Ch2exercises - Financial Accounting for MIS students PDF

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Financial Accounting for MIS students...

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E2.2 (LO 1) Selected transactions for Acosta Decor, an interior design company, in its first month of business are as follows. Identify debits, credits, and normal balances. Jan. 2 Marie Acosta invested €10,000 cash in business in exchange for ordinary shares. 3 Purchased used car for €3,000 cash for use in business. 9 Purchased supplies on account for €600. 11 Billed customers €2,400 for services performed. 16 Paid €350 cash for advertising. 20 Received €900 cash from customers billed on January 11. 23 Paid creditor €300 cash on balance owed. 28 Declared and paid a €1,000 cash dividend. Instructions For each transaction, indicate the following. a. The basic type of account debited and credited (asset, liability, equity). b. The specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.). c. Whether the specific account is increased or decreased. Account Debited

Transaction

(a) Basic Type

(b) Specific Account

Jan. 2

Asset

3

(c)

Account Credited

Effect

(d) Normal Balance

(a) Basic Type

(b) Specific Account

Cash

Increase

Debit

Equity

Asset

Equipment

Increase

Debit

9

Asset

Supplies

Increase

11

Asset

Accounts Receivable

16

Equity

20

(c) Effect

(d) Normal Balance

Share Capital— Ordinary

Increase

Credit

Asset

Cash

Decrease

Debit

Debit

Liability

Accounts Payable

Increase

Credit

Increase

Debit

Equity

Service Revenue

Increase

Credit

Advertising Expense

Increase

Debit

Asset

Cash

Decrease

Debit

Asset

Cash

Increase

Debit

Asset

Accounts Receivable

Decrease

Debit

23

Liability

Accounts Payable

Decrease

Credit

Asset

Cash

Decrease

Debit

28

Equity

Dividends

Increase

Debit

Asset

Cash

Decrease

Debit

d. The normal balance of the specific account. Use the following format, in which the January 2 transaction is given as an example.

EXERCISE 2.3 Journal Entries of previous question

General Journal

J1

Date

Account Titles and Explanation

Jan. 2

Cash.................................................... Share Capital—Ordinary...........

10,000

Equipment.......................................... Cash............................................

3,000

Supplies............................................. Accounts Payable......................

600

Accounts Receivable........................ Service Revenue........................

2,400

Advertising Expense......................... Cash............................................

350

Cash.................................................... Accounts Receivable.................

900

Accounts Payable.............................. Cash............................................

300

3 9 11 16 20 23

Ref.

Debit

Credit 10,000 3,000 600 2,400 350 900

Copyright © 2019 WILEY Weygandt Financial Accounting, IFRS, 4/e, Solutions Manual (For Instructor Use Only)

300

2-2

28

Dividends........................................... Cash............................................

1,000 1,000

E2.8 (LO 2) Selected transactions for Sophie's Dog Care are as follows during the month of March.

Journalize a series of transactions. Marc 1 Paid monthly rent of $1,200. h 3 Performed services for $160 on account. 5 Performed services for cash of $75. 8 Purchased equipment for $600. The company paid cash of $90 and the balance was on account. 1 Received cash from customers billed on March 3. 2 1 Paid salaries and wages to employees of $525. 4 2 Paid utilities of $72. 2 2 Borrowed $1,500 from Grafton State Bank by signing a note. 4 2 Paid $220 to repair service for plumbing repairs. 7 2 Paid balance amount owed from equipment purchase on March 8. 8 3 Paid $1,800 for six months of insurance. 0

Copyright © 2019 WILEY Weygandt Financial Accounting, IFRS, 4/e, Solutions Manual (For Instructor Use Only)

2-3

Instructions Journalize the transactions. (Omit explanations.)

EXERCISE 2.8

Date March 1 3 5 8

12 14 22 24

General Journal Account Titles Debit Rent Expense..................................................... 1,200 Cash............................................................ Accounts Receivable........................................ Service Revenue........................................

160

Cash.................................................................... Service Revenue........................................

75

Equipment.......................................................... Cash............................................................ Accounts Payable......................................

600

Cash.................................................................... Accounts Receivable.................................

160

Salaries and Wages Expense........................... Cash............................................................

525

Utilities Expense................................................ Cash............................................................

72

Credit 1,200 160 75 90 510 160 525

Cash.................................................................... 1,500 Notes Payable............................................

Copyright © 2019 WILEY Weygandt Financial Accounting, IFRS, 4/e, Solutions Manual (For Instructor Use Only)

72 1,500

2-4

27 28 30

Repairs Expense............................................... Cash............................................................

220

Accounts Payable............................................. Cash............................................................

510

220 510

Prepaid Insurance............................................. 1,800 Cash............................................................

1,800

E2.11 (LO 3, 4) Selected transactions from the journal of Wong Consultants are presented below (amounts in ¥ thousands). Post journal entries and prepare a trial balance. Dat Account Titles and Explanation Re Debi Credi e f. t t Aug. Cash 1

5,00 0

  Share Capital—Ordinary

5,000

    (Issued shares for cash) 10

Cash

2,60 0

  Service Revenue

2,600

    (Received cash for services performed) 12

Equipment

5,00

Copyright © 2019 WILEY Weygandt Financial Accounting, IFRS, 4/e, Solutions Manual (For Instructor Use Only)

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Dat e

Account Titles and Explanation

Re Debi Credi f. t t 0   Cash

  Notes Payable

2 2,700

    (Purchased equipment for cash and notes payable) 25

Accounts Receivable

1,70 0

  Service Revenue

1,700

    (Billed clients for services performed) 31

Cash

900

  Accounts Receivable

900

    (Receipt of cash on account) Instructions a. Post the transactions to T‐accounts. b. Prepare a trial balance at August 31, 2020.

EXERCISE 2.11 (a)

Aug. 1 10 31 Bal.

Cash 5,000 Aug. 12 2,600 900 6,200

2,300

Copyright © 2019 WILEY Weygandt Financial Accounting, IFRS, 4/e, Solutions Manual (For Instructor Use Only)

2-6

Accounts Receivable Aug. 25 1,700 Aug. 31 Bal. 800

Aug. 12

900

Equipment 5,000 Notes Payable Aug. 12

2,700

Share Capital—Ordinary Aug. 1 5,000

Service Revenue Aug. 10 25 Bal.

2,600 1,700 4,300

Copyright © 2019 WILEY Weygandt Financial Accounting, IFRS, 4/e, Solutions Manual (For Instructor Use Only)

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2-8

EXERCISE 2.11 (Continued) (b)

WONG CONSULTANTS Trial Balance August 31, 2020

Cash.......................................................................... Accounts Receivable.............................................. Equipment................................................................ Notes Payable.......................................................... Share Capital—Ordinary......................................... Service Revenue......................................................

Debit ¥ 6,200 800 5,000

¥12,000

2-9

Credit

¥ 2,700 5,000 4,300 ¥12,000

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