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Department
Business - Marketing
Course
Business - Marketing ACC120
Professor
Lorna Martin- Scriver
Semester
Winter

Description
BRIEF EXERCISES EXERCISE 2-11 (a) GENERAL JOURNAL J1 Date Account Titles and Explanation Debit Credit May 2 Rent Expense....................................................... 1,200 Cash......................................................1,200..... 4 Supplies..............................................700.............. Accounts Payable........................................... 700 15 Accounts Payable ......................................800....... Cash........................................................800..... 31 Salary expense..................................................... 1,800 Cash......................................................1,800..... 31 Cash .................................................................. 9,500 Accounts Receivable..................................500....... Service Revenue 10,000 (b) Cash Accounts Payable May 1 6,000 May 2 1,200 May 1 800 31 9,500 15 800 May 4 700 31 1,800 May 15 800 May31 Bal. 11,700 May 31 Bal.700 Accounts Receivable Notes Payable May 31 500 May 1 50,000 May 31 Bal. 500 May 31Bal. 50,000 (b) (Continued) Supplies S. Ahuja, Capital May 1 1,000 May 1 21,200 May 4700 May 31 Bal. 1,700 May31Bal. 21,200 Equipment Service Revenue May 1 65,000 May 3110,000 May31Bal. 65,000 May 31 Bal.10,000 Rent Expense Salaries Expense May 2 1,200 May 31 1,800 May31Bal. 1,200 May31Bal.1,800 (c) AHUJA DENTAL SERVICES Trial Balance May 31, 2014 Debit Credit Cash...................................................................... $11,700 Accounts receivable ....................................500...... Supplies..............................................1,700............. Equipment............................................65,000.......... Notes payable...................................................$50,000 Accounts payable ................................................. 700 S. Ahuja, capital................................................21,200 Service revenue..................................................10,000 Rent expense..........................................1,200......... Salaries expense......................................1,800........ $81,900 $81,900 (d) AHUJA DENTAL SERVICES Income Statement Month Ended May 31, 2014 Revenues Service revenue..............................................$10,000............ Expenses Rent expense........................................$1,200........ Salaries expense.....................................1,800....... Total expenses .............................................3,000........... Profit ..........................................................................$7,000 AHUJA DENTAL SERVICES Statement of Owner's Equity Month Ended May 31, 2014 S. Ahuja, capital, May 1, 2014..................................$21,200....... Add: Profit ....................................................7,000................ S. Ahuja, capital, May 31, 2014.................................$28,200...... AHUJA DENTAL SERVICES Balance Sheet May 31, 2014 Assets Cash...............................................................$11,700.................. Accounts receivable ...................................................500......... Supplies.............................................................1,700................ Equipment...........................................................65,000............. Total assets....................................................$78,900............. Liabilities and Owner's Equity Liabilities Notes payable...................................................$50,000.......... Accounts payable....................................................700....... Total liabilities................................................50,700............. Owner's Equity S. Ahuja, capital................................................28,200........... Total liabilities and owner's equity ........................$78,900 EXERCISE 2-13 (a) (b) (c) (d) In Balance Larger Error Difference Column Incorrect Accounts 1. No $400 Debit Accounts Payable 2. Yes $0 None Rent Expense Prepaid Rent 3. Yes $0 None Accounts Receivable Service Revenue 4. No $500 Credit Accounts Payable 5. Yes $0 None Supplies Cash 6. No $18 Credit Advertising Expense 7. Yes $0 None Cash Salaries Expense BRIEF EXERCISE 2-14 1. The Prepaid Insurance balance was in the wrong column. Assets have a normal debit balance. When this account is moved to the debit column, the new total in the debit column will be $46,200 ($42,700 + $3,500) and the new total in the credit column will be $47,100 ($50,600 – $3,500). 2. The trial balance is now out of balance by $900 ($46,200 – $47,100). The transposition error in L. Bourque, Capital account is the cause of the $900 difference. If the $15,400 balance in that account is transposed to $14,500 this will reduce the total credits by $900 and the trial balance will now balance. See revised trial balance below: BOURQUE COMPANY Trial Balance December 31, 2014 Debit Credit Cash.......................................................................... $15,000 Accounts receivable .......................................1,800..... Prepaid insurance..........................................3,500...... Accounts payable ..................................................... $ 2,000 Unearned revenue.................................................... 2,200 L. Bourque, capital.................................................... 14,500 L. Bourque, drawings.......................................4,900.... Service revenue........................................................ 27,500 Rent expense...............................................2,400........ Salaries expense.........................................18,600........ ______ $46,200 $46,200 EXERCISES EXERCISE 2-1 (a) 4. Credit (b) 2. Analyzing transactions (c) 9. Posting (d) 1. Account (e) 5. Debit (f) 7. Journalizing (g) 10. Trial balance (h) 4. Credit (i) 3. Chart of accounts (j) 6. Journal EXERCISE 2-2 (a) (1) (3) Type of (2) Normal Account Account Financial Statement Balance Cash Asset Balance Sheet Debit M. Kobayashi, Capital Owner’s Balance Sheet and Credit Capital Statement of Owner’s Equity Accounts Payable Liability Balance Sheet Credit Building Asset Balance Sheet Debit Fees Earned Revenue Income Statement Credit Insurance Expense Expense Income Statement Debit Interest Revenue Revenue Income Statement Credit M. Kobayashi, Drawings Drawings Statement of Owner’s Debit Equity Notes Receivable Asset Balance Sheet Debit Prepaid Insurance Asset Balance Sheet Debit Rent Expense Expense Income Statement Debit Supplies Asset Balance Sheet Debit (b) Assets are on the left side of the basic accounting equation and liabilities and owner’s equity are on the right side of the basic accounting equation. Since debits are on the left side, and assets are also on the left side, the normal balance of an asset is a debit balance. Since credits are on the right side and liabilities are on the right side, the normal balance of a liability is a credit balance. The same is also true for owner’s equity. Revenues increase owner’s equity and therefore also have a normal credit balance. But expenses and drawings are decreases to owner’s equity and thus have a normal debit balance. EXERCISE 2-5 GENERAL JOURNAL J1 Date Account Titles and Explanation Debit Credit Mar. 3 Cash.................................................................. 10,000 J. MacKenzie, Capital................................... 10,000 4 Cash.................................................................. 10,000 Notes Payable..............................................10,000 6 Vehicles .............................................9,500.......... Cash........................................................9,500 7 Supplies..............................................1,500......... Accounts Payable........................................ 1,500 12 Accounts Receivable...................................2,100. Service Revenue.......................................... 2,100 21 Advertising Expense.....................................525. Cash..........................................................525 25 Cash..................................................1,200........... Accounts Receivable ................................... 1,200 28 Accounts Payable ......................................1,500.. Cash.........................................................1,500 30 Cash.....................................................750.......... Unearned Revenue...................................... 750 31 J. MacKenzie, Drawings.................................1,400 Cash ............................................................1,400 PROBLEM 2-2A (a) Account Debited Account Credited (1) (2) (3) (1) (2) (3) Trans- Specific Account Specific action Basic Type Effect Basic Type Account Effect Apr. 1 Asset Cash + $13,500 Owner
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