Chapter 2 practice problems PDF

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Problems to practice chapter 2 of the text book....

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Homework 2 E1- Beverly Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred: April 2: Invested $32,000 cash and equipment valued at $14,000 in the business. 2: Hired an administravice assistant at a salary of $290 per week payable monthly 3: Purchased supplied on account $700. (Debit an asset account.) 7: Paid office rent of $600 for the month 11: Completed a tax assignment and billed client $1,100 for services rendered. (Use Service Revenue account) 12: Received $3,200 advance on a management consulting engagement. 17: Received cash of $2,300 for services completed for Ferengi Co. 21: Paid Insurance expense $110 30: Paid administrative assistant $1,600 for the month 30: A count of supplies indicated that $120 of supplies had been used. 30: Purchased a new computer for $6,100 with personal funds. (The computer will be used exclusively for business purposes) Journalize the transactions in the general journal. (Omit Explainations.)

E4- The following trial balance of Watteau Co. does not balance. Watteau Co. Trial Balance June 30, 2020 Debit Cash Accounts Receivable Supplies Equipment Accounts Payable Unearned Service Revenue Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Office Expense

Credit $2,870

$3,231 800 3,800 2,666 1,200 6,000 3,000 2,380 3,400 940 $13,371

$16,916

Each of the listed accounts should have a normal balance per the general ledger, An examination of the ledger and journal reveals the following errors: 1. Cash received from a customer on account was debited for $570, and Accounts Receivable was credited for the same amount. The actual collection was for $750 2. The purchase of a computer printer on account for $500 was recorded as a debit to Supplies for $500 and a credit to Accounts Payable for $500 3. Services were provided on account for a client for $890. Accounts Receivable was debited for $890 and Service Revenue was credited for $89. 4. A payment of $65 for telephone charges was recorded as a debit to Office Expense for $65 and a debit to cash for $65. 5. When the Unearned Service Revenue account was reviewed, it was found that service revenue amounting to $325 was performed prior to June 30 (related to Unearned Service Revenue) 6. A debit posting to Salaries and Wages Expense of $670 was omitted. 7. A payment on accounts for $206 was credited to Cash for $206 and credited to Accounts Payable for $260. 8. A dividend of $575 was debited to Salaries and Wages Expense for $575 and credited to Cash for $575. Prepare a corrected trial balance (It may be necessary to add one of more accounts to the trial balance)

E4 answer-

E5- The ledger of Duggan Rental Agency on March 31 of the current year indicated the following selected accounts before adjusting entries were prepared. Prepaid Insurance Supplies Equipment Accumulated Depreciation-Equip Notes Payable Unearned Rent Revenue Rent Revenue Interest Expense Salaries and Wages Exp

Debit $3,600 2,800 25,000

Credit

$8,400 20,000 9,300 60,000 -014,000

An analysis of the accounts shoes the following 1. The equipment depreciates $250 per month 2. 1/3 of the unearned rent was recognized as revenue during the quarter 3. Interest of $500 is accrued on the notes payable 4. Supplies on hand total $850 5. Insurance expires at the rate of $300 per month Prepare the adjusting entries at March 31, assuming the adjusting entries are made quarterly. Additional accounts are Deprecation Expense, Insurance Expense, Interest Payable and Supplies Expense (Omit explainations)

E6- Karen Weller, D.D.S., opened a dental practice on January 1, 2020. During the first month of operations, the following transactions occurred. 1. Performed services for patients who had dental plan insurance. At January 31, $750 of such services were performed but not yet billed to the insurance companies 2. Utility expenses incurred but not paid prior to January 31 totaled $520. 3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable. The equipment deprecates at $400 per month. Interest is $500 per month 4. Purchases a one-year malpractice insurance policy on January 1 for $12,000 5. Purchased $1,600 of dental supplies. On January 31, determined that $500 of supplies were on hand. Prepare the adjusting entries on January 31. (Omit explanations.) Account titles are Accumulated Depreciation- Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, prepaid Insurance, Supplies, Supplies Expense, Utilities Expense and Accounts Payable.

E7- A partial adjusted trial balance of Piper Company at January 31, 2020 shows the following: Piper Company Adjusted Trial Balance January 31, 2020 Debit Supplies $700 Prepaid Insurance 2,400 Salaries and Wages Payable Unearned Service Revenue Supplies Expense 950 Insurance Expense 400 Salaries and Wages Expense 1,800 Service Revenue

Credit

$800 750

2,000

Answer the following questions, assuming the year begins January 1. a. The amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1?

b. If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased?

c. If $2,500 of salaries was paid in January, was the balance in Salaries and Wages Payable at December 31, 2019?

d. If $1,600 was received in January for services performed in January, what was the balance in Unearned Service Revenue December 31, 2019?

E8- Andy Roddick is the new owner of Ace Computer Services. At the end of August 2020, his first month of ownership, Roddick is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August. 1. At August 31, Roddick owned his employees $1,900 in wages that will be paid September 1 2. At the end of the month, he had not yet received the month’s utility bill. Based on past experience, he estimated the bill would be approximately $600. 3. On August 1, Roddick borrowed $30,000 from a local bank on a 15-year mortgage. The annual interest rate is 8%. 4. A telephone bill in the amount of $117 covering August charges is unpaid at August 31. Prepare the adjusting journal entries as of August 31, 2020, suggested by the information above.

E9- Selected accounts of Urdu Company are shown below: Supplies

Accounts Receivable

Salaries and Wages Expense

Salaries and Wages Payable

Unearned Service Revenue

Supplies Expense

Service Rev

From an analysis of the T- accounts, reconstruct (a) the October transaction entries, and (b) the adjusting journal entries that were made on October 31, 2020. Prepare explanations for each journal entry....