ACCT 201 Questions

ACCT 201

CHAPTER 2 QUESTIONS

E2-1

Analyze statements about accounting and the recording process.

Johan Aslata has prepared the following list of statements about accounts.

1.

An account is an accounting record of either a specific asset or a specific liability.

2.

An account shows only increases, not decreases, in the item it relates to.

3.

Some items, such as Cash and Accounts Receivable, are combined into one account.

4.

An account has a left, or credit side, and a right, or debit side.

5.

A simple form of an account consisting of just the account title, the left side, and the right side, is called a T account.

Instructions

Identify each statement as true or false. If false, indicate how to correct the statement.

E2-2

Selected transactions for M. Anderson, an interior decorator, in her first month of business, are as follows.

Jan. 2

Invested $10,000 cash in business.

3

Purchased used car for $4,000 cash for use in business.

9

Purchased supplies on account for $500.

11

Billed customers $2,100 for services performed.

16

Paid $350 cash for advertising.

20

Received $700 cash from customers billed on January 11.

23

Paid creditor $300 cash on balance owed.

28

Withdrew $1,000 cash for personal use by owner.

Instructions

For each transaction, indicate the following.

a.

The basic type of account debited and credited (asset, liability, owner's equity).

b.

The specific account debited and credited (cash, rent expense, service revenue, etc.).

c.

Whether the specific account is increased or decreased.

d.

The normal balance of the specific account.

Use the following format, in which the January 2 transaction is given as an example.

Account Debited

Account Credited

(a)

(b)

(c)

(d)

(a)

(b)

(c)

(d)

Date

Basic Type

Specific Account

Effect

Normal Balance

Basic Type

Specific Account

Effect

Normal Balance

Jan. 2

Asset

Cash

Increase

Debit

Owner's Equity

Owner's Capital

Increase

Credit

E2-7

Analyze transactions and journalize.

Beekman Enterprises had the following selected transactions.

1.

Jo Beekman invested $4,000 cash in the business.

2.

Paid office rent of $950.

3.

Performed consulting services and billed a client $5,200.

4.

Jo Beekman withdrew $750 cash for personal use.

Instructions

(a)

Indicate the effect each transaction has on the accounting equation (), using plus and minus signs.

(b)

Journalize each transaction. (Omit explanations.)

E2-12

Prepare journal entries and post using standard account form.

Selected transactions for Roberta Garza Company during its first month in business are presented below.

Sept. 1

Invested $10,000 cash in the business.

5

Purchased equipment for $12,000 paying $4,000 in cash and the balance on account.

25

Paid $3,000 cash on balance owed for equipment.

30

Withdrew $700 cash for personal use.

Garza's chart of accounts shows: No. 101 Cash, No. 157 Equipment, No. 201 Accounts Payable, No. 301 Owner's Capital, and No. 306 Owner's Drawings.

Instructions

(a)

Journalize the transactions on page J1 of the journal. (Omit explanations.)

(b)

Post the transactions using the standard account form.

P2-1A

Journalize a series of transactions.

Frontier Park was started on April 1 by H. Hillenmeyer. The following selected events and transactions occurred during April.

Apr. 1

Hillenmeyer invested $35,000 cash in the business.

4

Purchased land costing $27,000 for cash.

8

Incurred advertising expense of $1,800 on account.

11

Paid salaries to employees $1,500.

12

Hired park manager at a salary of $4,000 per month, effective May 1.

13

Paid $1,650 cash for a one-year insurance policy.

17

Withdrew $1,000 cash for personal use.

20

Received $6,800 in cash for admission fees.

25

Sold 100 coupon books for $25 each. Each book contains 10 coupons that entitle the holder to one admission to the park.

30

Received $8,900 in cash admission fees.

30

Paid $900 on balance owed for advertising incurred on April 8.

Hillenmeyer uses the following accounts: Cash, Prepaid Insurance, Land, Accounts Payable, Unearned Service Revenue, Owner's Capital, Owner's Drawings, Service Revenue, Advertising Expense, and Salaries and Wages Expense.

Instructions

Journalize the April transactions.

P2-2A

Journalize transactions, post, and prepare a trial balance.

Desiree Clark is a licensed CPA. During the first month of operations of her business, the following events and transactions occurred.

May 1

Clark invested $20,000 cash in her business.

2

Hired a secretary-receptionist at a salary of $2,000 per month.

3

Purchased $2,500 of supplies on account from Read Supply Company.

7

Paid office rent of $900 cash for the month.

11

Completed a tax assignment and billed client $3,200 for services provided.

12

Received $3,500 advance on a management consulting engagement.

17

Received cash of $1,200 for services completed for C. Desmond Co.

31

Paid secretary-receptionist $2,000 salary for the month.

31

Paid 60% of balance due Read Supply Company.

Desiree uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner's Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

Instructions

(a)

Journalize the transactions.

Trial balance totals $28,900

(b)

Post to the ledger accounts.

(c)

Prepare a trial balance on May 31, 2012.

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