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Chapter 2: 6RQ (page 90)
When are debits increases? When are debits decreases?
Assets are the resources that generate income in the future for the owners and debit increases in assets, expenses, and dividends. Debit decrease in liabilities and equity (common stock and revenue).
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Using the following accounts and their balances, prepare the trial balance for Cooper Furniture Repair as of December 31, 2018. All accounts have normal balances.
Cash \( 7,000 Advertising Expense \) 1,200
Unearned Revenue 4,500 Utilities Expense 800
Equipment 10,000 Rent Expense 5,000
Service Revenue 8,000 Accounts Payable 2,300
Common Stock 12,200 Dividends 3,000
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.b
Requirements 3. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal
Better Days Ahead, a charitable organization, has a standing agreement with First National Bank. The agreement allows Better Days Ahead to overdraw its cash balance at the bank when donations are running low. In the past, Better Days Ahead managed funds wisely and rarely used this privilege. Jacob Henson has recently become the president of Better Days Ahead. To expand operations, Henson acquired office equipment and spent large amounts on fundraising. During Henson鈥檚 presidency, Better Days Ahead has maintained a negative bank balance of approximately $10,000.
What is the ethical issue in this situation, if any?
State why you approve or disapprove of Henson鈥檚 management of Better Days Ahead鈥檚 funds.
Your friend, Dean McChesney, requested that you advise him on the effects that certain transactions will have on his business, A-Plus Travel Planners. Time is short, so you cannot journalize the transactions. Instead, you must analyze the transactions without a journal. McChesney will continue the business only if he can expect to earn a monthly net income of \(6,000. The business completed the following transactions during June:
a. McChesney deposited \)10,000 cash in a business bank account to start the company. The company issued common stock to McChesney.
b. Paid \(300 cash for office supplies.
c. Incurred advertising expense on account, \)700.
d. Paid the following cash expenses: administrative assistant鈥檚 salary, \(1,400; office rent, \)1,000.
e. Earned service revenue on account, \(8,800.
f. Collected cash from customers on account, \)1,200.
Requirements
3. Prepare a trial balance at June 30, 2018
Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:
Sep. 1 Received \(48,000 cash and issued common stock to Simpson.
4 Purchased office supplies, \)1,200, and furniture, \(1,300, on account.
6 Performed services for a law firm and received \)1,900 cash.
7 Paid \(18,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.
14 Paid for the furniture purchased on September 4 on account.
15 Paid assistant鈥檚 semimonthly salary, \(1,500.
17 Received cash on account, \)1,000.
20 Prepared a design for a school on account, \(650.
25 Received \)2,100 cash for design services to be performed in October.
28 Received \(2,900 cash for consulting with Plummer & Gordon.
29 Paid \)600 cash for a 12-month insurance policy starting on October 1.
30 Paid assistant鈥檚 semimonthly salary, \(1,500.
30 Paid monthly rent expense, \)600.
30 Received a bill for utilities, \(350. The bill will be paid next month.
30 Paid cash dividends of \)3,700.
Requirements 3. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal
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