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Chapter 2: 12RQ (page 56)
What are the four parts of a journal entry?
Four part of journal entry are date, debit account name and amount, credit name and account and explanation.
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Creating a chart of accounts Raymond Autobody Shop has the following accounts:
Accounts Payable Service Revenue
Cash Equipment
Utilities Expense Common Stock
Automotive Supplies Advertising Expense
Dividends Unearned Revenue
Retained Earnings
Create a chart of accounts for Raymond Autobody Shop using the standard numbering system. Each account is separated by a factor of 10. For example, the first asset account will be 100 and the next asset account will 110
Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:
Sep. 1 Received \(48,000 cash and issued common stock to Simpson.
4 Purchased office supplies, \)1,200, and furniture, \(1,300, on account.
6 Performed services for a law firm and received \)1,900 cash.
7 Paid \(18,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.
14 Paid for the furniture purchased on September 4 on account.
15 Paid assistant鈥檚 semimonthly salary, \(1,500.
17 Received cash on account, \)1,000.
20 Prepared a design for a school on account, \(650.
25 Received \)2,100 cash for design services to be performed in October.
28 Received \(2,900 cash for consulting with Plummer & Gordon.
29 Paid \)600 cash for a 12-month insurance policy starting on October 1.
30 Paid assistant鈥檚 semimonthly salary, \(1,500.
30 Paid monthly rent expense, \)600.
30 Received a bill for utilities, \(350. The bill will be paid next month.
30 Paid cash dividends of \)3,700.
Requirements 1. Record each transaction in the journal using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Furniture; Accounts Payable; Utilities Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanations are not required.
Explain the five steps in journalizing and posting transactions.
Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:
Sep. 1 Received \(48,000 cash and issued common stock to Simpson.
4 Purchased office supplies, \)1,200, and furniture, \(1,300, on account.
6 Performed services for a law firm and received \)1,900 cash.
7 Paid \(18,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.
14 Paid for the furniture purchased on September 4 on account.
15 Paid assistant鈥檚 semimonthly salary, \(1,500.
17 Received cash on account, \)1,000.
20 Prepared a design for a school on account, \(650.
25 Received \)2,100 cash for design services to be performed in October.
28 Received \(2,900 cash for consulting with Plummer & Gordon.
29 Paid \)600 cash for a 12-month insurance policy starting on October 1.
30 Paid assistant鈥檚 semimonthly salary, \(1,500.
30 Paid monthly rent expense, \)600.
30 Received a bill for utilities, \(350. The bill will be paid next month.
30 Paid cash dividends of \)3,700.
Requirements 2. Open a T-account for each of the accounts.
Journalizing transactions, posting to T-accounts, and preparing a trial balance
Problem P2-42 continues with the company introduced in Chapter 1, Canyon Canoe Company. Here you will account for Canyon Canoe Company鈥檚 transactions as it is actually done in practice. Begin by reviewing the transactions from Chapter 1. The transactions have been reprinted below.
Nov. 1 Received \(16,000 cash to begin the company and issued common stock to Amber and Zach.
2 Signed a lease for a building and paid \)1,200 for the first month鈥檚 rent.
3 Purchased canoes for \(4,800 on account.
4 Purchased office supplies on account, \)750.
7 Earned \(1,400 cash for rental of canoes.
13 Paid \)1,500 cash for wages.
15 Paid \(50 dividends to stockholders.
16 Received a bill for \)150 for utilities. (Use separate payable account.)
20 Received a bill for \(175 for cell phone expenses. (Use separate payable account.)
22 Rented canoes to Early Start Daycare on account, \)3,000.
26 Paid \(1,000 on account related to the November 3 purchase.
28 Received \)750 from Early Start Daycare for canoe rental on November 22.
30 Paid \(100 dividends to stockholders
In addition, Canyon Canoe Company completed the following transactions for December.
Dec. 1 Amber and Zack contributed land on the river (worth \)85,000) and a small building to use as a rental office (worth \(35,000) in exchange for common stock.
1 Prepaid \)3,000 for three months鈥� rent on the warehouse where the company stores the canoes.
2 Purchased canoes signing a note payable for \(7,200
4 Purchased office supplies on account for \)500.
9 Received \(4,500 cash for canoe rentals to customers.
15 Rented canoes to customers for \)3,500, but will be paid next month.
16 Received a \(750 deposit from a canoe rental group that will use the canoes next month.
18 Paid the utilities and telephone bills from last month.
19 Paid various accounts payable, \)2,000.
20 Received bills for the telephone (\(325) and utilities (\)295) which will be paid later.
31 Paid wages of \(1,800. 31 Paid cash dividend to stockholders, \)300.
Requirements
1. Journalize the transactions for both November and December, using the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Rent; Land; Building; Canoes; Accounts Payable; Utilities Payable; Telephone Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Canoe Rental Revenue; Rent Expense; Utilities Expense; Wages Expense; and Telephone Expense. Explanations are not required. (Hint: For November transactions, refer to your answer for Chapter 1.)
2. Open a T-account for each of the accounts.
3. Post the journal entries to the T-accounts, and calculate account balances. Formal posting references are not required.
4. Prepare a trial balance as of December 31, 2018.
5. Prepare the income statement of Canyon Canoe Company for the two months ended December 31, 2018.
6. Prepare the statement of retained earnings for the two months ended December 31, 2018.
7. Prepare the balance sheet as of December 31, 2018.
8. Calculate the debt ratio for Canyon Canoe Company at December 31, 2018
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