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Chapter 2: Q14RQ (page 90)
What is the purpose of the trial balance?
Trial balance is an accounting worksheet, and the primary purpose is to examine the accuracy of the accounts.
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Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance Victor Yang practices medicine under the business title Victor Yang, M.D. During March, the medical practice completed the following transactions:
Mar. 1 Yang contributed \(62,000 cash to the business in exchange for common stock.
5 Paid monthly rent on medical equipment, \)570.
9 Paid \(14,000 cash to purchase land to be used in operations.
10 Purchased office supplies on account, \)1,500.
19 Borrowed \(27,000 from the bank for business use.
22 Paid \)1,400 on account.
28 The business received a bill for advertising in the daily newspaper to be paid in April, \(220.
31 Revenues earned during the month included \)6,700 cash and \(5,800 on account.
31 Paid employees鈥� salaries \)2,100, office rent \(1,500, and utilities \)350. Record as a compound entry.
31 The business received \(1,000 for medical screening services to be performed next month.
31 Paid cash dividends of \)7,100.
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; and Advertising Expense.
Requirements 3. Prepare the trial balance of Victor Yang, M.D., as of March 31, 2018.
Journalizing transactions, posting to T-accounts, and preparing a trial balance
Consider the following transactional data for the first month of operations for Crystal Clear Cleaning.
Nov. 1 Stockholders contributed \(15,000 and a truck, with a market value of \)3,000, to the business in exchange for common stock.
2 The business paid \(4,000 to Pleasant Properties for November through February rent. (Debit Prepaid Rent)
3 Paid \)4,800 for a business insurance policy for the term November 1, 2018 through October 31, 2019. (Debit Prepaid Insurance)
4 Purchased cleaning supplies on account, \(320.
5 Purchased on account an industrial vacuum cleaner costing \)1,500. The invoice is payable November 25.
7 Paid \(3,900 for a computer and printer.
9 Performed cleaning services on account in the amount of \)4,700.
10 Received \(200 for services rendered on November 9. 15 Paid employees, \)400.
16 Received \(15,000 for a 1-year contract beginning November
16 for cleaning services to be provided. Contract begins November 16, 2018, and ends November 15, 2019. (Credit Unearned Revenue)
17 Provided cleaning services and received \)400 cash.
18 Received a utility bill for \(175 with a due date of December 4, 2018. (Use Accounts Payable)
20 Borrowed \)36,000 from bank with interest rate of 6% per year.
21 Received \(500 on account for services performed on November 9.
25 Paid \)750 on account for vacuum cleaner purchased on November 5.
29 Paid \(200 for advertising.
30 Cash dividends of \)1,400 were paid to stockholders
3. Post the journal entries to the T-accounts, and calculate account balances
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 2. Prepare the statement of retained earnings for the month ended July 31, 2018. The beginning balance of retained earnings was $0.
Before you begin this assignment, review the Tying It All Together feature in the chapter. Part of the Fry鈥檚 Electronics, Inc.鈥檚 experience involves providing technical support to its customers. This includes in-home installations of electronics and also computer support at their retail store locations.
Requirements
2. Assume Fry鈥檚 Electronics, Inc.鈥檚 Modesto, California, location received $24,000 for an annual contract to provide computer support to the local city government. How would Fry鈥檚 Electronics record this transaction? What financial statement(s) would this transaction affect?
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
2. Post the transactions directly to the accounts without using a journal. Record each transaction by letter. Calculate account balances.
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