Tutorial 2 (Recording Business Transactions) Week of 6 April 2015

Quick Check
1a, 2d, 3b, 4b, 5b, 6d, 7c, 8b, 9a, 10d
S 2-1
Req.1
1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

S 2-4
Req. 1
Step 1: Identify each account affected and its type.
Step 2: Determine whether each account is increased or decreased.
Step 3: Record the transaction in the journal.
Account
5
28

Accounts receivable
Service revenue
Cash
Accounts receivable

Type
Asset
Owners equity
Asset
Asset

Increase/
Decrease
Increase
Increase
Increase
Decrease

Req. 1 - continued
Journal
DATE
ACCOUNTS AND EXPLANATIONS
Jan
5 Accounts receivable
Service revenue
Performed service on account.
28 Cash

POST.
REF. DEBIT CREDIT
1,000
1,000
600

Accounts receivable
Received cash on account.

600

S 2-6
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
Jan
22 Accounts receivable
Service revenue
Performed service on account.
30 Cash

POST.
REF. DEBIT CREDIT
8,000
8,000
7,000

Accounts receivable
Received cash on account.

7,000

31 Utilities expense
Accounts payable
Received utility bill.

180
180

31 Salary expense
Cash
Paid salary expense.

2,000
2,000

31 Advertising expense
Cash
Paid advertising expense.

700
700

S 2-7
Req. 1
Journal
DATE
1.

2.

POST.
REF.

ACCOUNTS AND EXPLANATIONS

Supplies
Accounts payable
Purchased supplies on account.

DEBIT
3,400

CREDI
T
3,400

Accounts payable
Cash ($3,400 )
Paid on account.

1,700
1,700

Req. 2

2.

Accounts payable
1,700
Bal

1.

3,400
1,700

S 2-8
Req. 1
Journal
DATE

ACCOUNTS AND EXPLANATIONS

Accounts receivable
Service revenue
Performed service on account.

POST.
REF.

Cash

DEBIT
16,000

CREDIT
16,000

9,600

Accounts receivable
Received cash on account.

9,600

Req. 2

Bal

Cash
9,600
9,600

Accounts receivable
16,000
9,600
Bal
6,400
3

Service revenue
16,000
Bal
16,000

Req. 3
a.

Washington earned:

b.

Cash
Accounts receivable
Total assets

$16,000

as Service revenue

$9,600
6,400
$16,000

S 2-10
Req. 1

Cash
Equipment
Accounts payable
Other liabilities
Oakland, capital
Revenues
Expenses
Total

Oakland Floor Coverings

Trial Balance
December 31, 2012
ACCOUNT
DEBIT
$12,000
45,000

CREDIT
$ 2,000
18,000
22,000
34,000

19,000
$76,000

$76,000

E 2-15
Req. 1
ASSETS
Debit

LIABILITIES
Credit

OWNERS EQUITY
Credit

$390,000

$260,000

$130,000

EXPENSES

Req. 2
REVENUES

NET INCOME (net loss)

$480,000
Credit

$350,000
Debit

$130,000
Credit

NET INCOME represents a net credit because revenues (credits) exceed expenses
(debits).
NET LOSS would be a net debit because expenses (debits) would exceed revenues
(credits).
LOSS would be a net debit because expenses (debits) would exceed revenues (credits).
E 2-16
Req. 1
DATE
Jul

2
5
10
12

Journal
ACCOUNTS AND EXPLANATIONS
Utilities expense
Cash

DEBIT
400

400

Equipment
Accounts payable

2,100

Accounts receivable
Service revenue

2,000

Cash

7,000

2,100
2,000

Note payable
19

7,000

Cash

29,000
Land

21
27

CREDIT

29,000

Supplies
Cash

800
800

Accounts payable
Cash

2,100
2,100

E 2-18
Req. 1

Req. 2

Effect on Trial Balance

Account

Amount

Direction of
Error

a.

Total debits > Total credits

Note payable

$7,000

Too low

b.

Total debits > Total credits

Utility expense

810

Too high

c.

Total debits = Total credits

Furniture
Accounts payable

800
800

Too high
Too high

d.

Total debits > Total credits

Cash

1,080

Too high

e.

Total debits = Total credits

Supplies
Accounts payable

90
90

Too low
Too low

E 2-19
Reqs. 1 and 2
Cash
4,000
Jul 2

400

Jul 10

12

7,000

21

800

Jul 31

19

29,000

27

2,100

Jul

Jul 31

Accounts receivable
2,000
2,000

36,700

Jul 21
Jul 31

Supplies
800
800

Jul 1
Jul 31

Land
29,000 Jul 19
0

Notes payable
Jul 12
Jul 31

Service revenue
Jul 10
Jul 31

Jul 5
Jul 31

29,000

Jul 27

Accounts payable
2,100 Jul 5
Jul 31

London, capital
Jul 1
Jul 31

7,000
7,000

2,000
2,000

Equipment
2,100
2,100

Jul 2
Jul 31
7

Utilities expense
400
400

2,100
0

33,000
33,000

Req. 3
London Engineering
Trial Balance
July 31, 2012
ACCOUNT
Cash
Accounts receivable
Supplies
Equipment
Notes payable
London, capital
Service revenue
Utilities expense
Total

DEBIT
$36,700
2,000
800
2,100

CREDIT

$ 7,000
33,000
2,000
400
$42,000

$42,000

E 2-20
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
1. Cash
Adams, capital
Owners investment.
2. Supplies
Accounts payable
Purchased supplies on account.

POST.
REF.

DEBIT CREDIT
53,000
53,000
700
700

3. Building
Cash
Paid cash for building.

40,000
40,000

4. Cash

50,000

Note payable
Borrowed money; signed note payable.

50,000

5. Equipment
Cash
Paid cash for equipment.

4,700
4,700

Req. 2

Cash
Supplies
Equipment
Building
Accounts payable
Note payable
Adams, capital
Total

Adams Lawn Care Company

Trial Balance
December 31, 2012
ACCOUNT
DEBIT
$ 58,300
700
4,700
40,000

CREDIT

$103,700

700
50,000
53,000
$103,700

P 2-31A
Req. 2
Journal
DATE
Sep
2
3

POST.
ACCOUNTS AND EXPLANATIONS REF.
Cash
Moore, capital

DEBIT
39,000

CREDIT
39,000

Supplies
Furniture
Accounts payable

600
2,000

Cash

1,300

2,600

Service revenue
7

1,300

Land

26,000
Cash

11
15
16
18
19
29
30
30
30

26,000

Accounts receivable
Service revenue

700

Salary expense
Cash

590

Accounts payable
Cash

600

Cash
Service revenue

2,400

700
590
600
2,400

Accounts receivable
Service revenue

800

Cash
Accounts receivable

700

800
700

Salary expense
Cash

590

Rent expense
Cash

670

Moore, drawing
Cash

2,400

590
670
2,400

Reqs. 1 and 3

Sep 2
4
18
29

Cash
39,000
Sep 7
1,300
15
2,400
16
700
30

26,000
590
600
590

Sep 11
19
Bal

10

Accounts receivable
700 Sep 29
800
800

700

30
30
Bal

Sep 3
Bal

670
2,400

12,550

Furniture
2,000
2,000

Sep 7
Bal

Land
26,000
26,000
Moore, capital
Sep 2
Bal

39,000
39,000

Sep 30
Bal

Moore, drawing
2,400
2,400

Service revenue
Sep 4
11
18
19
Bal

1,300
700
2,400
800
5,200

Sep 15
30
Bal

Salary expense
590
590
1,180

Rent expense
670
670

Sep 16

Accounts payable
600 Sep 3
Bal

Sep 3
Bal

Supplies
600
600

2,600
2,000

Sep 30
Bal

Req. 4
Trevor Moore, Attorney
Trial Balance
September 30, 2012
ACCOUNT
Cash
Accounts receivable
Supplies
Furniture
Land
Accounts payable
Moore, capital
Moore, drawing
Service revenue

DEBIT
$ 12,550
800
600
2,000
26,000

CREDIT

2,000
39,000

2,400
5,200
11

Salary expense
Rent expense
Total

1,180
670
$46,200

12

$46,200