TOUR214CH3Solutions - Chapter 3 Solutions PDF

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Chapter 3 Solutions...

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CHAPTER 3 THE RECORDING PROCESS SOLUTIONS TO EXERCISES

EXERCISE 3-1

1. 2. 3. 4. 5. 6.

Rooms Revenue Rent Expense Salary Payable Capital Food Revenue Cash

(a) Debit Effect

(a) Credit Effect

(b) Normal Balance

Decrease Increase Decrease Decrease Decrease Increase

Increase Decrease Increase Increase Increase Decrease

Credit Debit Credit Credit Credit Debit

EXERCISE 3-2

June

1 2 3 12

June

1

2 3

12

Account Debited Cash Equipment Rent Expense Accounts Receivable

Account Credited Common Stock Accounts Payable Cash Service Revenue

Cash ..............................................................................20,000 Common Stock................................................................

20,000

Equipment...................................................................... 8,600 Accounts Payable............................................................

8,600

Rent Expense............................................................... 1,200 Cash.................................................................................

1,200

Accounts Receivable...................................................... 890 Service Revenue………………………………………

890

EXERCISE 3-3 (a) Basic Analysis

(b) Debit-Credit Analysis

Aug. 1

The asset Cash is increased; the Debits increase assets: debit Cash stockholders’ equity account Common $25,000. Credits increase stockholders’ Stock is increased. equity: credit Common Stock $25,000.

Aug. 4

The asset Prepaid Insurance is increased; the asset Cash is decreased.

Debits increase assets: debit Prepaid Insurance $1,200. Credits decrease assets: credit Cash $1,200.

16

The asset Cash is increased; the revenue Fees Earned is increased.

Debits increase assets: debit Cash $5,000. Credits increase revenues: credit Service Revenue $5,000.

27

The expense Salaries Expense is increased; the asset Cash is decreased.

Debits increase expenses: debit Salaries Expense $1,500. Credits decrease assets: credit Cash $1,500.

Aug.

1 4

16 27

Cash ..............................................................................25,000 Common Stock................................................................

25,000

Prepaid Insurance............................................................ 1,200 Cash.................................................................................

1,200

Cash .............................................................................. 5,000 Service Revenue..............................................................

5,000

Salaries Expense............................................................ 1,500 Cash……………………………………………………

1,500

EXERCISE 3-4 Cash 5,500 2,500

5/15 5/20

5/10

Accounts Receivable 7,200 5/15

5,500

Service Revenue 5/10 5/20

7,200 2,500

EXERCISE 3-5 ELIZABETH BAKERY Trial Balance December 31, 2008

Debit $33,600 Cash........................................................................................................ 4,900 Prepaid Insurance................................................................................... Accounts Payable................................................................................... Unearned Fees........................................................................................ Common Stock....................................................................................... 4,000 Dividends................................................................................................ Service Revenue..................................................................................... 17,000 Salaries Expense..................................................................................... 3,000 Rent Expense.......................................................................................... $62,500

Credit

$ 7,500 5,800 20,000 29,200 000,000 $62,500

EXERCISE 3-6

( a) Aug.

1 10 31

Bal.

Aug. 25 Bal.

Aug. 12

Cash 10,000 Aug. 12 3,900 1,800 14,200 Accounts Receivable 2,200 Aug. 31

1,500

1,800

400 Computer 4,100 Notes Payable Aug. 12

2,600

Common Stock Aug. 1

10,000

Service Revenue Aug. 10 25 Bal.

3,900 2,200 6,100

(b)

PALM TREE TRAVEL, INC. Trial Balance August 31, 2008 Debit Cash Accounts Receivable Computer Notes Payable Common Stock Service Revenue

Credit

$14,200 400 4,100 00,000 $18,700

$ 2,600 10,000 6,100 $18,700

EXERCISE 3-7 (a)

General Journal

Date Apr.

Account Titles and Explanation 1

Ref .

Cash

Debit 15,000

Common Stock (Invested cash in business in exchange for common stock) 12

Credit

15,000

Cash

600 Service Revenue (Received cash for revenue earned)

15

25

29

600

Salaries Expense Cash (Paid salaries to date)

900 900

Accounts Payable Cash (Paid creditors on account)

1,500

Cash

1,000

1,500

Accounts Receivable (Received cash in payment of account) 30

1,000

Cash

600 Service Revenue (Received cash for revenue earned)

(b)

600

MARDI GRAS CATERING CORPORATION Trial Balance April 30, 2008

Debit $14,800 Cash.............................................................................................. 3,100 Accounts Receivable.................................................................... 2,500 Supplies........................................................................................ Accounts Payable......................................................................... Common Stock............................................................................. Service Revenue........................................................................... Salaries Expense........................................................................... 900 $21,300

Credit

$1,000 15,000 5,300 000,000 $21,300

EXERCISE 3-8

J1 Date June

Account Titles and Explanation 1

Cash

Ref .

Debit 150,000

Common Stock (Issued shares of stock for cash) 4

Land

150,000 40,000

Cash (Purchased land for cash) 8

11

40,000

Advertising Expense Accounts Payable (Incurred advertising expense on account)

3,500

Salaries Expense Cash (Paid salaries)

1,500

3,500

1,500

12

No entry.

13

Prepaid Insurance Cash (Paid for one-year insurance policy)

2,000

Cash

9,000

20

2,000

Admission Revenue (Received cash for admission fees) 30

Cash

9,000 5,000

Admission Revenue (Received cash for admission fees) 30

Credit

Accounts Payable Cash (Paid creditor on account)

5,000 1,000 1,000

EXERCISE 3-9 (a)

J1 Date Sept.

Account Titles and Explanation 1

Cash Common Stock (Issued shares of stock for cash)

Debit

10 1 31 1

40,000

No entry—not a transaction.

3

Supplies Accounts Payable (Purchased supplies on account)

12 6 20 1

1,500

Rent Expense Cash (Paid office rent)

72 9 10 1

1,500

Accounts Receivable Service Revenue (Billed client for services provided)

11 2 40 0

1,900

Cash

7,000

Unearned Revenue (Received an advance for future services)

10 1 20 5 10 1 40 0

2,350

Service Revenue (Received cash for services completed)

Salaries Expense Cash (Paid salaries)

72 6 10 1

2,480

Accounts Payable ($1,500 × 40%) Cash (Paid creditor on account)

20 1 10 1

600

11

12

17

Sept. 31

31

Cash

Credit

40,000

2

7

(b)

Ref .

1,500

1,500

1,900

7,000

2,350

2,480

600

Cash Date Sept.

No.101 Explanation

1 7 12 17 31 31

Ref. J1 J1 J1 J1 J1 J1

Debit 40,000

Credit 1,500

7,000 2,350 2,480 600

Account sRecei vabl e Date Sept. 11

Explanation

No.112 Ref. J1

Debit 1,900

Credit

Suppl i es Date Sept.

3

Accounts Payabl e Date Explanation Sept. 3 31

Ref. J1

Debit 1,500

Credit

Ref. J1 J1

Debit

Credit 1,500

Explanation

600

1

Ref. J1

Debit

Credit 7,000

Ref. J1

Debit

Credit 40,000

Explanation

Explanation

Balance 40,000

No.400 Ref. J1 J1

Debit

Credit 1,900 2,350

Ref. J1

Debit 2,480

Credit

Sal ar i esExpense Date Sept. 31

Balance 7,000

No.311

Ser vi ceRevenue Date Sept. 11 17

Balance 1,500 900

No.205

CommonSt ock Explanation

Balance 1,500

No.201

Unear nedRevenue

Date Sept.

Balance 1,900

No.126 Explanation

Date Sept. 12

Balance 40,000 38,500 45,500 47,850 45,370 44,770

Balance 1,900 4,250

No.726 Balance 2,480

RentExpense Date Sept.

Explanation 7

No.729 Ref. J1

Debit 1,500

Credit

Balance 1,500

(c)

ALYSON CLARK Trial Balance September 30, 2008

Debit

Credit

Cash.............................................................................................. $44,770 Accounts Receivable.................................................................... 1,900 Supplies........................................................................................ 1,500 Accounts Payable......................................................................... Unearned Revenue........................................................................ Common Stock............................................................................. Service Revenue........................................................................... Salaries Expense........................................................................... 2,480 Rent Expense................................................................................ 1,500 $52,150

$

900 7,000 40,000 4,250

000,000 $52,150

EXERCISE 3-10 Date Mar. 1

Account Titles and Explanation Cash Common Stock (Investment of cash in business in exchange for stock)

3

5

6

10

Land Buildings Equipment Cash (Purchased Lee’s Golf Land)

Ref.

Debit 60,000

Credit 60,000

23,000 9,000 6,000 38,000

Advertising Expense Cash (Paid for advertising)

1,600

Prepaid Insurance Cash (Paid for one-year insurance policy)

1,480

Equipment Accounts Payable (Purchased equipment on account)

2,600

1,600

1,480

2,600

18

Cash

800 Golf Revenue (Received cash for services provided)

19

800

Cash Unearned Revenue (Received cash for coupon books sold)

25

30

31

31

1,500 1,500

Dividends Cash

1,000 1,000

Salary Expense Cash

600 600

Accounts Payable — Parton Cash

2,600 2,600

Cash

500 Service Revenue

500

EXERCISE 3-11 (a) Account

(1) Increase Side

(1) Decrease Side

(2) Normal Balance

Accounts Payable

Right

Left

Credit

Accounts Receivable

Left

Right

Debit

Property, Plant, and Equipment

Left

Right

Debit

Income Taxes Payable

Right

Left

Credit

Interest Expense

Left

Right

Debit

Inventory

Left

Right

Debit

(b)

(1) (2) (3)

Cash is increased. Cash is decreased. Cash is decreased or Accounts Payable is increased.

(c)

(1) (2)

Cash is decreased. Cash is decreased or Notes or Mortgage Payable is increased....