Principles of Accounting

Name : Karina Putri Restike

Class : 1 Accounting

Student ID : 008202100049

E2-2 Selected transactions for D. Reyes, an interior decorator, in her first month of business,
are as follows.

Jan 2 Invested $10,000 cash in business.

3 Purchased used car for $4,000 cash for use in business.

9 Purchased supplies on account for $500.

11 Billed customers $1,800 for services performed.

16 Paid $200 cash for advertising.

20 Received $700 cash from customers billed on January 11.

23 Paid creditor $300 cash on balance owed.

28 Withdrew $1,000 cash for personal use by owner.

Instructions

For each transaction indicate the following.

(a) The basic type of account debited and credited (asset, liability, owner’s equity).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased or decreased.
(d) The normal balance of the specific account
Use the following format,in which the January 2 transaction is given as an example
 Account Debited Account Credited
Basic Specific Normal Basic Specific Normal
Date Effect Effect
Type Account Balance Type Account Balance
Jan- Owner's D. Reyes,
Asset Cash Increase Debit Increase Credit
02 Equity Capital
Jan-
Asset Equipment Increase Debit Asset Cash Decrease Debit
03
Jan- Accounts
Asset Supplies Increase Debit Liability Increase Credit
09 Payable
Jan- Accounts Owner's
Asset Increase Debit Revenue Increase Credit
11 Receivable Equity
Jan- Owner's Advertising
Increase Debit Asset Cash Decrease Debit
16 Equity Expense
Jan- Accounts
Asset Cash Increase Debit Asset Decrease Debit
20 Receivable
Jan- Accounts
Liability Decrease Credit Asset Cash Decrease Debit
23 Payable
Jan- Owner's D. Reyes,
Increase Debit Asset Cash Decrease Debit
28 Equity Drawings

E2-3 Data for D.Reyes,interior decorator,are presented in E2-2.

Instructions

Journalize the transactions using journal page J1. (You may omit explanations.)

GENERAL JOURNAL
Date Account Titles and Explanation Ref Debit Credit
2010
Jan. 2 Cash 10,000
D. Reyes, Capital 10,000
(Owner’s investment of cash in business.)
3 Equipment 4,000
Cash 4,000

(Purchased used cas in cash for use in business.)

9 Supplies 500
Accounts Payable 500
(Purchased supplies on account.)
11 Accounts Receivable 1,800
Service Revenue 1,800
 (Billed customers for services performed.)
16 Advertising Expenses 200
Cash 200
(Paid advertising expense with cash)
20 Cash 700
Accounts Receivable 700
(Received cash from customers billed on January
11.)
23 Liability 300
Account Payable 300
(Paid creditor with cash on balance owed.)
28 D. Reyes, Drawings 1,000
Cash 1,000
(Withdrew cash for personal use by owner.)

E2-7 Rowand Enterprises had the following selected transactions.

1. Aaron Rowand invested $4,000 cash in the business.

2. Paid office rent of $1,100.
3. Performed consulting services and billed a client $5,200.
4. Aaron Rowand withdrew $700 cash for personal use.

Instructions

(a) Indicate the effect each transaction has on the accounting equation (Assets = Liabilities
+ Owner’s Equity), using plus and minus signs.

ASSET = LIABILITY + EQUITY

01 Increase No Effect Increase

02 Decease No Effect Decrase

03 Increase No Effect Increase

 04 Decrase No Effect Decrase

(b) Journalize each transaction. (Omit explanations.)

GENERAL JOURNAL
Date Account Titles and Explanation Ref Debit Credit
2012
Jan. 1 Cash 4,000
Aaron Rowand, Capital 4,000
(Owner’s investment of cash in business.)
2 Rent Expenses 1,100
Cash 1,100
(Paid office rent.)
3 Accounts Receivable 5,200
Service Revenue 5,200.
(Performed consulting services and billed a client.)
4 Aaron Rowand, Drawings 700
Cash 700
(Aaron Rowand withdrew cash for personal use.)

E2-13 The bookkeeper for Sam Kaplin Equipment Repair made a number of errors in
journalizing and posting,as described below.

1. A credit posting of $400 to Accounts Receivable was omitted.

2. A debit posting of $750 for Prepaid Insurance was debited to Insurance Expense.
3. A collection from a customer of $100 in payment of its account owed was journalized
and posted as a debit to Cash $100 and a credit to Service Revenue $100.
4. A credit posting of $300 to Property Taxes Payable was made twice.
5. A cash purchase of supplies for $250 was journalized and posted as a debit to Supplies
$25 and a credit to Cash $25.
6. A debit of $475 to Advertising Expense was posted as $457.

Instructions
For each error:

(a) Indicate whether the trial balance will balance.

Sam Kaplin Equipment Repair

Trial Balance
December 31, 2010
Debit Credit
Accounts Receivable $400
Prepaid Insurance $750
Cash $100
Service Revenue $100
Property Tax Payable
Property Tax Payable $300
Supplies $25
Cash $25
Adversiting Expenses $457
$1,332 $1,125

(b) If the trial balance will not balance,indicate the amount of the difference.
$1,332 - $1,325 = $1,007
(c) Indicate the trial balance column that will have the larger total..

Error In Balance Difference Larger Colomn

(1) No $400 Debit
(2) No $750 Debit
(3) Yes $100
(4) No $600 Credit
(5) Yes $25
(6) No $457 Debit

P2-2A Jane Kent is a licensed CPA. During the first month of operations of her business, the
following events and transactions occurred.

May 1 Kent invested $25,000 cash.

 2 Hired a secretary-receptionist at a salary of $2,000 per month.

3 Purchased $2,500 of supplies on account from Read Supply Company.

7 Paid office rent of $900 cash for the month.

11 Completed a tax assignment and billed client $2,100 for services provided.

12 Received $3,500 advance on a management consulting engagement.

17 Received cash of $1,200 for services completed for H.Arnold Co.

31 Paid secretary-receptionist $2,000 salary for the month.

31 Paid 40% of balance due Read Supply Company.

Jane uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No.
126 Supplies, No. 201 Accounts Payable, No. 205 Unearned Revenue, No. 301 Jane Kent,
Capital; No.400 Service Revenue, No.726 Salaries Expense, and No.729 Rent Expense.
Instructions

(a) Journalize the transactions.

GENERAL JOURNAL J1
Date Account Titles and Explanation Ref Debit Credit
2012
May 1 Cash 101 25,000
Kent, Capital 301 25,000
(Owner’s investment of cash in business.)
3 Supplies 126 2,500
Accounts Payable 201 2,500
(Purchased supplies on account from Read Supply
Company.)
7 Rent Expenses 729 900
Cash 101 900
(Paid office rent of cash for the month.)
11 Accounts Receivable 112 2,100
Service Revenue 400 2,100
 (Completed a tax assignment and billed client for
services provided.)
12 Cash 101 3,500
Unearned Service Revenue 205 3,500
(Received cash in advance on a management
consulting engagement.)
17 Cash 101 1,200
Service Revenue 400 1,200
(Received cash for services completed for H.
Arnold Co.)
31 Salaries Expenses 726 2,000
Cash 101 2,000
(Paid secretary-receptionist salary for the month.)
31 Accounts Payable 201 1,000
Cash 101 1,000
(Paid 40% of balance due Read Supply Company.)

(b) Post to the ledger accounts.

Cash 101
Date Explanation Ref Debit Credit Balance

2012

May 1 Posting J1 25,000 25,000

7 Posting J1 900 24,100

12 Posting J1 3,500 27,600

17 Posting J1 1,200 28,800

31 Posting J1 2,000 26,800

31 Posting J1 1,000 25,800

Accounts Receivable 112

 Date Explanation Ref Debit Credit Balance

2012

May 11 Posting J1 2,100 2,100

Supplies 126
Date Explanation Ref Debit Credit Balance

2012

May 3 Posting J1 2,500 2,500

Accounts Payable 201

Date Explanation Ref Debit Credit Balance

2012

May 3 Posting J1 2,500 2,500

31 Posting J1 1,000 1,500

Jane Kent, Capital 301

Date Explanation Ref Debit Credit Balance

2012

May 1 Posting J1 25,000 25,000

Service Revenue 400

Date Explanation Ref Debit Credit Balance

2012

May 11 Posting J1 2,100 2,100

17 Posting J1 1,200 3,300

 Unearned Service Revenue 205
Date Explanation Ref Debit Credit Balance

2012

May 12 Posting J1 3,500 3,500

Salaries Expenses 726

Date Explanation Ref Debit Credit Balance

2012

May 31 Posting J1 2,000 2,000

Rent Expenses 729

Date Explanation Ref Debit Credit Balance

2012

May 7 Posting J1 2,000 2,000

(c) Prepare a trial balance on May 31, 2010

Jane Kent
Trial Balance
May 31, 2012
Debit Credit
Cash $25,800
Account Receivable $2,100
Supplies $2,500
Accounts Payable $1,500
Unearned Revenue $3,500
Jane Kent, Capital $25,000
Service Revenue $3,300
Salaries Expenses $2,000
 Rent Expenses $900
$33,300 $33,300
P2-4B The trial balance of Syed Moiz Co.shown below does not balance.

Each of the listed accounts has a normal balance per the general ledger. An examination of the
ledger and journal reveals the following errors.

1. Cash received from a customer in payment of its account was debited for $480,and
Accounts Receivable was credited for the same amount.The actual collection was for
$840.
2. The purchase of a computer on account for $620 was recorded as a debit to Supplies
for $620 and a credit to Accounts Payable for $620.
3. Services were performed on account for a client for $890.Accounts Receivable was
debited for $890,and Service Revenue was credited for $89.
4. A debit posting to Salaries Expense of $700 was omitted.
5. A payment of a balance due for $306 was credited to Cash for $306 and credited to
Accounts Payable for $360.
6. The withdrawal of $600 cash for Moiz’s personal use was debited to Salaries Expense
for $600 and credited to Cash for $600.

Instructions

Prepare a correct trial balance. (Hint: It helps to prepare the correct journal entry for the
transaction described and compare it to the mistake made).
 SYED MOIZ CO.
Trial Balance
June 30, 2010
Debit Credit
Cash $3,700
Account Receivable $2,371
Supplies $580
Equipment $3,220
Account Payable $3,000
Unearned Revenue $1,100
S.Moiz, Capital $8,000
S.Moiz, Drawings $1,400
Service Revenue $3,281
Salaries Expense $3,300
Office Expense $810
$15,381 $15,381

P2-5B The Josie Theater, owned by Josie Micheals, will begin operations in March. The Josie
will be unique in that it will show only triple features of sequential theme movies. As of March
1, the ledger of Josie showed: No. 101 Cash $9,000, No. 140 Land $24,000, No. 145 Buildings
(concession stand, projection room, ticket booth, and screen) $10,000, No. 157 Equipment
$10,000, No.201 Accounts Payable $7,000 ,and No.301 J. Micheals, Capital $46,000. During
the month of March the following events and transactions occurred.

Mar 2 Rented the three Indiana Jones movies to be shown for the first 3 weeks of March.
The film rental was $3,500;$1,500 was paid in cash and $2,000 will be paid on
March 10.

3 Ordered the Lord of the Rings movies to be shown the last 10 days of March. It will
cost $200 per night.

9 Received $4,000 cash from admissions.

 10 Paid balance due on Indiana Jones movies rental and $2,100 on March 1 accounts
payable.

11 Josie Theater contracted with Stephanie Becker to operate the concession stand.
Becker is to pay 15% of gross concession receipts (payable monthly) for the right to
operate the concession stand.

12 Paid advertising expenses $450.

20 Received $5,000 cash from customers for admissions

20 Received the Lord of Rings movies and paid the rental fee of $2,000.

31 Paid salaries of $2,500.

31 Received statement from Stephanie Becker showing gross receipts from concessions
of $6,000 and the balance due to Josie Theater of $900 ($6,000 × 15%) for March.
Becker paid one-half the balance due and will remit the remainder on April 5.

31 Received $9,000 cash from customers for admissions.

In addition to the accounts identified above, the chart of accounts includes: No. 112 Accounts
Receivable, No. 405 Admission Revenue, No. 406 Concession Revenue, No. 610 Advertising
Expense, No.632 Film Rental Expense, and No. 726 Salaries Expense.

Instructions

(a) Enter the beginning balances in the ledger. Insert a check mark (√) in the reference
column of the ledger for the beginning balance.
(b) Journalize the March transactions.

GENERAL JOURNAL J1
Date Account Titles and Explanation Ref Debit Credit
2010
March 2 Film Rental Expenses 806 3,500
Cash 101 1,500
Accounts Payable 201 2,000
9 Cash 101 4,000
Admissions Revenue 400 4,000
10 Accounts Payable 201 4,100
 Cash 101 4,100
12 Adversiting Expenses 631 450
Cash 101 450
20 Cash 101 5,000
Admissions Revenue 400 5,000
20 Film Rental Expenses 806 2,000
Cash 101 2,000
31 Salaries Expenses 726 2,500
Cash 101 2,500
31 Account Receivable 112 6,000
Cash 101 450
Buldings 145 6,000
Account Receivable 112 450
31 Cash 101 9,000
Admissions Revenue 400 9,000

(c) Post the March journal entries to the ledger.Assume that all entries are posted from
page 1 of the journal.

Cash 101
Date Explanation Ref Debit Credit Balance

2010

March 1 Posting √ 9,000 9,000

2 Posting J1 3,500 5,500

9 Posting J1 4,000 9,500

10 Posting J1 4,100 5,400

12 Posting J1 450 4,950

 20 Posting J1 5,000 9,950

31 Posting J1 2,500 7,450

31 Posting J1 450 7,900

31 Posting J1 9,000 16,900

Land 140
Date Explanation Ref Debit Credit Balance

2010

March 1 Posting √ 24,000 24,000

Buildings 145
Date Explanation Ref Debit Credit Balance

2010

March 1 Posting √ 10,000 10,000

31 Posting J1 6,000 4,000

Equipment 157
Date Explanation Ref Debit Credit Balance

2010

March 1 Posting √ 10,000 10,000

Accounts Payable 201

Date Explanation Ref Debit Credit Balance

2010

March 1 Posting √ 7,000 7,000

2 Posting J1 2,000 9,000

10 Posting J1 4,100 4,900

J. Micheals, Capital 301

Date Explanation Ref Debit Credit Balance
2010

March 1 Posting √ 46,000 46,000

Film Rental Expenses 806

Date Explanation Ref Debit Credit Balance

2010

March 2 Posting J1 3,500 3,500

20 Posting J1 2,000 5,500

Admissions Revenue 400

Date Explanation Ref Debit Credit Balance

2010

March 9 Posting J1 4,000 4,000

20 Posting J1 5,000 9,000

31 Posting J1 9,000 18,000

Advertising Expenses 631

Date Explanation Ref Debit Credit Balance

2010

March 12 Posting J1 450 450

Salaries Expenses 726

Date Explanation Ref Debit Credit Balance

2010

March 31 Posting J1 2,500 2,500

Accounts Receivable 112

Date Explanation Ref Debit Credit Balance

2010

March 31 Posting J1 6,000 6,000

31 Posting J1 450 5,550

(d) Prepare a trial balance on March 31,2010.
The Josie Theater
Trial Balance
March 31, 2010
Debit Credit
Cash $16,900
Land $24,000
Buildings $4,000
Equipment $10,000
Accounts Payable $4,900
J. Micheals, Capital $46,000
Film Rental Expenses 5,500
Admissions Revenue $18,000
Advertising Expenses $450
Salaries Expenses $2,500
Account Receivable $5,550
$68,900 $68,900