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Chapter 2 Practice Exercises

The document provides instructions and details for 5 practice exercises involving journalizing, posting, and preparing trial balances for various business transactions during different months for different companies. Exercise 1 involves transactions for a laundromat business in September 2015. Exercise 2 involves transactions in May 2015 for a veterinary clinic. Exercise 3 involves transactions in September 2014 for a landscaping business. Exercise 4 involves transactions in January for an interior decorating business. Exercise 5 involves transactions in August 2019 for a services company.

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441 views2 pages

Chapter 2 Practice Exercises

The document provides instructions and details for 5 practice exercises involving journalizing, posting, and preparing trial balances for various business transactions during different months for different companies. Exercise 1 involves transactions for a laundromat business in September 2015. Exercise 2 involves transactions in May 2015 for a veterinary clinic. Exercise 3 involves transactions in September 2014 for a landscaping business. Exercise 4 involves transactions in January for an interior decorating business. Exercise 5 involves transactions in August 2019 for a services company.

Uploaded by

Sokrit Soeur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Chapter 2: Practice Exercises

Exercise 1
Bob Sample opened the Campus Laundromat on September 1, 2015. During the first month of operations, the
following transactions occurred.
Sept. 1 Bob invested $20,000 cash in the business.
2 The company paid $1,000 cash for store rent for September
3 Purchased washers and dryers for $25,000 paying $10,000 in cash and
signing a $15,000, 6-month, 12% note payable
4 Paid $1,200 for a one-year accident insurance policy
10 Received a bill from the Daily News for advertising the opening of the Laundromat $200
20 Bob withdrew $700 cash for personal use
30 The company determined that cash receipts for laundry services for the month were $6,200

Instructions:
(a) Journalize the September transactions
(b) Open ledger accounts and post the September transactions
(c) Prepare a trial balance at September 30, 2015

Exercise 2
Paws and Hoofs Clinic engaged in the following economic events during May 2015:
May 1 Larry Cox invested $20,000 in cash to form Paws and Hoofs Clinic.
2 Made an agreement to provide $6,000 in services over the next year to Quarter Horse Stables
3 Paid $600 in advance for two months’ rent of an office.
9 Purchased medical supplies for $400 in cash.
12 Purchased $4,000 of equipment on credit; made a 25 percent down payment.
15 Delivered a calf for a fee of $350 on credit.
18 Made a payment of $500 on the equipment purchased on May 12.
27 Paid a utility bill of $140.

Requirements:
a. Prepare a journal entry to record the company’s business transaction.
b. Post the transactions to the ledger and prepare a trial balance for the month of May

Exercise 3
On September 1, 2014, Michael Moe incorporated Moe’s Mowing, Inc., a company that provides mowing and
landscaping services. During the month of September, the business incurred the following transactions.
a. To begin the operations, Michael deposited $10,000 cash in the business’s bank account.
b. The business purchased equipment for $3,500 on account.
c. The business purchased office supplies for $800 cash.
d. The business provided $2,600 of services to a customer on account.
e. The business paid $500 cash toward the equipment previously purchased on (b)
f. The business received $2,000 in cash for services provided to a new customer.
g. The business paid $200 cash to repair equipment.
h. The business paid $900 cash in salary expense.
i. The business received $2,100 cash from customers on account in (d).
j. The owner withdraws $1,500 cash for personal use.

Requirements
a. Prepare a journal entry to record the company’s business transaction.
b. Post the transactions to the ledger.
c. Prepare a trial balance
Exercise 4
In her first month of business operation, M. Anderson, an interior decorator, incurs the following transactions.
Jan. 2 Invested $10,000 cash in business.
3 Purchased used car for $4,000 cash for the use in business.
9 Purchased supplies on account for $500.
12 Billed customers $2,100 for services performed.
15 Paid $350 cash for advertising.
18 Received $700 cash from customers billed on January 12.
21 Paid creditor $300 cash on balance owed.
27 Withdrew $1,000 cash for personal use by owner.

Requirements:
a. Prepare a journal entry to record the company’s business transaction.
b. Post the transactions to the ledger and Prepare a trial balance

Exercise 5:
The following transactions of Larson Services Inc. occurred during August 2019, its first month of operations.

Aug. 1 Owner invested $3,000 cash to start the company


2 Borrowed $10,000 cash from the bank
3 Paid $8,000 cash for a used truck
3 Signed a contract with a customer to do a $15,000 job beginning in November
4 Paid $600 for a one-year truck insurance policy effective August 1
5 Collected fees of $2,000 for work to be performed in September
7 Billed a client $5,000 for services performed today
9 Paid $250 for supplies purchased and used today
12 Purchased $500 of supplies on credit
15 Collected $1,000 of the amount billed August 7
16 Paid $200 for advertising in The News that ran the first two weeks of August
20 Paid $250 of the amount owing regarding the credit purchase of August 12
25 Paid the following expenses: rent for August, $350; salaries, $2,150; telephone, $50; truck operation, $250
28 Called clients for payment of the balances owing from August 7
31 Billed a client $6,000 for services performed today
31 $500 of the amount collected on August 5 has been earned as of today

Required:
1. Journalize the above transactions
2. Update them to ledger
3. Prepare a trial balance
4. Prepare financial statements

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