Determine if a debit, credit, or nil entry would be made to the balance sheet:
- Increase Accounts Receivable
- Increase Accounts Payable
- Decrease Mortgage Payable
- Increase Office Supplies
- Decrease Owner’s Capital
- Increase Cash
- Decrease Office Furniture
- Increase Owner’s Withdrawals
- Decrease Unearned Revenue
- Increase Revenue
Determine if the normal balance is a debit or a credit:
- Service Revenue
- Unearned Revenue
- Cash
- Accounts Receivable
- Bank Loan
- Advertising Expense
- Note Payable
- Rent Expense
- Owner’s Capital
- Undeveloped Land
Question 2
John Tree started a business, Tree Trimming, which is a proprietorship, on June 01, 2018. The following transactions occurred in June 2018:
- June 5: Tree Trimming provided tree trimming services for a client, on account, for $ 3,000.
- June 9: John Tree withdrew $ 500 from his personal bank account and used the funds to purchase a television for his mother.
- June 15: Tree Trimming received cash for the June 5 work that it had performed.
- June 22: Tree Trimming paid $ 250 regarding an ad that it placed in the local newspaper.
- June 24: Tree Trimming received $ 10,000 cash for tree trimming services it performed that day.
Required:
Journalize the above transactions affecting Tree Trimming. Provide a written explanation for each journal entry recorded or not recorded.
Question 3
Linda Jewel started a business, Jewelry By Design, a proprietorship, in November 2018. The following transactions transpired in November 2018:
- November 01: Linda Jewel deposited $ 5,000 of her personal funds to Jewelry By Design.
- November 01: Jewelry By Design paid $ 1,000 for November’s rent.
- November 10: Jewelry By Design invoiced a customer $ 7,000 regarding creating necklaces for thecustomer.
- November 13: Jewelry By Design paid $ 700 cash for office supplies and purchased on account $ 3,000 office furniture.
- November 20: Jewelry By Design attended a craft fair and received $ 3,500 cash for selling bracelets.
- November 22: Jewelry By Design collected payment for the November 10 sale.
- November 26: Jewelry By Design paid $ 1,500 accounts payable.
Required:
- Prepare journal entries for the above transactions.
- Post the journal entries to T-accounts. Identify the postings by date. Date the ending balance of each T-account Nov. 30.
- Prepare Jewelry By Design’s unadjusted trial balance at November 30, 2018.
Question 4
Sam Strong, on March 01, 2018, started his income tax business, Strong Taxes. The following transactions occurred in March 2018:
- Sam Strong transferred several personal assets to the business: cash $ 60,000, land valued at $ 400,000, and a building valued at $ 100,000.
- Strong Taxes paid cash for the following items:
- $ 1,000 Office Supplies
- $ 5,000 Computer Equipment
- $ 4,000 Office Furniture
- Strong Taxes paid consulting fees, $ 3,000 cash.
- Strong Taxes did tax consulting work and charged the client $ 8,000. That amount will be paid in April 2018.
- Sam Strong took a vacation and Strong Taxes paid $ 10,000 cash for the vacation.
- Strong Taxes received a $ 2,500 invoice for placing a radio ad. The invoice will be paid at a later date.
- Strong Taxes did tax planning work and received $ 12,000 for the tax work done.
- Strong Taxes prepared several income tax returns and charged the client $ 4,000.
- Strong Taxes was billed $ 12,000 by its lawyer; Strong Taxes paid cash for half of the billed amount and will pay the remaining balance in May.
- Strong Taxes received cash for the work it had done preparing the income tax returns for a client.
Required:
- Journalize the above transactions using the numerals to identify the transaction.
- Following Exhibit 2-11 on page 79 in your textbook, open the following ledgers:
Cash # 1100
Accounts Receivable # 1200
Office Supplies # 1300
Office Furniture #1400
Computer Equipment #1500
Building #1600
Land #1700
Accounts Payable #2100
Sam Strong, Capital # 3100
Sam Strong, Withdrawals # 3200
Service Revenue # 4100
Consulting Fees Expense #5100
Advertising Expense #5200
Legal Fees Expense #5300
- Post the journal entries to the ledger accounts, keeping a running balance for each account.
- Prepare the unadjusted trial balance for Strong Taxes at March 31, 2018.
Question 5
Ron Able formed Able Construction, a proprietorship. Ron Able attempted to produce a trial balance, and his trial balance did not balance:
Able Construction | ||
Trial Balance | ||
30-Nov-18 | ||
Account | Debit | Credit |
Cash | $2,100 | |
Accounts Receivable | 10,500 | |
Supplies | 1,400 | |
Office Furniture | 4,100 | |
Land | 47,100 | |
Accounts Payable | $4,300 | |
Notes Payable | 23,500 | |
Ron Able, Capital | 32,100 | |
Ron Able, Withdrawals | 2,500 | |
Consulting Service Revenue | 7,800 | |
Advertising Expense | 900 | |
Rent Expense | 1,500 | |
Salary Expense | 2,600 | |
Utilities Expense | 910 | |
Total | $73,610 | $67,700 |
Able Construction’s accountant, Sue Smart, uncovered the following errors:
- The cash balance is over stated by $ 150.
- The cost of the land was $ 43,100, not $ 47,100.
- A $ 500 purchase of supplies on account was neither journalized nor posted.
- A $ 2,000 credit to Consulting Service Revenue was not posted.
- Rent Expense of $ 300 was posted as a credit rather than a debit.
- The balance of Salary Expense is $ 2,400, but it was listed as $ 2,600 on the trial balance.
- A $ 500 debit to Accounts Receivable was posted as $ 50. The credit to Consulting Service Revenue was correct.
- The balance of Utilities Expense was overstated by $ 610.
- A $ 700 debit to the Ron Able, Withdrawals account was posted as a debit to Ron Able, C
Required:
Prepare Able Construction’s correct trial balance at November 30, 2018. Show your calculations. Journal entries are not required.