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Chapter 2: 2RQ (page 90)
What is the purpose of the chart of accounts? Explain the numbering typically associated with the accounts.
The companies organize accounts by using the chart of accounts and numbering helps in providing order in accounts.
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Question:E2-21 Journalizing transactions from T-accounts In December 2018, the first five transactions of Abling鈥檚 Lawn Care Company have been posted to the T-accounts. Prepare the journal entries that served as the sources for the five transactions. Include an explanation for each entry
Cash
Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions:
Nov. 1 Received \(41,000 cash and issued common stock to Stewart.
4 Purchased office supplies, \)1,200, and furniture, \(2,300, on account.
6 Performed services for a law firm and received \)2,100 cash.
7 Paid \(27,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the \)800 within one week.
14 Paid for the furniture purchased on November 4 on account.
15 Paid assistant鈥檚 semimonthly salary, \(1,470.
17 Received cash on account, \)500.
20 Prepared a design for a school on account, \(680.
25 Received \)1,900 cash for design services to be performed in December.
28 Received \(3,100 cash for consulting with Plummer & Gordon.
29 Paid \)840 cash for a 12-month insurance policy starting on December 1.
30 Paid assistant鈥檚 semimonthly salary, \(1,470. 30 Paid monthly rent expense, \)650.
30 Received a bill for utilities, \(650. The bill will be paid next month.
30 Paid cash dividends of \)2,800.
Requirements 2. Open a T-account for each of the accounts.
Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions:
Nov. 1 Received \(41,000 cash and issued common stock to Stewart.
4 Purchased office supplies, \)1,200, and furniture, \(2,300, on account.
6 Performed services for a law firm and received \)2,100 cash.
7 Paid \(27,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the \)800 within one week.
14 Paid for the furniture purchased on November 4 on account.
15 Paid assistant鈥檚 semimonthly salary, \(1,470.
17 Received cash on account, \)500.
20 Prepared a design for a school on account, \(680.
25 Received \)1,900 cash for design services to be performed in December.
28 Received \(3,100 cash for consulting with Plummer & Gordon.
29 Paid \)840 cash for a 12-month insurance policy starting on December 1.
30 Paid assistant鈥檚 semimonthly salary, \(1,470. 30 Paid monthly rent expense, \)650.
30 Received a bill for utilities, \(650. The bill will be paid next month.
30 Paid cash dividends of \)2,800.
Requirements 1. Record each transaction in the journal using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Furniture; Accounts Payable; Utilities Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanations are not required.
Question: The following transactions occurred for Wilke Technology Solutions:
May 1 The business received cash of \(105,000 and issued common stock to Zoe Wilke.
2 Purchased office supplies on account, \)550.
4 Paid \(57,000 cash for building and land. The building had a fair market value of \)45,000.
6 Performed services for customers and received cash, \(3,600.
9 Paid \)350 on accounts payable.
17 Performed services for customers on account, \(3,500.
19 Paid rent expense for the month, \)1,200.
20 Received \(1,500 from customers for services to be performed next month.
21 Paid \)900 for advertising in next month鈥檚 IT Technology magazine.
23 Received \(3,100 cash on account from a customer.
31 Incurred and paid salaries, \)1,700.
Analyzing and journalizing transactions
Journalize the transactions of Wilke Technology Solutions. Include an explanation with each journal entry. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Advertising; Land; Building; Accounts Payable; Unearned Revenue; Common Stock; Service Revenue; Rent Expense; and Salaries Expense
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.
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