b, a, e, c Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

5 Exercise 3-6 Nevado Company Trial Balance June 30, NAME Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable M. Nevado, Capital M. Nevado, Drawing Professional Fees Supplies Expense Rent Expense Miscellaneous Expense 4,700 3, ,300 6, ,240 2,200 12,500 17,540 32,240 Notes: a. Cash account with normal balance $8,000 $3,300 = $4,700. b. Decrease Accounts Payable by $500 that was not posted. c. Change Accounts Receivable s $8,300 to $3,800 to correct the transposition. d. Subtract the $1,500 withdrawal by the owner from Miscellaneous Expense and add it to the drawing account ($1,800 $1,500 = $300 and $4,890 + $1,500 = $6,390). Exercise 3-7 DESCRIPTION TOTAL REVENUE TOTAL EXPENSES NET INCOME 0. Example: A check for $325 was written to pay on account. The accountant debited Rent Expense for $325 and credited Cash for $325. NA O U a. $420 was received on account from customers. The accountant debited Cash for $420 and credited Professional Fees for $420. O NA O b. The owner withdrew $1,200 for personal use. The accountant debited Wages Expense for $1,200 and credited Cash for $1,200. NA O U c. A check was written for $1,250 to pay the rent. The accountant debited Rent Expense for $1,520 and credited Cash for $1,520. NA O U d. $1,800 was received on account from customers. The accountant debited Cash for $1,800 and credited the Capital account for $1,800. NA NA NA e. A check was written for $225 to pay the phone bill received and recorded earlier in the month. The accountant debited Phone Expense for $225 and Cash for $225. NA O U 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 71

6 Exercise 3-8 GENERAL JOURNAL PAGE 12 DESCRIPTION 1 Office 1 2 a. Store Equipment Cash Bought office equipment b. Office Supplies Expense Cash Bought office supplies (One-Step Approach) 11 c. Repair Expense Equipment To correct error in which Equipment was debited instead of Repair Expense d. Prepaid Insurance Cash To correct error in which a $750 payment was recorded as $ (Two-Step Approach) 24 c. Cash Equipment Error was made to Equipment and Repair Expense Repair Expense Cash Correct entry to record equipment repair d. Cash Prepaid Insurance To undo entry of $660, which should have been $ Prepaid Insurance Cash To correct entry of $660, which should have been $ Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

7 Problem 3-1A GENERAL JOURNAL PAGE 31 DESCRIPTION Oct. 1 Prepaid Insurance 1, Cash 1, Liability insurance for one year, 4 5 Ck. No Advertising Expense Accounts Payable Received a bill from 9 10 Business Summary Rent Expense 1, Cash 1, Paid month's rent, Ck. No Repair Expense Accounts Payable Received a bill for equipment repair from Fix-It Service, Inv. No Cash 6, Tuition Income 6, Received tuition Telephone Expense Cash Paid telephone bill, Ck. No Furniture 1, Cash Accounts Payable 1, Bought desks and chairs from The Oak Center, Ck. No Accounts Payable Cash Paid Business Summary, Ck. No R. Barnes, Drawing 1, Cash 1, Withdrawal for personal use, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 73

8 Problem 3-1A (concluded) GENERAL JOURNAL PAGE 32 DESCRIPTION Oct. 24 Gas and Oil Expense Accounts Payable Received bill from Wagner Oil 4 5 Co., Inv. No Cash 6, Tuition Income 6, Received tuition Salary Expense 1, Cash 1, Paid salary of part-time office assistant, Ck. No Equipment 1, Accounts Payable 1, Bought a photocopier from Gorst Office Machines, Inv. No Cash Accounts Receivable Received tuition charged last month Utilities Expense Cash Paid utilities, Ck. No Miscellaneous Expense Cash Flowers for office, Ck. No Equipment 1, R. Barnes, Capital 1, Investment of computer and printer by owner Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

9 Problem 3-2A GENERAL JOURNAL PAGE 5 DESCRIPTION Aug. 1 Rent Expense 512 1, Cash 111 1, Paid rent for August, Ck. No Cash Accounts Receivable Bill's Deli, on account, Inv. No Cash 111 3, Income from Services 411 3, Week of August Accounts Payable Cash Paid Ashbey Equipment Co., on account, Ck. No Cash 111 3, Income from Services 411 3, Week of August Wages Expense 511 1, Cash 111 1, Wages, August 1 15, Ck. No Accounts Receivable Income from Services Central Transit, for services rendered, Inv. No Supplies Expense Accounts Payable Bought supplies from General Supply Company, Inv. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 75

10 Problem 3-2A (continued) GENERAL JOURNAL PAGE 6 DESCRIPTION Aug. 22 Cash 111 3, Income from Services 411 3, Week of August Utilities Expense Cash Paid utilities bill, Ck. No Accounts Payable Cash General Supply Company on account, Ck. No Cash 111 3, Income from Services 411 3, Week of August Wages Expense 511 1, Cash 111 1, Wages, August 16 31, Ck. No Cash Accounts Receivable Central Transit, on account, Inv. No Advertising Expense Accounts Payable Received advertising bill from Metro News, Inv. No. D M. Carley, Drawing 312 1, Cash 111 1, Withdrawal for personal use, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

11 Problem 3-2A (continued) GENERAL LEDGER Cash NO. 111 July 31 Balance 24, Aug , , , , , , , , , , , , , , , , , , , , , Accounts Receivable NO. 113 July 31 Balance Aug Prepaid Insurance NO. 117 July 31 Balance Equipment 124 NO. July 31 Balance 18, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 77

12 Problem 3-2A (continued) Accounts Payable NO. 221 July 31 Balance 4, Aug , , , , M. Carley, Capital NO. 311 July 31 Balance 42, M. Carley, Drawing NO. 312 July 31 Balance 4, Aug , , Income from Services NO. 411 July 31 Balance 6, Aug , , , , , , , , , Wages Expense NO. 511 July 31 Balance 2, Aug , , , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

13 Problem 3-2A (continued) Rent Expense NO. 512 July 31 Balance Aug , , Advertising Expense NO. 513 July 31 Balance Aug , Utilities Expense NO. 514 July 31 Balance Aug , Supplies Expense NO. 515 July 31 Balance Aug , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 79

14 Problem 3-2A (continued) Carley's Car Care Trial Balance August 31, NAME Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable M. Carley, Capital M. Carley, Drawing Income from Services Wages Expense Rent Expense Advertising Expense Utilities Expense Supplies Expense 30, ,950 4,639 42,000 6,300 21,378 5,446 2,100 1,107 1,076 1,115 68,017 68,017 Revenue: Carley's Car Care Income Statement For Two Months Ended August 31, Income from Services $21,378 Expenses: Wages Expense $5,446 Rent Expense 2,100 Advertising Expense 1,107 Utilities Expense 1,076 Supplies Expense 1,115 Total Expenses 10,844 Net Income $10, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

15 Problem 3-2A (concluded) M. Carley, Capital, July 1, Net Income for July and August Less Withdrawals for July and August Increase in Capital M. Carley, Capital, August 31, Carley's Car Care Statement of Owner's Equity For Two Months Ended August 31, $10,534 6,300 $42,000 4,234 $46,234 Carley's Car Care Balance Sheet August 31, Assets Cash $30,539 Accounts Receivable 544 Prepaid Insurance 840 Equipment 18,950 Total Assets $50,873 Liabilities Accounts Payable $ 4,639 Owner's Equity M. Carley, Capital Total Liabilities and Owner's Equity 46,234 $50, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 81

16 Problem 3-3A GENERAL JOURNAL PAGE 21 DESCRIPTION July 1 Equipment 124 3, Cash 111 1, Accounts Payable 221 2, Bought laboratory equipment 5 6 from Laser Surgical Supply 6 7 Company, Ck. No Rent Expense 512 1, Cash 111 1, Paid the month's rent, Ck. No Cash Accounts Receivable Received on account Supplies Expense Accounts Payable Bought supplies from McRae Supply Company, Inv. No Laboratory Expense 513 1, Cash 111 1, Paid for laboratory services, Ck. No Prepaid Insurance 117 2, Cash 111 2, Bought insurance for one year, Ck. No Accounts Receivable 113 5, Professional Fees 411 5, Performed medical services on account Cash 111 4, Professional Fees 411 4, Performed medical services Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

17 Problem 3-3A (continued) GENERAL JOURNAL PAGE 22 DESCRIPTION July 16 Accounts Payable Equipment Returned damaged equipment, 4 5 Inv. No. 3162, Credit Memo No Salary Expense 511 2, Cash 111 2, Paid part-time nurse's salary, 9 10 Ck. No Utilities Expense Cash Paid the telephone bill, Ck. No Accounts Receivable 113 7, Professional Fees 411 7, Performed medical services on account C. Lucern, Drawing 312 2, Cash 111 2, Withdrew cash for personal use, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 83

18 Problem 3-3A (continued) GENERAL LEDGER Cash NO. 111 June 30 Balance 25, July , , , , , , , , , , , , , , , , Accounts Receivable NO. 113 June 30 Balance July , , , , Prepaid Insurance NO. 117 June 30 Balance July , , Equipment NO. 124 June 30 Balance 16, July , , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

19 Problem 3-3A (continued) Accounts Payable NO. 221 June 30 Balance 2, July , , , , C. Lucern, Capital NO. 311 June 30 Balance 39, C. Lucern, Drawing NO. 312 July , , Professional Fees NO. 411 July , , , , , , Salary Expense 511 NO. July , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 85

20 Problem 3-3A (continued) Rent Expense 512 NO. July , , Laboratory Expense NO. 513 July , , Utilities Expense NO. 514 July Supplies Expense NO. 515 July Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

21 Problem 3-3A (concluded) C. Lucern Clinic Trial Balance July 31, NAME Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable C. Lucern, Capital C. Lucern, Drawing Professional Fees Salary Expense Rent Expense Laboratory Expense Utilities Expense Supplies Expense 18,751 13,467 3,100 19,642 4,773 39,846 2,000 18,060 2,100 1,300 1, ,679 62, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 87

22 Problem 3-4A GENERAL JOURNAL PAGE 1 DESCRIPTION Mar. 1 Cash , J. Lara, Capital , Lara invested cash Equipment 124 1, J. Lara, Capital 311 1, Lara invested personal 8 9 gardening equipment Equipment Accounts Payable Bought used trailer from Tow Sales, Inv. No Rent Expense Cash Paid month's rent, Ck. No Equipment 124 5, Cash 111 3, Accounts Payable 221 2, Bought used backhoe from Digger's Equipment, Inv. No. 4166, Ck. No Prepaid Insurance 117 1, Cash 111 1, Liability insurance for one year, Ck. No Accounts Receivable 113 3, Landscaping Income 411 3, Services on account to Fredkey's, Inv. No Supplies Expense Accounts Payable Bought supplies from Office Requip, Inv. No Accounts Receivable 113 2, Landscaping Income 411 2, Services on account to C. Endel, Inv. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

23 Problem 3-4A (continued) GENERAL JOURNAL PAGE 2 DESCRIPTION Mar. 17 Gas and Oil Expense Cash Paid for gas and oil for equip- 4 5 ment to Commercial Services, 5 6 Ck. No Cash 111 1, Landscaping Income 411 1, Services for cash to Riston Company, Inv. No Accounts Payable Cash On account to Tow Sales, Inv. No. 314, Ck. No Cash Accounts Receivable On account from Fredkey's, Inv. No Accounts Receivable 113 1, Landscaping Income 411 1, Services on account to Stevens, Inc., Inv. No Utilities Expense Cash Paid the telephone bill, Ck. No Salary Expense 511 1, Cash 111 1, Paid employee, Ck. No J. Lara, Drawing 312 1, Cash 111 1, Lara withdrew cash for personal use, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 89

24 Problem 3-4A (continued) GENERAL LEDGER Cash NO. 111 Mar , , , , , , , , , , , , , , , , , Accounts Receivable NO. 113 Mar , , , , , , , Prepaid Insurance NO. 117 Mar , , Equipment NO. 124 Mar , , , , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

25 Problem 3-4A (continued) Accounts Payable 221 NO. Mar , , , , J. Lara, Capital 311 NO. Mar , , , , J. Lara, Drawing NO. 312 Mar , , Landscaping Income NO. 411 Mar , , , , , , , , Salary Expense NO. 511 Mar , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 91

26 Problem 3-4A (continued) Rent Expense 512 NO. Mar Gas and Oil Expense NO. 513 Mar Utilities Expense NO. 514 Mar Supplies Expense NO. 515 Mar Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

27 Problem 3-4A (concluded) Lara's Landscaping Service Trial Balance March 31, NAME Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable J. Lara, Capital J. Lara, Drawing Landscaping Income Salary Expense Rent Expense Gas and Oil Expense Utilities Expense Supplies Expense 27,624 7,757 1,800 7,540 3,095 36,325 1,500 10,421 1, ,841 49, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 93

28 Problem 3-1B GENERAL JOURNAL PAGE 31 DESCRIPTION Dec. 1 Prepaid Insurance 2, Cash 2, Liability insurance for one year, 4 5 Ck. No Advertising Expense Accounts Payable Received St. No from 9 10 City News Rent Expense 1, Cash 1, Paid month's rent, Ck. No Repair Expense Accounts Payable Received a bill for equipment repair from Electronic Services, Inv. No Cash 5, Tuition Income 5, Received tuition Telephone Expense Cash Paid telephone bill, Ck. No Furniture 1, Cash Accounts Payable 1, Bought desks and chairs from School Furniture, Ck. No Accounts Payable Cash Paid City News, Ck. No R. Ethan, Drawing 1, Cash 1, Withdrawal for personal use, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

29 Problem 3-1B (concluded) GENERAL JOURNAL PAGE 32 DESCRIPTION Dec. 26 Gas and Oil Expense Accounts Payable Received bill from Discount Oil 4 5 Company, Inv. No Cash 6, Tuition Income 6, Received tuition Salary Expense 1, Cash 1, Paid salary of office assistant, Ck. No Equipment Accounts Payable Bought a fax machine from EquipCo., Inv. No Cash 1, Accounts Receivable 1, Received tuition charged last month Utilities Expense Cash Paid utilities, Ck. No Equipment 1, R. Ethan, Capital 1, Invested personal computer and printer Supplies Expense Cash Bought supplies, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 95

30 Problem 3-2B GENERAL JOURNAL PAGE 4 DESCRIPTION May 1 Rent Expense 512 1, Cash 111 1, Paid rent for May, Ck. No Cash 111 1, Accounts Receivable 113 1, Jay Company, on account, 8 9 Inv. No Cash 111 3, Income from Services 411 3, Week of May Accounts Payable Cash Paid Tofer Equipment Co., on account, Ck. No Cash 111 3, Income from Services 411 3, Week of May Wages Expense 511 1, Cash 111 1, Paid wages, May 1 May 15, Ck. No Accounts Receivable 113 2, Income from Services 411 2, Leggit Company on account, Inv. No Supplies Expense Accounts Payable Bought supplies on account from Everyday Supply Company, Inv. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

31 Problem 3-2B (continued) GENERAL JOURNAL PAGE 5 DESCRIPTION May 21 Cash 111 3, Income from Services 411 3, Week of May Utilities Expense Cash Paid telephone bill, Ck. No Accounts Payable Cash Paid Everyday Supply Company on account, Inv. No. 3160, Ck. No Cash 111 3, Income from Services 411 3, Week of May Wages Expense 511 1, Cash 111 1, Paid wages, May 16 May 31, Ck. No Cash Accounts Receivable Leggit Company on account, Inv. No Advertising Expense Accounts Payable Received advertising bill from Neighborhood News, Inv. No R. Ramirez, Drawing 312 1, Cash 111 1, Withdrawal for personal use, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 97

32 Problem 3-2B (continued) GENERAL LEDGER Cash NO. 111 Apr. 30 Balance 12, May 1 4 1, , , , , , , , , , , , , , , , , , , , , , Accounts Receivable NO. 113 Apr. 30 Balance 1, May 5 4 1, , , , Prepaid Insurance NO. 117 Apr. 30 Balance Equipment NO. 124 Apr. 30 Balance 8, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

33 Problem 3-2B (continued) Accounts Payable NO. 221 Apr. 30 Balance 2, May , , , , R. Ramirez, Capital NO. 311 Apr. 30 Balance 21, R. Ramirez, Drawing NO. 312 Apr. 30 Balance 1, May , , Income from Services NO. 411 Apr. 30 Balance 4, May 7 4 3, , , , , , , , , , Wages Expense NO. 511 Apr. 30 Balance 1, May , , , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 99

34 Problem 3-2B (continued) Rent Expense NO. 512 Apr. 30 Balance May 1 4 1, , Advertising Expense NO. 513 Apr. 30 Balance May Utilities Expense NO. 514 Apr. 30 Balance May Supplies Expense NO. 515 Apr. 30 Balance May Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

35 Problem 3-2B (continued) Kiddy Day Care Trial Balance May 31, NAME Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable R. Ramirez, Capital R. Ramirez, Drawing Income from Services Wages Expense Rent Expense Advertising Expense Utilities Expense Supplies Expense 21,298 2, ,500 2,215 21,572 2,700 20,510 4,583 1, ,297 44,297 Revenue: Kiddy Day Care Income Statement For Two Months Ended May 31, Income from Services $20,510 Expenses: Wages Expense $4,583 Rent Expense 1,900 Advertising Expense 983 Utilities Expense 783 Supplies Expense 535 Total Expenses 8,784 Net Income $11, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 101

36 Problem 3-2B (concluded) Kiddy Day Care Statement of Owner's Equity For Two Months Ended May 31, R. Ramirez, Capital, April 1, Net Income for April and May Less Withdrawals for April and May Increase in Capital R. Ramirez, Capital, May 31, $11,726 2,700 $21,572 9,026 $30,598 Kiddy Day Care Balance Sheet May 31, Assets Cash $21,298 Accounts Receivable 2,555 Prepaid Insurance 460 Equipment 8,500 Total Assets $32,813 Liabilities Accounts Payable $ 2,215 R. Ramirez, Capital Owner's Equity Total Liabilities and Owner's Equity 30,598 $32, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

37 Problem 3-3B GENERAL JOURNAL PAGE 21 DESCRIPTION July 1 Equipment 124 6, Cash 111 1, Accounts Payable 221 5, Bought laboratory equipment from 5 6 Sage Surgical Supply Company, 6 7 Inv. No. 2071, Ck. No Rent Expense 512 1, Cash 111 1, Paid the month's rent, Ck. No Cash 111 3, Accounts Receivable 113 3, Received on account Supplies Expense Accounts Payable Bought supplies from Allround Supply, Inv. No Laboratory Expense 513 1, Cash 111 1, Paid for laboratory services, Ck. No Prepaid Insurance 117 2, Cash 111 2, Bought insurance for one year, Ck. No Accounts Receivable 113 5, Professional Fees 411 5, Performed rehab services on account Cash 111 5, Professional Fees 411 5, Performed rehab services Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 103

38 Problem 3-3B (continued) GENERAL JOURNAL PAGE 22 DESCRIPTION July 18 Accounts Payable Equipment Returned damaged equipment, 4 5 Inv. No. 2071, Credit Memo No Salary Expense 511 2, Cash 111 2, Paid part-time nurse's salary, 9 10 Ck. No Utilities Expense Cash Paid the telephone bill, Ck. No Accounts Receivable 113 4, Professional Fees 411 4, Performed rehab services on account J. Vance, Drawing 312 2, Cash 111 2, Withdrew cash for personal use, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

39 Problem 3-3B (continued) GENERAL LEDGER Cash NO. 111 June 30 Balance 4, July , , , , , , , , , , , , , , , Accounts Receivable NO. 113 June 30 Balance 3, July , , , , , Prepaid Insurance NO. 117 June 30 Balance 2, July , , Equipment NO. 124 June 30 Balance 16, July , , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 105

40 Problem 3-3B (continued) Accounts Payable NO. 221 June 30 Balance 2, July , , , , J. Vance, Capital 311 NO. June 30 Balance 23, J. Vance, Drawing NO. 312 July , , Professional Fees NO. 411 July , , , , , , Salary Expense 511 NO. July , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

41 Problem 3-3B (continued) Rent Expense 512 NO. July , , Laboratory Expense NO. 513 July , , Utilities Expense NO. 514 July Supplies Expense NO. 515 July Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 107

42 Problem 3-3B (concluded) Vance Rehab Clinic Trial Balance July 31, NAME Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable J. Vance, Capital J. Vance, Drawing Professional Fees Salary Expense Rent Expense Laboratory Expense Utilities Expense Supplies Expense 929 9,420 4,785 22,960 7,714 23,844 2,000 14,470 2,200 1,550 1, ,028 46, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

43 Problem 3-4B GENERAL JOURNAL PAGE 1 DESCRIPTION Apr. 1 Cash , O. Leander, Capital , Leander invested cash Equipment 124 1, O. Leander, Capital 311 1, Leander invested personal 8 9 landscaping equipment Equipment 124 1, Accounts Payable 221 1, Bought used trailer from Used Mart, Inv. No Rent Expense Cash Paid month's rent, Ck. No Equipment 124 5, Cash 111 2, Accounts Payable 221 3, Bought used bulldozer from Dray's Equipment, Inv. No. 3255, Ck. No Prepaid Insurance 117 2, Cash 111 2, Liability insurance for one year, Ck. No Accounts Receivable 113 4, Landscaping Income 411 4, Services on account to Fulton Homes, Inv. No Supplies Expense Accounts Payable Bought supplies from Perry's Supply, Inv. No Accounts Receivable 113 3, Landscaping Income 411 3, Services on account, D. D. Mau Inc., Inv. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 109

44 Problem 3-4B (continued) GENERAL JOURNAL PAGE 2 DESCRIPTION Apr. 17 Gas and Oil Expense Cash Paid for gas and oil for equip- 4 5 ment to Pumpers, Ck. No Cash 111 1, Landscaping Income 411 1, Services for cash to Cliff's 9 10 House, Inv. No Accounts Payable Cash On account to Used Mart, Inv. No. 415, Ck. No Cash Accounts Receivable On account from Fulton Homes, Inv. No Accounts Receivable 113 1, Landscaping Income 411 1, Services on account to H. Ron, Inv. No Utilities Expense Cash Paid the telephone bill, Ck. No Salary Expense 511 1, Cash 111 1, Paid employee, Ck. No O. Leander, Drawing 312 1, Cash 111 1, Owner withdrew cash for personal use, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

45 Problem 3-4B (continued) GENERAL LEDGER Cash NO. 111 Apr , , , , , , , , , , , , , , , , , Accounts Receivable NO. 113 Apr , , , , , , , Prepaid Insurance 117 NO. Apr , , Equipment NO. 124 Apr , , , , , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 111

46 Problem 3-4B (continued) Accounts Payable NO. 221 Apr , , , , , , O. Leander, Capital NO. 311 Apr , , , , O. Leander, Drawing NO. 312 Apr , , Landscaping Income NO. 411 Apr , , , , , , , , Salary Expense 511 NO. Apr , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

47 Problem 3-4B (continued) Rent Expense 512 NO. Apr Gas and Oil Expense NO. 513 Apr Utilities Expense NO. 514 Apr Supplies Expense NO. 515 Apr Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 113

48 Problem 3-4B (concluded) Leander's Landscaping Service Trial Balance April 30, NAME Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable O. Leander, Capital O. Leander, Drawing Landscaping Income Salary Expense Rent Expense Gas and Oil Expense Utilities Expense Supplies Expense 22,078 9,577 2,800 8,300 4,427 31,750 1,500 11,814 1, ,991 47, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

49 SOLUTIONS TO ACTIVITIES CONSIDER AND COMMUNICATE Suggested Response The purpose of posting references is to answer the question, Where was the amount posted? If the ledger account number is written in the Post. Ref. column before the bookkeeper actually posts the amount, it only answers the question, Where should it be posted? When the posting process is correctly followed, it provides a system that helps maintain order and can help locate errors. When the trial balance doesn t balance, you can look through the Post. Ref. column, and you may see a blank indicating a missed posting. If the bookkeeper ignores this process, he can cost himself time if there is an error. He will have thrown away one tool for tracking down the problem. CRITICAL THINKING Solution Winston Company Income Statement For Month Ended July 31, Revenue: Income from Services $9,570 Expenses: Rent Expense $1,200 Wages Expense 4,200 Utilities Expense 388 Supplies Expense 635 Total Expenses 6,423 Net Income $3,147 Winston Company Statement of Owner's Equity For Month Ended July 31, S. Winston, Capital, July 1, $50,000 Investments during July $ 0 Plus Net Income for July 3,147 Subtotal $3,147 Less Withdrawals for July 2,500 Increase in Capital 647 S. Winston, Capital, July 31, $50, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 115

50 CRITICAL THINKING Solution (concluded) Winston Company Balance Sheet July 31, Assets Cash $24,940 Truck 15,750 Equipment 16,148 Total Assets $56,838 Liabilities Accounts Payable $ 6,191 Owner's Equity S. Winston, Capital 50,647 Total Liabilities and Owner's Equity $56, Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

51 ALL ABOUT YOU SPA: Journalizing, Posting, and Preparing a Trial Balance Note: Students may enter entries of the same date in different order than shown here. GENERAL JOURNAL PAGE 1 DESCRIPTION June 1 Cash , A. Valli, Capital , Owner invested cash in business Spa Equipment 124 3, A. Valli, Capital 311 3, Owner invested personal spa 8 9 equipment in business Prepaid Insurance Cash Bought 6-month liability insurance policy, Ck. No Spa Equipment 124 4, Cash 111 2, Accounts Payable 211 2, Bought spa equipment on account with down payment, Ck. No Rent Expense 512 1, Cash 111 1, Paid June rent, Ck. No Spa Supplies Expense Accounts Payable Bought spa supplies on account, Inv. No Office Supplies Expense Cash Bought office supplies for cash, Ck. No Miscellaneous Expense Cash Paid for flowers and balloons for grand opening, Ck. No Office Equipment Accounts Payable Bought equip. on account, Inv. No Advertising Expense Accounts Payable Bought advertising pamphlets on account, Inv. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 117

52 ALL ABOUT YOU SPA (continued) GENERAL JOURNAL PAGE 2 DESCRIPTION June 5 Office Equipment Accounts Payable Bought office equipment on account, 4 5 Inv. No Office Supplies Expense Accounts Payable Bought office supplies on account, 9 10 Inv. No Wages Expense 511 1, Cash 111 1, Paid first week's wages, Ck. No Cash 111 2, Income from Services 411 2, First week's cash revenue report Accounts Receivable Income from Services First week's revenue from customers on account Accounts Payable Cash Paid on account for spa equipment purchased on June 3, Ck. No Cash 111 3, Income from Services 411 3, Second week's cash revenue report Accounts Receivable Income from Services Second week's revenue from customers on account Wages Expense 511 1, Cash 111 1, Paid second week's wages, Ck. No Accounts Payable 211 1, Cash 111 1, Paid on account for spa equipment purchased on June 3, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

53 ALL ABOUT YOU SPA (continued) GENERAL JOURNAL PAGE 3 DESCRIPTION June 21 Cash 111 4, Income from Services 411 4, Third week's cash revenue report Accounts Receivable Incomes from Services Third week's revenue from customers 8 9 on account Wages Expense 511 1, Cash 111 1, Paid third week's wages, Ck. No Accounts Payable Cash Paid on account for spa equipment purchased on June 3, Ck. No Wages Expense 511 1, Cash 111 1, Paid fourth week's wages, Ck. No Laundry Expense Cash Paid month's laundry bill, Ck. No Cash 111 5, Income from Services 411 5, End of month's cash revenue report Accounts Receivable Income from Services Revenue from customers on account A. Valli, Drawing 312 1, Cash 111 1, Owner withdrew cash for personal use, Ck. No Utilities Expense Cash Paid monthly telephone bill, Ck. No Utilities Expense Cash Paid monthly power and water bill, Ck. No Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 119

54 ALL ABOUT YOU SPA (continued) GENERAL LEDGER Cash NO. 111 June , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Accounts Receivable NO. 113 June , , Prepaid Insurance NO. 117 June Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

55 ALL ABOUT YOU SPA (continued) Spa Equipment NO. 124 June 1 1 3, , , , Office Equipment 128 NO. June , Accounts Payable NO. 211 June 3 1 2, , , , , , , , , , , A. Valli, Capital 311 NO. June , , , , A. Valli, Drawing NO. 312 June , , Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 121

56 ALL ABOUT YOU SPA (continued) Income from Services NO. 411 June 7 2 2, , , , , , , , , , , , Wages Expense NO. 511 June 7 2 1, , , , , , , , Rent Expense NO. 512 June 3 1 1, , Office Supplies Expense NO. 513 June Spa Supplies Expense NO. 514 June Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.