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Chapter 2 Class Exercises - 201

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49 views8 pages

Chapter 2 Class Exercises - 201

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rsx10011
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ACCT 201

Chapter 2 Class Exercises

E 2-4 Boilermaker House Painting Company incurs the following transactions for September.
1. Paint houses in the current month for $15,000 on account.
2. Purchase painting equipment for $16,000 cash.
3. Purchase office supplies on account for $2,500.
4. Pay employee salaries of $3,200 for the current month.
5. Purchase advertising to appear in the current month, $1,200.
6. Pay office rent of $4,400 for the current month.
7. Receive $10,000 from customers in (1) above.
8. Receive cash of $5,000 in advance from a customer who plans to have his house painted in
the following month.

Required: For each transaction, describe the dual effect on the accounting equation. For
example, for the first transaction, (1) assets increase and (2) stockholders’ equity increases.

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ACCT 201

E 2-7 Below are several external transactions for Hokies Company. Indicate which accounts
should be debited and which should be credited.

Hokies uses the following accounts:


Accounts Payable Equipment Accounts Receivable
Cash Supplies Utilities Expense
Prepaid Rent Rent Expense Service Revenue
Common Stock Notes Payable Retained Earnings
Salaries Payable Salaries Expense Dividends

Account Debited Account Credited

Example: Purchase equipment in exchange for


Equipment Cash
cash.

1. Pay a cash dividend

2. Pay rent in advance for the next three


months

3. Provide services to customers on account

4. Purchase office supplies on account

5. Pay salaries for the current month

6. Issue common stock in exchange for cash

7. Collect cash from customers for services


provided in (3) above
8. Borrow cash from the bank and sign a
note

9. Pay for the current month’s utilities

10. Pay for office supplies purchased in (4)


above

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ACCT 201

E 2-11 Bearcat Construction begins operations in March and has the following transactions.

Required: Record each transaction. Bearcat uses the following accounts: Cash, Accounts
Receivable, Equipment, Notes Payable, Common Stock, Service Revenue, Advertising Expense,
and Salaries Expense.

March 1 Issue common stock for $21,000.

March 5 Obtain $9,000 loan from the bank by signing a note.

March 10 Purchase construction equipment for $25,000 cash.

March 15 Purchase advertising for the current month for $1,100 cash.

March 22 Provide construction services for $18,000 on account.

March 27 Receive $13,000 cash on account from March 22 services.

March 28 Pay salaries for the current month of $6,000.

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ACCT 201

E 2-15 Consider the recorded transactions below.


Debit Credit
1. Accounts Receivable 8,400
Service Revenue 8,400
2. Supplies 2,300
Accounts Payable 2,300
3. Cash 10,200
Accounts Receivable 10,200
4. Advertising Expense 1,000
Cash 1,000
5. Accounts Payable 3,700
Cash 3,700
6. Cash 1,100
Deferred Revenue 1,100

Required: Post each transaction to T-accounts and compute the ending balance of each
account. The beginning balance of each account before the transactions is: Cash, $3,400;
Accounts Receivable, $4,200; Supplies, $400; Accounts Payable, $3,500; Deferred Revenue,
$300. Service Revenue and Advertising Expense each have a beginning balance of zero.

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ACCT 201

E 2-17 Below is the complete list of accounts of Sooner Company and the related balance at the
end of April. All accounts have their normal debit or credit balance. Cash, $3,900; Prepaid Rent,
$7,400; Accounts Payable, $4,300; Common Stock, $40,000; Service Revenue, $25,400; Salaries
Expense, $8,200; Accounts Receivable, $6,100; Land, $60,000; Deferred Revenue, $2,300;
Retained Earnings, $23,000; Supplies Expense, $9,400.

Required: Prepare a trial balance with the list of accounts in the following order: assets,
liabilities, stockholders’ equity, revenues, and expenses.

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ACCT 201

E 2-20 Boilermaker House Painting Company incurs the following transactions for September.
1. Paint houses in the current month for $20,000 on account.
2. Purchase painting equipment for $21,000 cash.
3. Purchase office supplies on account for $3,500.
4. Pay employee salaries of $4,200 for the current month.
5. Purchase advertising to appear in the current month for $1,000 cash.
6. Pay office rent of $5,400 for the current month.
7. Receive $15,000 from customers in (1) above.
8. Receive cash of $6,000 in advance from a customer who plans to have his house painted
in the following month.

Required:
1. Record each transaction. Boilermaker uses the following accounts: Cash, Accounts
Receivable, Supplies, Equipment, Accounts Payable, Deferred Revenue, Common Stock,
Retained Earnings, Service Revenue, Salaries Expense, Advertising Expense, and Rent
Expense.

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ACCT 201

2. Post each transaction to T-accounts and compute the ending balance of each account.
At the beginning of September, the company had the following account balances: Cash,
$46,100; Accounts Receivable, $1,700; Supplies, $500; Equipment, $7,400; Accounts
Payable, $1,200; Common Stock, $25,000; Retained Earnings, $29,500. All other
accounts had a beginning balance of zero.

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ACCT 201

3. After calculating the ending balance of each account, prepare a trial balance.

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