Question 1

A company paid $2,500 cash to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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Question 2

Describe the link between the income statement, the statement of owner's equity, and the balance sheet.

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Question 3

Explain the debt ratio and its use in analyzing a company's financial condition.

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Question 4

Maria Sanchez began business as Sanchez Law Firm on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then, prepare a trial balance, as of November 30.
a) Sanchez invested $15,000 cash and a law library valued at $6,000.
b) Purchased $7,500 of office equipment from Johnson Bros. on credit.
c) Completed legal work for a client and received $1,500 cash in full payment.
d) Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed.
e) Completed $4,000 of legal work for a client on credit.
f) Sanchez withdrew $2,000 cash for personal use.
g) Received $2,500 cash as partial payment for the legal work completed for the client in (e).
h) Paid $2,500 cash for the legal secretary's salary.

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Question 5

A business paid $100 cash to Karen Smith (the owner of the business) for her personal use. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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Question 6

Flora Accounting Services completed these transactions in February:
a. Purchased office supplies on account, $300.
b. Completed work for a client on credit, $500.
c. Paid cash for the office supplies purchased in (a).
d. Completed work for a client and received $800 cash.
e. Received $500 cash for the work described in (b).
f. Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary.

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Question 7

Identify each of the following items would likely serve as a source document by marking an X in the appropriate column. The first one is done as an example

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Question 8

What is a trial balance? What is its purpose?

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Question 9

Explain the recording and posting processes.

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Question 10

Dolly Barton began Barton Office Services in October and during that month completed these transactions:
a. Invested $10,000 cash, and $15,000 of computer equipment.
b. Paid $500 cash for an insurance premium covering the next 12 months.
c. Completed a word processing assignment for a customer and collected $1,000 cash.
d. Paid $200 cash for office supplies.
e. Paid $2,000 for October's rent.
Prepare journal entries to record the above transactions. Explanations are unnecessary.

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Question 11

Explain debits and credits and their role in the accounting system.

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Question 12

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:

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Question 13

Krenz Car Care, owned and operated by Karl Krenz, began business in September of the current year. Karl, a master mechanic, had no experience with keeping a set of books. As a result, Karl entered all of September's transactions directly to the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow:
Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction.

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Question 14

A company sends a $1,500 bill to a customer for delivery services rendered. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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Question 15

Indicate whether a debit or credit entry would be made to record the following changes in each account.
a. To decrease Cash.
b. To increase Owner, Capital.
c. To decrease Accounts Payable.
d. To increase Salaries Expense.
e. To decrease Supplies.
f. To increase Revenue.
g. To decrease Accounts Receivable.
h. To increase Owner, Withdrawals.

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Question 16

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:
If Josephine invested an additional $12,000 in the business during the year, but withdrew no assets during the year, what was the amount of net income earned by Josephine's Bakery?

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Question 17

Leonard Matson completed these transactions during December of the current year:
Prepare general journal entries to record these transactions.

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Question 18

On December 3, the Matador Company paid $5,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction.

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Question 19

On February 5, Textron Stores purchased a van that cost $35,000. The firm made a down payment of $5,000 cash and signed a long-term note payable for the balance. Show the general journal entry to record this transaction.

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Question 20

The following is a list of accounts and identification letters A through J for Shannon Management Co.:
Use the form below to identify the type of account and its normal balance. The first item is filled in as an example.

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Quiz 2: Analyzing and Recording Transactions