SMCH 03

Beginning the Accounting Cycle: Journalizing, Posting, and the Trial Balance
ANSWERS TO DISCUSSION QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
The accounting cycle represents a certain period of time a business has to perform the normal accounting procedures (usually one year). Disagree; it is based on the income statement. Calendar yearJanuary 1 to December 31 Fiscal yearAny 12 consecutive months. (A fiscal year could be a calendar year.) Interim statements are financial statements prepared for parts of the fiscal period. Transactions are first journalized in a book of original entry and then posted to the ledger, the book of final entry. The debit(s) and credit(s) parts of recording a transaction are located on the same page of the journal. In the ledger, they would be on separate pages. The chart of accounts provides all the titles of the accounts that will be used in the debit and credit parts of recording each transaction in a journal. A compound journal entry is a journal entry that requires three or more accounts. Disagree; it means updating the ledger. False. The side that increases the account is the normal balance. Agree. Cross-referencing updates the PR column in the journal after the ledger account has been updated. Transposition is a rearrangement of digits: 5,132 5,312 Slide means adding or deleting zeros: 4,821 482.10
45
CHAPTER 3 SOLUTIONS TO MINI EXERCISES 1. A. B. C. D. 200X Oct. 15 Cash Equipment E. L. Swan, Capital F. Initial Investment by Owner G. $6,000 and $400 = $6,400 H. $6,400 I. P.1
2. A. Owner Investment of Cash and Equipment B. Performed Hair Services for Cash and Charge C. Advertising Bill Unpaid 3. BAL
Dr. 15 21 17 18 Cr.
PR column of cash tells us from which page of journal information came. The Acct. #111 will be used to cross reference back to the PR column of the Journal to tell it was posted to Acct. #111 in the General Ledger. 4.
LARKIN COMPANY TRIAL BALANCE OCTOBER 31, 200X Dr. Cash Equipment Accounts Payable B. Larkin, Capital B. Larkin, Withdrawals Taxi Fees Rent Expense Advertising Expense Totals 17 12 8 17 5 16 4 3 41 Cr.
41
5.
2002 June 12 Telephone Expense Repair Expense 180 180
To correct error on May 1 entry a corrected journal entry would not be needed if the entry had not yet been posted.
46
SOLUTIONS TO EXERCISES 3-1. Date Oct. 1 Account Titles and Description Cash Equipment L. Clinton, Capital Owner investment Building Accounts Payable Purchase Building on Account PR Dr. 40 0 0 0 00 2 0 0 0 00 Cr.
42 0 0 0 00
60 0 0 0 00 60 0 0 0 00
12 Truck Cash Purchase truck for cash 18 Supplies Accounts Payable Bought from Green Co. on account
18 0 0 0 00 18 0 0 0 00
7 0 0 00 7 0 0 00
3-2. Date Jan. 1 Account Titles and Description Cash Reggie Long, Capital Owner Investment 5 Auto Equipment Cash Purchased shop equipment for cash 8 Auto Equipment Accounts Payable Bought from Lowell Co. on account 14 Cash Repair Fees Earned Fees collected 18 Accounts Receivable Repair Fees Earned Fees on account from Sullivan Co. 20 Reggie Long, Withdrawals Cash Personal Withdrawal PR Dr. 16 0 0 0 00 Cr. 16 0 0 0 00 7 0 0 0 00 7 0 0 0 00 6 0 0 0 00 6 0 0 0 00 9 0 0 00 9 0 0 00 9 0 0 00 9 0 0 00 3 0 0 00 3 0 0 00
47
EXERCISES (CONTINUED) 3-3. Date 200X Apr. 6 Account Titles and Description Cash A. King, Capital Cash investment Equipment Cash Accounts Payable Purchase of Equipment
CASH P. 4
PR Dr. Cr. 111 15 0 0 0 00 311 15 0 0 0 00
14
121 9 0 0 0 00 111 211
4 0 0 0 00 5 0 0 0 00
ACCOUNT NO. 111
Balance Date 200X Apr. 6 14 Explanation Post Ref. Debit Credit Debit GJ4 15 0 0 0 00 15 0 0 0 00 GJ4 4 0 0 0 00 11 0 0 0 00 Credit
EQUIPMENT
ACCOUNT NO. 121
Balance Date 200X Apr. 14 Explanation Post Ref. GJ4 Debit 9 0 0 0 00 Credit Debit 9 0 0 0 00 Credit
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Balance Date 200X Apr. 14 Explanation Post Ref. GJ4 Debit Credit 5 0 0 0 00 Debit Credit 5 0 0 0 00
A. KING, CAPITAL
ACCOUNT NO. 311
Balance Date 200X Apr. 6 Explanation Post Ref. GJ4 Debit Credit 15 0 0 0 00 Debit Credit 15 0 0 0 00
48
EXERCISES (CONTINUED) 3-4. Date 200X Jul. 1 (A)

PAGE 1
Account Titles and Description Cash J. Lowe, Capital Owner investment Equipment Account Payable Purchases of Equipment from Lax Co. Accounts Receivable Fees Earned Services billed to Friend Co. Cash Fees Earned Cash Fees Salaries Expense Cash Salaries Paid J. Lowe, Withdrawals Cash Personal Withdrawals
PR Dr. Cr. 111 6 0 0 0 00 311 6 0 0 0 00
121 211
8 0 0 00 8 0 0 00
15
112 4 0 0 0 00 411 4 0 0 0 00 111 5 0 0 0 00 411 5 0 0 0 00
18
24
511 1 8 0 0 00 111 1 8 0 0 00
28
312 111
4 0 0 00 4 0 0 00
(B)
CASH ACCOUNT NO. 111
Balance Date 200X Jul. 1 18 24 28 Explanation Post Ref. GJ1 GJ1 GJ1 GJ1 Debit 6 0 0 0 00 5 0 0 0 00 Credit 6 11 1 8 0 0 00 9 4 0 0 00 8 Debit 0 00 0 00 2 00 8 00 Credit 00 00 00 00
49
EXERCISES (CONTINUED)
ACCOUNTS RECEIVABLE ACCOUNT NO. 112
Balance Date 200X Jul. 15 Explanation Post Ref. GJ1 Debit 4 0 0 0 00 Credit Debit 4 0 0 0 00 Credit
EQUIPMENT
ACCOUNT NO. 121
Balance Date 200X Jul. 4 Explanation Post Ref. GJ1 Debit 8 0 0 00 Credit Debit 8 0 0 00 Credit
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Balance Date 200X Jul. 4 Explanation Post Ref. GJ1 Debit Credit 8 0 0 00 Debit Credit 8 0 0 00
J. LOWE, CAPITAL
ACCOUNT NO. 311
Balance Date 200X Jul. 1 Explanation Post Ref. GJ1 Debit Credit 6 0 0 0 00 Debit Credit 6 0 0 0 00
J. LOWE, WITHDRAWALS
ACCOUNT NO. 312
Balance Date 200X Jul. 28 Explanation Post Ref. GJ1 Debit 4 0 0 00 Credit Debit 4 0 0 00 Credit
FEES EARNED
ACCOUNT NO. 411
Balance Date 200X Jul. 15 18 Explanation Post Ref. GJ1 GJ1 Debit Credit 4 0 0 0 00 5 0 0 0 00 Debit Credit 4 0 0 0 00 9 0 0 0 00
50
EXERCISES (CONTINUED)
SALARIES EXPENSE ACCOUNT NO. 511
Balance Date 200X Jul. 24 (C)

J. LOWE, COMPANY TRIAL BALANCE JULY 31, 200X Dr. Cr.
Explanation
Post Ref. GJ1
Debit 1 8 0 0 00
Credit
Debit 1 8 0 0 00
Credit
Cash Accounts Receivable Equipment Accounts Payable J. Lowe, Capital J. Lowe, Withdrawals Fees Earned Salaries Expense Totals
8 8 0 0 00 4 0 0 0 00 8 0 0 00 6 4 0 0 00 9 1 8 0 0 00 15 8 0 0 00 15 0 0 0 00 8 0 0 00 8 0 0 00 0 0 0 00
3-5.
SUNG CO. TRIAL BALANCE MARCH 31, 200X Dr. Cr.
Cash Accounts Receivable Accounts Payable A. Sung, Capital A. Sung, Withdrawals Services Earned Concessions Earned Rent Expense Salaries Expense Miscellaneous Expense Totals 3-6. Put line through 900s. Change to 1,400 and initial.
10 1
0 0 0 00 2 0 0 00 2 6 3 0 0 00 4 2 7 0 0 00 5 0 0 00 0 0 0 00 5 0 0 00
4 2 5 1 3 15 7
0 0 0 0
0 0 0 0
00 00 00 00
15 7 0 0 00
51
SOLUTIONS TO A PROBLEMS PROBLEM 3A-1

ALS FITNESS CENTER GENERAL JOURNAL PAGE 1
Date 200X Aug. 1
Account Titles and Description Prepaid Rent Cash Rent Paid in Advance2 mo. Fitness Equipment Accounts Payable Bought on Account from Leeks Supply House Fitness Supplies Cash Purchased from Angels Wholesale Cash Fitness Fees Earned Fees for Cash Al Vincent, Withdrawals Cash Personal Withdrawal Advertising Expense Accounts Payable Advertising Bill Cleaning Expense Cash Paid Cleaning Expense Salaries Expense Cash Paid Salaries
PR 6
Dr. 0 0 0 00
Cr. 6 0 0 0 00
2 0 0 00 4 2 0 0 00
10
7 0 0 00 7 0 0 00
12
4 0 0 00 1 4 0 0 00
20
6 0 0 00 6 0 0 00
21
1 2 0 00 1 2 0 00
25
9 0 00 9 0 00
28
5 0 0 00 5 0 0 00
52
PROBLEM 3A-1 (CONTINUED)

ROYS DOG GROOMING CENTER GENERAL JOURNAL PAGE 2
Date 200X Aug. 29
Account Titles and Description Accounts Receivable Fitness Fees Earned Fees on Account for Ricks Kennel Accounts Payable Cash Partial Payment to Leeks
PR 1
Dr. 7 0 0 00
Cr. 1 7 0 0 00
30
1 0 0 00 2 1 0 0 00
53
PROBLEM 3A-2 (A, B)

TAYLORS DANCE STUDIO GENERAL JOURNAL PAGE 1
Date 200X Jun. 1
Account Titles and Description Cash Molly Taylor, Capital Cash Investment Prepaid Rent Cash Rent Paid in Advance3 mo. Equipment Accounts Payable Purchased on Account from Aston Co. Cash Fees Earned Fees For Cash Supplies Cash Bought Supplies for Cash Accounts Receivable Fees Earned Fees on Account from Lester Co. Salaries Expense Cash Paid Salaries Molly Taylor, Withdrawals Cash Personal Withdrawal Electrical Expense Cash Paid Electric Bill Telephone Expense Cash Paid Telephone Bill for June
54
PR 111 9 311
Dr. 0 0 0 00
Cr. 9 0 0 0 00
114 1 111
0 0 0 00 1 0 0 0 00
131 211
7 0 0 00 7 0 0 00
111 411
9 0 0 00 9 0 0 00
121 111
3 0 0 00 3 0 0 00
112 2 411
1 0 0 00 2 1 0 0 00
10
521 111
4 0 0 00 4 0 0 00
15
312 111
1 5 0 00 1 5 0 00
28
511 111
1 2 5 00 1 2 5 00
29
531 111
1 9 0 00 1 9 0 00

GENERAL LEDGER OF TAYLORS DANCE STUDIO CASH ACCOUNT NO. 111
Balance Date 200X Jun. 1 1 5 8 10 15 28 29 Explanation Post Ref. GJ1 GJ1 GJ1 GJ1 GJ1 GJ1 GJ1 GJ1 Debit 9 0 0 0 00 9 0 0 00 3 4 1 1 1 0 0 5 2 9 0 0 0 5 0 00 00 00 00 00 Credit 1 0 0 0 00 9 8 8 8 8 8 7 7 Debit 0 00 0 00 9 00 6 00 2 00 0 50 9 25 7 35 Credit 00 00 00 00 00 00 00 00
ACCOUNTS RECEIVABLE
ACCOUNT NO. 112
Balance Date 200X Jun. 9 Explanation Post Ref. GJ1 Debit 2 1 0 0 00 Credit Debit 2 1 0 0 00 Credit
PREPAID RENT
ACCOUNT NO. 114
SUPPLIES
ACCOUNT NO. 121
Balance Date 200X Jun. 8 Explanation Post Ref. GJ1 Debit 3 0 0 00 Credit Debit 3 0 0 00 Credit
55

EQUIPMENT ACCOUNT NO. 131
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Balance Date 200X Jun. 3 Explanation Post Ref. GJ1 Debit Credit 7 0 0 00 Debit Credit 7 0 0 00
MOLLY TAYLOR, CAPITAL
ACCOUNT NO. 311
Balance Date 200X Jun. 1 Explanation Post Ref. GJ1 Debit Credit 9 0 0 0 00 Debit Credit 9 0 0 0 00
MOLLY TAYLOR, WITHDRAWALS
ACCOUNT NO. 312
FEES EARNED
ACCOUNT NO. 411
Balance Date 200X Jun. 5 9 Explanation Post Ref. GJ1 GJ1 Debit Credit 9 0 0 00 2 1 0 0 00 Debit Credit 9 0 0 00 3 0 0 0 00
56
PROBLEM 3A-2 (CONCLUDED)

ELECTRICAL EXPENSE ACCOUNT NO. 511
SALARIES EXPENSE
ACCOUNT NO. 521
TELEPHONE EXPENSE
ACCOUNT NO. 531
(C)
TAYLORS DANCE STUDIO TRIAL BALANCE JUNE 30, 200X Dr. Cr.
Cash Accounts Receivable Prepaid Rent Supplies Equipment Accounts Payable Molly Taylor, Capital Molly Taylor, Withdrawals Fees Earned Electrical Expense Salaries Expense Telephone Expense Totals
7 2 1
7 1 0 3 7
3 0 0 0 0
5 0 0 0 0
00 00 00 00 00 9 7 0 0 00 0 0 0 00 0 0 0 00
1 5 0 00 3 1 4 1 7 2 0 9 0 5 0 0 0 00 00 00 00
12
12
7 0 0 00
57
PROBLEM 3A-3 (A, B)

A. FRENCHS PLACEMENT AGENCY GENERAL JOURNAL PAGE 1
Date 200X Jun. 1
Account Titles and Description Cash A. French, Capital Owner Investment
PR 111 9 311
Dr. 0 0 0 00
Cr. 9 0 0 0 00
Equipment 141 2 Account Payable 211 Purchased on Account from Hook Co. Accounts Receivable Placement Fees Earned Fees on Account A. French, Withdrawals Cash Personal Withdrawals Wage Expense Cash Paid Wages Cash Placement Fees Earned Cash Fees Supplies Accounts Payable Bought on Account from Lyon Co. Telephone Expense Cash Paid Telephone Bill for June 112 1 411
0 0 0 00 2 0 0 0 00
6 0 0 00 1 6 0 0 00
312 111
1 0 0 00 1 0 0 00
511 111
3 0 0 00 3 0 0 00
111 411
6 0 0 00 6 0 0 00
15
131 211
5 0 0 00 5 0 0 00
28
521 111
1 6 0 00 1 6 0 00
29
Advertising Expense 531 Accounts Payable 211 Advertising Bill Received from Shale Co.
9 0 0 00 9 0 0 00
58

GENERAL LEDGER OF A. FRENCHS PLACEMENT AGENCY CASH ACCOUNT NO. 111
Balance Date 200X Jun. 1 5 7 9 28 Explanation Post Ref. GJ1 GJ1 GJ1 GJ1 GJ1 Debit 9 0 0 0 00 Credit 9 1 0 0 00 8 3 0 0 00 8 9 1 6 0 00 9 Debit 0 00 9 00 6 00 2 00 0 40 Credit 00 00 00 00 00
6 0 0 00
ACCOUNTS RECEIVABLE
ACCOUNT NO. 112
SUPPLIES
ACCOUNT NO. 131
EQUIPMENT
ACCOUNT NO. 141
59

ACCOUNTS PAYABLE ACCOUNT NO. 211
Balance Date 200X Jun. 1 15 29 Explanation Post Ref. GJ1 GJ1 GJ1 Debit Credit 2 0 0 0 00 5 0 0 00 9 0 0 00 Debit Credit 2 0 0 0 00 2 5 0 0 00 3 4 0 0 00
A. FRENCH, CAPITAL
ACCOUNT NO. 311
A. FRENCH, WITHDRAWALS
ACCOUNT NO. 312
PLACEMENT FEES EARNED
ACCOUNT NO. 411
Balance Date 200X Jun. 3 9 Explanation Post Ref. GJ1 GJ1 Debit Credit 1 6 0 0 00 6 0 0 00 Debit Credit 1 6 0 0 00 2 2 0 0 00
WAGE EXPENSE
ACCOUNT NO. 511
60
PROBLEM 3A-3 (CONCLUDED)

TELEPHONE EXPENSE ACCOUNT NO. 521
ADVERTISING EXPENSE
ACCOUNT N0. 531
(C)
A. FRENCHS PLACEMENT AGENCY TRIAL BALANCE JUNE 30, 200X Dr. Cr.
Cash Accounts Receivable Supplies Equipment Accounts Payable A. French, Capital A. French, Withdrawals Placement Fees Earned Wage Expense Telephone Expense Advertising Expense Totals
9 0 4 1 6 0 5 0 2 0 0
0 0 0 0
00 00 00 00 3 9 4 0 0 00 0 0 0 00 2 0 0 00
1 0 0 00 2 3 1 9 6 0 6 0 0 0 0 0 0 00 00 00 00
14
14
6 0 0 00
61
SOLUTIONS TO B PROBLEMS PROBLEM 3B-1

Date 200X Apr. 1
Account Titles and Description Fitness Equipment Cash Al Vincent, Capital Owner Investment Fitness Supplies Account Payable Bought on Account from Rex Co. Office Equipment Accounts Payable Bought on Account from Ross Stationary Al Vincent, Withdrawals Cash Personal Withdrawal Cash Fitness Fees Earned Cash Fees Advertising Expense Accounts Payable Advertising Bill Received Cleaning Expense Accounts Payable Cleaning Bill Received
PR
Dr. 6 0 0 0 00 3 0 0 0 00
Cr.
9 0 0 0 00
5 0 0 00 5 0 0 00
10
4 0 0 00 4 0 0 00
12
6 0 00 6 0 00
20
6 0 0 00 6 0 0 00
21
7 5 00 7 5 00
25
9 0 00 9 0 00
62
PROBLEM 3B-1 (CONCLUDED)

Date 200X Account Titles and Description Apr. 28 Accounts Receivable Fitness Fees Earned Fees on Account 29 Salaries Expense Cash Paid Salaries 30 Accounts Payable Cash Paid half of the Amount Owed to Ross Stationery
PR
Dr. 7 0 0 00
Cr. 7 0 0 00
4 0 0 00 4 0 0 00
2 0 0 00 2 0 0 00
63
PROBLEM 3B-2 (A, B)
TAYLORS DANCE STUDIO GENERAL JOURNAL
PAGE 1
Date 200X Jun. 1
Account Titles and Description Cash Molly Taylor, Capital Owner Investment Prepaid Rent Cash Rent Paid in Advance 4 mo. Supplies Accounts Payable Purchased on Account from A. J. K. Equipment Accounts Payable Bought on Account from Reese Co. Cash Fees Earned Cash Fees from Northwest Jr. College Accounts Receivable Fees Earned Fees on Account from Long Co. Molly Taylor, Withdrawals Cash Personal Withdrawal Salaries Expense Cash Paid Salaries Telephone Expense Cash Paid Telephone Bill Electrical Expense Accounts Payable Electric Bill Received
64
PR Dr. Cr. 111 6 0 0 0 00 311 6 0 0 0 00
114 1 2 0 0 00 111 1 2 0 0 00
121 211
7 0 0 00 7 0 0 00
131 211
9 0 0 00 9 0 0 00
111 1 3 0 0 00 411 1 3 0 0 00
112 411
6 0 0 00 6 0 0 00
10
321 111
4 0 0 00 4 0 0 00
15
521 111
4 0 0 00 4 0 0 00
28
531 111
1 1 8 00 1 1 8 00
28
511 211
1 2 0 00 1 2 0 00
PROBLEM 3B-2 (CONTINUED)

GENERAL LEDGER OF TAYLORS DANCE STUDIO CASH ACCOUNT NO. 111
Balance Date 200X Jun. 1 1 8 10 15 28 Explanation Post Ref. GJ1 GJ1 GJ1 GJ1 GJ1 GJ1 Debit 6 0 0 0 00 1 3 0 0 00 4 0 0 00 4 0 0 00 1 1 8 00 Credit 1 2 0 0 00 6 4 6 5 5 5 Debit 0 00 8 00 1 00 7 00 3 00 1 82 Credit 00 00 00 00 00 00
ACCOUNTS RECEIVABLE
ACCOUNT NO. 112
PREPAID RENT
ACCOUNT NO. 114
SUPPLIES
ACCOUNT NO. 121
65

EQUIPMENT ACCOUNT NO. 131
ACCOUNTS PAYABLE
ACCOUNT NO. 211
Balance Date 200X Jun. 3 5 28 Explanation Post Ref. GJ1 GJ1 GJ1 Debit Credit 7 0 0 00 9 0 0 00 1 2 0 00 Debit Credit 7 0 0 00 1 6 0 0 00 1 7 2 0 00
MOLLY TAYLOR, CAPITAL
ACCOUNT NO. 311
MOLLY TAYLOR, WITHDRAWALS
ACCOUNT NO. 312
FEES EARNED
ACCOUNT NO. 411
66

ELECTRICAL EXPENSE ACCOUNT NO. 511
SALARIES EXPENSE
ACCOUNT NO. 521
TELEPHONE EXPENSE
ACCOUNT NO. 531
(C)
TAYLORS DANCE STUDIO TRIAL BALANCE JUNE 30, 200X Dr. Cr.
Cash Accounts Receivable Prepaid Rent Supplies Equipment Accounts Payable Molly Taylor, Capital Molly Taylor, Withdrawals Fees Earned Electrical Expense Salaries Expense Telephone Expense Totals
5 1
1 6 2 7 9
8 0 0 0 0
2 0 0 0 0
00 00 00 00 00 1 6 7 2 0 00 0 0 0 00 9 0 0 00
4 0 0 00 1 1 4 1 6 2 0 1 2 0 0 8 0 00 00 00 00
6 2 0 00
67
PROBLEM 3B-3 (A, B)

A. FRENCHS PLACEMENT AGENCY GENERAL JOURNAL PAGE 1
Date 200X Jun. 1
Account Titles and Description Cash A. French, Capital Owner Investment Equipment Cash Bought Equipment for Cash Accounts Receivable Placement Fees Earned Fees on Account from Avon Co. Wage Expense Cash Paid Wages A. French, Withdrawals Cash Personal Withdrawal Cash Placement Fees Earned Cash Fees from Jay Diamond Supplies Cash Bought Supplies for Cash Telephone Expense Accounts Payable Telephone Bill Owed Advertising Expense Accounts Payable Advertising Bill Received
PR 111 311
Dr. 6 0 0 0 00
Cr. 6 0 0 0 00
141 111
3 5 0 00 3 5 0 00
112 411
2 1 0 0 00 2 1 0 0 00
511 111
4 0 0 00 4 0 0 00
312 111
6 9 00 6 9 00
111 411
9 0 0 00 9 0 0 00
15
131 111
3 5 0 00 3 5 0 00
28
521 211
1 8 5 00 1 8 5 00
29
531 211
2 0 0 00 2 0 0 00
68

GENERAL LEDGER OF A. FRENCHS PLACEMENT AGENCY CASH ACCOUNT NO. 111
Balance Date 200X Jun. 1 2 5 7 9 15 Explanation Post Ref. GJ1 GJ1 GJ1 GJ1 GJ1 GJ1 Debit 6 0 0 0 00 Credit 3 5 0 00 4 0 0 00 6 9 00 9 0 0 00 3 5 0 00 6 5 5 5 6 5 Debit 0 00 6 50 2 50 1 81 0 81 7 31 Credit 00 00 00 00 00 00
ACCOUNTS RECEIVABLE
ACCOUNT NO. 112
SUPPLIES
ACCOUNT NO. 131
EQUIPMENT
ACCOUNT NO. 141
69

ACCOUNTS PAYABLE ACCOUNT NO. 211
Balance Date 200X Jun. 28 29 Explanation Post Ref. GJ1 GJ1 Debit Credit 1 8 5 00 2 0 0 00 Debit Credit 1 8 5 00 3 8 5 00
A. FRENCH, CAPITAL
ACCOUNT NO. 311
A. FRENCH, WITHDRAWALS
ACCOUNT NO. 312
Balance Date 200X Jun. 7 Explanation Post Ref. GJ1 Debit 6 9 00 Credit Debit 6 9 00 Credit
PLACEMENT FEES EARNED
ACCOUNT NO. 411
WAGE EXPENSE
ACCOUNT NO. 511
70

TELEPHONE EXPENSE ACCOUNT NO. 521
ADVERTISING EXPENSE
ACCOUNT NO. 531
(C)
A. FRENCHS PLACEMENT AGENCY TRIAL BALANCE JUNE 30, 200X Dr. C r.
Cash Accounts Receivable Supplies Equipment Accounts Payable A. French, Capital A. French, Withdrawals Placement Fees Earned Wage Expense Telephone Expense Advertising Expense Totals
5 2
7 1 3 3
3 0 5 5
1 0 0 0
00 00 00 00 6 3 8 5 00 0 0 0 00 0 0 0 00
6 9 00 3 4 1 2 3 0 8 0 8 0 5 0 5 00 00 00 00
3 8 5 00
71
SOLUTION TO REAL WORLD APPLICATION #1

HAMPTON CO. TRIAL BALANCE JUNE 30, 200X Dr. Cr.
Cash in bank Accounts Receivable Office Supplies Prepaid Rent Office Equipment Notes Payable Accounts Payable D. Hole, Capital D. Hole, Withdrawals Office Sales Wage Expense Rent Expense Utilities Expense Totals
3 5
4 7 2 3 4
8 8 4 6 0
0 0 0 0 0
00 00 00 00 00 2 3 11 4 0 0 00 4 8 0 00 5 6 0 00 7 2 0 00
1 2
1 0 0 00 5 6 9 2 1 0 4 6 6 0 0 0 0 00 00 00 00
23
23
1 6 0 00
SOLUTIONS TO REAL WORLD ACCOUNTING APPLICATION #2 1. 2. 3. 4. 5. Cash in trial balance is understated. Trial balance will not balance. Computer supplies understated and computer equipment overstated. Trial balance will balance. Wage expense overstated by $8 and trial balance will not balance. Computer supplies understated and computer sales understated. Trial balance will balance. Accounts payable is overstated and trial balance will not balance. SOLUTION TO REAL WORLD APPLICATION #3 The question in this case is whether Jay should be allowed to copy another companys software. I believe that there is something wrong with Jay asking his friend if he can copy his software. Software is protected under copyright laws. Maybe Jay should check with the manufacturer of the software for delayed billing.
72
CONTINUING PROBLEM
ELDORADO COMPUTER CENTER GENERAL JOURNAL PAGE 1
Date 200X 9/1 0X 2 6 8 12 15 17 20 22 26 28
Account Titles and Description Prepaid Rent Cash (Ck #8104) Cash Service Revenue Cash Service Revenue Accounts Payable Cash Cash Accounts Receivable Accounts Payable Cash Computer Shop Equipment Cash Phone Expense Accounts Payable Utilities Expense Accounts Payable Cash Service Revenue Accounts Receivable Service Revenue
PR 1025 1 1000 1000 4000 1000 4000 2000 1000 1000 1020 2000 1000 1080 1 1000 5040 2000 5030 2000 1000 4000 1020 2 4000
Dr. 2 0 0 00 3 2 5 00
Cr. 1 2 0 0 00 3 2 5 00
2 2 0 00 2 2 0 00 1 5 5 00 1 5 5 00 8 5 0 00 8 5 0 00 2 0 0 00 2 0 0 00 2 0 0 00 1 2 0 0 00 6 5 00 6 5 00 9 5 00 9 5 00 1 4 0 00 1 4 0 00 6 0 0 00 2 6 0 0 00
73
CASH
ACCOUNT NO. 1000
Balance Date 200X Explanation 9/1 0X balance forward 1 2 6 8 12 15 17 26 Post Ref. J1 J1 J1 J1 J1 J1 J1 J1 Debit Credit 2 1 2 0 0 00 1 1 2 1 5 5 00 2 2 2 0 0 00 2 1 2 0 0 00 1 1 Debit 8 65 6 65 9 90 2 10 0 55 9 05 7 05 5 05 6 45 Credit 00 00 00 00 00 00 00 00 00
3 2 5 00 2 2 0 00 8 5 0 00
1 4 0 00
74
ACCOUNTS RECEIVABLE
ACCOUNT NO. 1020
Balance Date 200X Explanation 9/1 0X balance forward 12 28 Post Ref. J1 J1 Debit Credit Debit 8 5 0 00 8 5 0 00 - 0 2 6 0 0 00 Credit
2 6 0 0 00
PREPAID RENT
ACCOUNT NO. 1025
Balance Date 200X 9/1 0X Explanation Post Ref. J1 Debit 1 2 0 0 00 Credit Debit 1 2 0 0 00 Credit
SUPPLIES
ACCOUNT NO. 1030
Balance Date 200X Explanation 9/1 0X balance forward Post Ref. Debit Credit Debit 4 5 0 00 Credit
COMPUTER SHOP EQUIPMENT
ACCOUNT NO. 1080
Balance Date 200X Explanation 9/1 0X balance forward 17 Post Ref. J1 Debit 1 2 0 0 00 Credit Debit 1 2 0 0 00 2 4 0 0 00 Credit
75
OFFICE EQUIPMENT
ACCOUNT NO. 1090
ACCOUNTS PAYABLE
ACCOUNT NO. 2000
Balance Date 200X Explanation 9/1 0X balance forward 8 15 20 22

FREEDMAN, CAPITAL
Post Ref. J1 J1 J1 J1
Debit 1 5 5 00 2 0 0 00
Credit
Debit
6 5 00 9 5 00
ACCOUNT NO. 3000
Credit 4 0 5 00 2 5 0 00 5 0 00 1 1 5 00 2 1 0 00
Balance Date 200X Explanation 9/1 0X balance forward Post Ref. Debit Credit Debit Credit 4 5 0 0 00
FREEDMAN, WITHDRAWALS
ACCOUNT NO. 3010
76
SERVICE REVENUE
ACCOUNT NO. 4000
Balance Date 200X Explanation 9/1 0X balance forward 2 6 26 28 Post Ref. J1 J1 J1 J1 Debit Credit 3 2 1 2 6 2 2 4 0 5 0 0 0 00 00 00 00 Debit 3 3 3 4 6 Credit 4 0 0 00 7 2 5 00 9 4 5 00 0 8 5 00 6 8 5 00
ADVERTISING EXPENSE
ACCOUNT NO. 5010
Balance Date 200X Explanation 9/1 0X balance forward Post Ref. Debit Credit Debit 1 4 0 0 00 Credit
RENT EXPENSE
ACCOUNT NO. 5020
77
UTILITIES EXPENSE
ACCOUNT NO. 5030
Balance Date 200X Explanation 9/1 0X balance forward 22 Post Ref. J1 Debit 9 5 00 Credit Debit 8 5 00 1 8 0 00 Credit
PHONE EXPENSE
ACCOUNT NO. 5040
Balance Date 200X Explanation 9/1 0X balance forward 20 Post Ref. J1 Debit 6 5 00 Credit Debit 1 5 5 00 2 2 0 00 Credit
SUPPLIES EXPENSE
ACCOUNT NO. 5050
Balance Date 200X Explanation Post Ref. Debit Credit Debit Credit
78
INSURANCE EXPENSE
ACCOUNT NO. 5060
POSTAGE EXPENSE
ACCOUNT NO. 5070
Balance Date 200X Explanation 9/1 0X balance forward Post Ref. Debit Credit Debit 5 0 00 Credit
79
ELDORADO COMPUTER CENTER TRIAL BALANCE SEPTEMBER 30, 200X Dr. Cr.
Cash Accounts Receivable Prepaid Rent Supplies Computer Shop Equipment Office Equipment Accounts Payable Freedman, Capital Freedman, Withdrawals Service Revenue Advertising Expense Rent Expense Utilities Expense Phone Expense Insurance Expense Postage Expense Totals
1 2 1 2
6 6 2 4 4 6
4 0 0 5 0 0
5 0 0 0 0 0
00 00 00 00 00 00 4 2 1 0 00 5 0 0 00 6 8 5 00
1 0 0 00 6 1 0 0 8 2 5 5 3 9 4 4 1 2 1 0 0 0 0 0 0 5 00 00 00 00 00 00 00
11
11
3 9 5 00
80
ELDORADO COMPUTER CENTER INCOME STATEMENT FOR THE QUARTER ENDED 9/30/0X
Revenue: Service Revenue Operating Expenses Advertising Expense Rent Expense Utilities Expense Phone Expense Insurance Expense Postage Expense Total Operating Expenses Net Income
$6 $1 4 4 1 2 1 0 0 8 2 5 5 0 0 0 0 0 0 00 00 00 00 00 00 2 $4
6 8 5 00
4 0 0 00 2 8 5 00
81
ELDORADO COMPUTER CENTER STATEMENT OF OWNERS EQUITY FOR THE QUARTER ENDED 9/30/0X
Freedman, Capital July 1, 200x Net Income Less: Freedman, Withdrawals Net Increase in Capital Freedman, Capital September 30, 200x $4 2 8 5 00 (1 0 0 00)
$4
5 0 0 00
4 $8
1 8 5 00 6 8 5 00
82
ELDORADO COMPUTER CENTER BALANCE SHEET 9/30/0X ASSETS LIABILITIES AND OWNERS EQUITY
Liabilities: Accounts Payable Owners Equity Freedman, Capital 9/30 $8 8 9 5 00 Total Liabilities and Owners Equity
$ 2 1 0 00 8 6 8 5 00 $8 8 9 5 00
Cash Accounts Receivable Prepaid Rent Supplies Computer Shop Equipment Office Equipment
$1 6 4 5 2 6 0 0 1 2 0 0 4 5 0 2 4 0 0 6 0 0
00 00 00 00 00 00
Total Assets
83

SMCH 03

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SMCH 03

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Beginning the Accounting Cycle: Journalizing, Posting, and the Trial Balance

ANSWERS TO DISCUSSION QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

PR Dr. Cr. 111 15 0 0 0 00 311 15 0 0 0 00

121 9 0 0 0 00 111 211

ACCOUNT NO. 111

ACCOUNT NO. 121

ACCOUNT NO. 211

ACCOUNT NO. 311

EXERCISES (CONTINUED) 3-4. Date 200X Jul. 1 (A)

PR Dr. Cr. 111 6 0 0 0 00 311 6 0 0 0 00

112 4 0 0 0 00 411 4 0 0 0 00 111 5 0 0 0 00 411 5 0 0 0 00

ACCOUNT NO. 121

ACCOUNT NO. 211

ACCOUNT NO. 311

ACCOUNT NO. 312

ACCOUNT NO. 411

Balance Date 200X Jul. 24 (C)

Post Ref. GJ1

SOLUTIONS TO A PROBLEMS PROBLEM 3A-1

Date 200X Aug. 1

PROBLEM 3A-1 (CONTINUED)

Date 200X Aug. 29

PROBLEM 3A-2 (A, B)

Date 200X Jun. 1

PROBLEM 3A-2 (CONTINUED)

ACCOUNT NO. 112

ACCOUNT NO. 114

ACCOUNT NO. 121

PROBLEM 3A-2 (CONTINUED)

ACCOUNT NO. 211

MOLLY TAYLOR, CAPITAL

ACCOUNT NO. 311

MOLLY TAYLOR, WITHDRAWALS

ACCOUNT NO. 312

ACCOUNT NO. 411

PROBLEM 3A-2 (CONCLUDED)

ACCOUNT NO. 521

ACCOUNT NO. 531

PROBLEM 3A-3 (A, B)

Date 200X Jun. 1

Account Titles and Description Cash A. French, Capital Owner Investment

PROBLEM 3A-3 (CONTINUED)

ACCOUNT NO. 112

ACCOUNT NO. 131

ACCOUNT NO. 141

PROBLEM 3A-3 (CONTINUED)

ACCOUNT NO. 311

ACCOUNT NO. 312

PLACEMENT FEES EARNED

ACCOUNT NO. 411

ACCOUNT NO. 511

PROBLEM 3A-3 (CONCLUDED)

ACCOUNT N0. 531

SOLUTIONS TO B PROBLEMS PROBLEM 3B-1

Date 200X Apr. 1

PROBLEM 3B-1 (CONCLUDED)

PROBLEM 3B-2 (A, B)

TAYLORS DANCE STUDIO GENERAL JOURNAL

Date 200X Jun. 1

PR Dr. Cr. 111 6 0 0 0 00 311 6 0 0 0 00

PROBLEM 3B-2 (CONTINUED)

ACCOUNT NO. 112