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Chapter 2: 11RQ (page 90)
Explain the five steps in journalizing and posting transactions.
Journal is the record of business transactions and there are five steps to journalizing and posting journal entries.
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Question:Preparing financial statements from the trial balance and calculating the debt ratio
The trial balance as of July 31, 2018, for Sara Simon, Registered Dietician, is presented below:
Account Title Debit Credit
Office Supplies 2,300
Cash 38,000
Accounts Receivable 9,000
Prepaid Insurance 2,400
Equipment 16,000
Accounts Payable 3,000
Unearned Revenue 3,912
Notes Payable 31,000
Common Stock 18,000
Dividends 2,800
Salaries Expense 1,700
Rent Expense 1,100
Utilities Expense 500
Service Revenue 17,888
Total Balance \( 73,800 \) 73,800
Requirements 4. Calculate the debt ratio as of July 31, 2018.
Question:Preparing financial statements from the trial balance and calculating the debt ratio
Preparing financial statements from the trial balance and calculating the debt ratio
Account Title Debit Credit
Office Supplies 1,400
Cash 32,000
Accounts Receivable 9,100
Prepaid Insurance 2,600
Equipment 24,000
Accounts Payable 3,400
Unearned Revenue 1,296
Notes Payable 34,000
Common Stock 20,000
Dividends 3,000
Salaries Expense 1,600
Rent Expense 700
Utilities Expense 100
Service Revenue 15,804
Total Balance \( 74,500 \) 74,500
Requirements 4. Calculate the debt ratio as of July 31, 2018.
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:
Cash 17,000
Office Supplies 1,200
Accounts Receivable 10,500
Land 29,000
Furniture 0
Automobile 0
Accounts Payable 3,800
Unearned Revenue 0
Common Stock 46,200
Dividends 0
Rent Expense 1,000
Salaries Expense 2,500
Service Revenue 11,200
Total Balance \( 61,200 61,200
During April, the business completed the following transactions:
Apr. 4 Collected \)6,000 cash from a client on account.
8 Performed tax services for a client on account, \(5,500.
13 Paid \)3,300 on account.
14 Purchased furniture on account, \(4,000.
15 Menning contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)11,500.
18 Purchased office supplies on account, \(1,600.
19 Received \)2,750 for tax services performed on April 8.
20 Paid cash dividends of \(7,500.
21 Received \)4,900 cash for consulting work completed.
24 Received \(2,500 cash for accounting services to be completed next month.
27 Paid office rent, \)900.
28 Paid employee salary, $1,200.
Requirements 2. Open the four-column ledger accounts listed in the trial balance, together with their balances as of March 31. Use the following account numbers: Cash, 11; Accounts Receivable, 12; Office Supplies, 13; Land, 14; Furniture, 15; Automobile, 16; Accounts Payable, 21; Unearned Revenue, 22; Common Stock, 31; Dividends, 33; Service Revenue, 41; Salaries Expense, 51; and Rent Expense, 52.
Journalizing transactions, posting to T-accounts, and preparing a trial balance
Problem P2-42 continues with the company introduced in Chapter 1, Canyon Canoe Company. Here you will account for Canyon Canoe Company鈥檚 transactions as it is actually done in practice. Begin by reviewing the transactions from Chapter 1. The transactions have been reprinted below.
Nov. 1 Received \(16,000 cash to begin the company and issued common stock to Amber and Zach.
2 Signed a lease for a building and paid \)1,200 for the first month鈥檚 rent.
3 Purchased canoes for \(4,800 on account.
4 Purchased office supplies on account, \)750.
7 Earned \(1,400 cash for rental of canoes.
13 Paid \)1,500 cash for wages.
15 Paid \(50 dividends to stockholders.
16 Received a bill for \)150 for utilities. (Use separate payable account.)
20 Received a bill for \(175 for cell phone expenses. (Use separate payable account.)
22 Rented canoes to Early Start Daycare on account, \)3,000.
26 Paid \(1,000 on account related to the November 3 purchase.
28 Received \)750 from Early Start Daycare for canoe rental on November 22.
30 Paid \(100 dividends to stockholders
In addition, Canyon Canoe Company completed the following transactions for December.
Dec. 1 Amber and Zack contributed land on the river (worth \)85,000) and a small building to use as a rental office (worth \(35,000) in exchange for common stock.
1 Prepaid \)3,000 for three months鈥� rent on the warehouse where the company stores the canoes.
2 Purchased canoes signing a note payable for \(7,200
4 Purchased office supplies on account for \)500.
9 Received \(4,500 cash for canoe rentals to customers.
15 Rented canoes to customers for \)3,500, but will be paid next month.
16 Received a \(750 deposit from a canoe rental group that will use the canoes next month.
18 Paid the utilities and telephone bills from last month.
19 Paid various accounts payable, \)2,000.
20 Received bills for the telephone (\(325) and utilities (\)295) which will be paid later.
31 Paid wages of \(1,800. 31 Paid cash dividend to stockholders, \)300.
Requirements
1. Journalize the transactions for both November and December, using the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Rent; Land; Building; Canoes; Accounts Payable; Utilities Payable; Telephone Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Canoe Rental Revenue; Rent Expense; Utilities Expense; Wages Expense; and Telephone Expense. Explanations are not required. (Hint: For November transactions, refer to your answer for Chapter 1.)
2. Open a T-account for each of the accounts.
3. Post the journal entries to the T-accounts, and calculate account balances. Formal posting references are not required.
4. Prepare a trial balance as of December 31, 2018.
5. Prepare the income statement of Canyon Canoe Company for the two months ended December 31, 2018.
6. Prepare the statement of retained earnings for the two months ended December 31, 2018.
7. Prepare the balance sheet as of December 31, 2018.
8. Calculate the debt ratio for Canyon Canoe Company at December 31, 2018
Journalizing transactions John Daniel opened a medical practice in Sacramento, California, and had the following transactions during the month of January.
Jan. 1 The business received \(34,000 cash and issued common stock to Daniel.
2 Purchased medical supplies on account, \)17,000.
4 Performed services for patients receiving \(1,600.
12 Paid monthly office rent of \)3,000.
15 Recorded $7,000 revenue for services rendered to patients on account.
Journalize the transactions of John Daniel, M.D. Include an explanation with each entry.
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