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Chapter 2: Q13E (page 94)

Identifying increases and decreases in accounts and normal balances Insert the missing information into the accounting equation. Signify increases as Incr. and decreases as Decr.

(a) ASSETS Retained Earnings Common Stock (d) Revenues Expenses Contributed Capital (g) (p) (h) Credit (k) Debit (l) Credit (i) (q) (j) Credit Incr. (r) (m) Credit Decr. (o) (f) Credit (c) LIABILITIES (b)

Short Answer

Expert verified

Assets help in generating some revenue in the future and the blanks are identified as per the requirement in Step 2.

Step by step solution

01

Definition of assets

Assets are the economic sources owned by the individuals or business organizations which is generating some benefits in future

02

Identification of increase or decrease and debits or credits

(a) Assets - Accounting equation.

(b) Equity 鈥� Accounting Equation.

(c) liabilities 鈥� Accounting Equation.

(d) Dividends 鈥� Part of the Equity section of the accounting equation.

(e) Increase 鈥� Assets are increased when debited.

(f) Credit 鈥� Liabilities increase on credits.

(g) Decrease 鈥� Common stocks are decreased when debited.

(h) Increase 鈥� Common stocks are increased when credited.

(i) Increase 鈥� Dividends are increased when debited left side shows the debit.

(j) Decrease 鈥� Dividends decrease when credited.

(k) Decrease 鈥� Revenues always decrease when debited.

(l) Increase 鈥� Revenues are increased when credited.

(m) Decrease 鈥� Expense decreases when credited.

(n) Credit 鈥� Right side of the T-accounts.

(o) Debit 鈥� Liabilities decrease when debited.

(p) Debit 鈥� Left side of the t-account.

(q) Debit 鈥� Left side of the t-account is the debit side.

(r) Debit 鈥� Expenses are debited when increased.

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Most popular questions from this chapter

Creating a chart of accounts Raymond Autobody Shop has the following accounts:

Accounts Payable Service Revenue

Cash Equipment

Utilities Expense Common Stock

Automotive Supplies Advertising Expense

Dividends Unearned Revenue

Retained Earnings

Create a chart of accounts for Raymond Autobody Shop using the standard numbering system. Each account is separated by a factor of 10. For example, the first asset account will be 100 and the next asset account will 110

Calculating the balance of a T-account

Accounts Payable

May 2 6,000 21,000 May 1

May 22 11,500 500 May 5

8,500 May 15

500 May 23

Calculate the Accounts Payable balance.

Question:Preparing a trial balance from T-accounts

The T-accounts of McMahon Farm Equipment Repair follow as of May 31, 2018.

ASSETS Salaries Payable LIABILITIES EQUITY Retained Earnings 4,000 29,000 Notes Payable 3,500 400 Accounts Receivable 14,000 Land 29,000 Building 16,000 Equipment Common Stock Contributed Capital Dividends Property Tax Expense 1,000 Advertising Expense 280

Cash 31,000 1,800 400 14,000 4,200 800 4,000 2,000 3,380

Service Revenue 3,500 1,800 4,200 31,000 2

If total debits equal total credits on the trial balance, is the trial balance error-free? Explain your answer.

Correcting errors in a trial balance

The trial balance of Beautiful Tots Child Care does not balance.

Account Title Debit Credit

Office Supplies 1,000

Cash 7,900

Accounts Receivable 6,700

Prepaid Insurance 300

Equipment 91,500

Accounts Payable 3,400

Notes Payable 45,000

Common Stock 57,000

Dividends 5,000

Service Revenue 12,350

Rent Expense 750

Salaries Expense 4,400

Total Balance \( 117,550 \) 117,750

The following errors are detected:

a. Cash is understated by \(1,500.

b. A \)4,100 debit to Accounts Receivable was posted as a credit.

c. A \(1,400 purchase of office supplies on account was neither journalized nor posted.

d. Equipment was incorrectly transferred from the ledger as \)91,500. It should have been transferred as \(83,000.

e. Salaries Expense is overstated by \)700.

f. A \(300 cash payment for advertising expense was neither journalized nor posted.

g. A \)200 cash dividend was incorrectly journalized as \(2,000.

h. Service Revenue was understated by \)4,100.

i. A 12-month insurance policy was posted as a $1,900 credit to Prepaid Insurance. Cash was posted correctly.

Prepare the corrected trial balance as of August 31, 2018. Journal entries are not required.
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