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ACCT&201 Week 3 Homework
1. Using the notion that the accounting equation (Assets = Liabilities + Stockholders' Equity) must remain in balance, indicate whether each of the following transactions is possible.
Transactions
Yes/No
a.
Cash increases; Accounts Payable decreases.
No
b.
Service Revenue increases; Salaries Payable increases.
No
c.
Advertising Expense increases; Cash decreases.
Yes
2. Hokies uses the following accounts:
Accounts Payable
Equipment
Accounts Receivable
Cash
Supplies
Utilities Expense
Prepaid Rent
Rent Expense
Service Revenue
Common Stock
Notes Payable
Retained Earnings
Salaries Payable
Salaries Expense
Dividends
Required:
Indicate which accounts should be debited and which should be credited for the following transactions of Hokies company.
Transactions
Account Debited
Account Credited
Example: Purchase equipment in exchange for cash.
Equipment
Cash
1.
Pay a cash dividend.
2.
Pay rent in advance for the next three months.
3.
Provide services to customers on account.
4.
Purchase office supplies on account.
5.
Pay salaries for the current month.
6.
Issue common stock in exchange for cash.
7.
Collect cash from customers for services provided in (3) above.
8.
Borrow cash from the bank and sign a note.
9.
Pay for the current month's utilities.
10.
Pay for office supplies purchased in (4) above.
3. Below is a list of typical accounts. Required: For each account, indicate (1) the type of account and (2) whether the normal account balance is a debit or credit.
Accounts
Type of Account
Normal Balance (Debit or Credit)
1.
Salaries Payable
2.
Common Stock
3.
Prepaid Rent
4.
Buildings
5.
Utilities Expense
6.
Equipment
7.
Rent Expense
8.
Notes Payable
9.
Salaries Expense
10.
Insurance Expense
11.
Cash
12.
Service Revenue
4. Below is a list of activities for Jayhawk Corporation. Required: Select from the activities of Jayhawk Corporation whether the transaction increases, decreases, or has no effect on assets, liabilities, and stockholders' equity. The first item is provided as an example.
Transaction
Assets
=
Liabilities
+
Stockholders' Equity
1.
Issue common stock in exchange for cash.
Increase
=
No effect
+
Increase
2.
Purchase business supplies on account.
=
+
3.
Pay for legal services for the current month.
=
+
4.
Provide services to customers on account.
=
+
5.
Pay employee salaries for the current month.
=
+
6.
Provide services to customers for cash.
=
+
7.
Pay for advertising for the current month.
=
+
8.
Repay loan from the bank.
=
+
9.
Pay dividends to stockholders.
=
+
10.
Receive cash from customers in (4) above.
=
+
11.
Pay for supplies purchased in (2) above.
=
+
5. Below is a list of activities for Purple Cow Incorporated. Required: For each activity, indicate the impact on the accounting equation. After doing so for all transactions, ensure that the accounting equation remains in balance. The first item is provided as an example. (Decreases to account classifications should be entered as a negative.)
Transaction
Assets
=
Liabilities
+
Stockholders' Equity
1.
Provide services to customers on account, $1,600.
$1,600
$0
$1,600
2.
Pay $400 for current month's rent.
3.
Hire a new employee, who will be paid $500 at the end of each month.
4.
Pay $100 for advertising aired in the current period.
5.
Purchase office supplies for $400 cash.
6.
Receive cash of $1,000 from customers in (1) above.
7.
Obtain a loan from the bank for $7,000.
8.
Receive a bill of $200 for utility costs in the current period.
9.
Issue common stock for $10,000 cash.
10.
Pay $500 to employee in (3) above.
Totals
6. Jake owns a lawn maintenance company, and Luke owns a machine repair shop. For the month of July, the following transactions occurred. July 3 Jake provides lawn services to Luke’s repair shop on account, $500. July 6 One of Jake’s mowers malfunctions. Luke provides repair services to Jake on account, $450. July 9 Luke pays $500 to Jake for lawn services provided on July 3. July 14 Luke borrows $600 from Jake by signing a note. July 18 Jake purchases advertising in a local newspaper for the remainder of July and pays cash, $110. July 20 Jake pays $450 to Luke for services provided on July 6. July 27 Luke performs repair services for other customers for cash, $800. July 30 Luke pays employee salaries for the month, $300. July 31 Luke pays $600 to Jake for money borrowed on July 14. Required: Record the transactions for Jake’s Lawn Maintenance Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
C:\Users\Annmarie Foltz\AppData\Local\Microsoft\Windows\INetCache\Content.Word\IMG_1743.jpg
7. Please look at question 6 and answer this question.
Required: 1. Record each transaction for Luke's Repair Shop. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
C:\Users\Annmarie Foltz\AppData\Local\Microsoft\Windows\INetCache\Content.Word\IMG_1743.jpg
8. 2. Using the format shown below, enter the impact of each transaction on the accounting equation for each company. (Decreases to account classification should be entered as a negative.)
JAKE'S LAWN MAINTENANCE COMPANY
LUKE'S REPAIR SHOP
Assets
=
Liabilities
+
Stockholders' Equity
Assets
=
Liabilities
+
Stockholders' Equity
July 03
500
$0
$500
$0
$500
$(500)
06
09
14
18
20
27
30
31
9. Consider the recorded transactions below.
Debit
Credit
1.
Accounts Receivable
8,400
Service Revenue
8,400
2.
Supplies
2,300
Accounts Payable
2,300
3.
Cash
10,200
Accounts Receivable
10,200
4.
Advertising Expense
1,000
Cash
1,000
5.
Accounts Payable
3,700
Cash
3,700
6.
Cash
1,100
Deferred Revenue
1,100
Required:
Post each transaction to T-accounts and calculate the ending balance for each account. The beginning balance of each account before the transactions is: Cash, $3,400; Accounts Receivable, $4,200; Supplies, $400; Accounts Payable, $3,500; Deferred Revenue, $300. Service Revenue and Advertising Expense each have a beginning balance of zero.
Cash
Accounts Receivable
Beg. bal.
Beg. bal.
End. bal.
End. bal.
Supplies
Accounts Payable
Beg. bal.
Beg. bal.
End. bal.
End. bal.
Deferred Revenue
Service Revenue
Beg. bal.
Beg. bal.
End. bal.
End. bal.
Advertising Expense
Beg. bal.
End. bal.
10. Below are the account balances of Bruins Company at the end of November.
Accounts
Balances
Accounts
Balances
Cash
$
40,000
Common Stock
$
50,000
Accounts Receivable
50,000
Retained Earnings
35,000
Supplies
1,100
Dividends
1,100
Prepaid Rent
3,000
Service Revenue
65,000
Equipment
?
Salaries Expense
30,000
Accounts Payable
17,000
Rent Expense
12,000
Salaries Payable
5,000
Interest Expense
3,000
Interest Payable
3,000
Supplies Expense
7,000
Deferred Revenue
9,000
Utilities Expense
6,000
Notes Payable
30,000
Required: Prepare a trial balance by placing amounts in the appropriate debit or credit column and determining the balance of the Equipment account.
BRUINS COMPANY
Trial Balance
November 30
Accounts
Debit
Credit
Totals
$0
$0
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