Question 1

The following trial balance is prepared from the general ledger of HG's Auto Maintenance, Inc. $\begin{array}{c}
 \text {HG'S AUTO MAINTENANCE, Inc.}\
 \text { Trial Balance}\
 \text { October 31}\
\
\begin{array}{lll}
\
\text {Cash}\
\text {Accounts receivable}\
\text {Supplies}\
\text {Shop equipment}\
\text {Office equipment}\
\text {Accounts payable}\
\text {Common stock}\
\text {Dividends}\
\text {Repair fees earned}\
\text {Supplies expense}\
\text {Totals}
\end{array}
\begin{array}{rr}
\text { Debit } & \text { Credit } \
\hline \$ 1,975 & \
2,800 & \
500 & \
13,000 & \
6,600 & \
& \$ 4,510 \
& 22,000 \
4,200 & \
& 11,875 \
8,600 & \
\hline \underline{\$ 37675} &\underline{ \$ 38385 }
\end{array}
\end{array}$
 Because the trial balance did not balance, you decided to examine the accounting records. You found that the following errors had been made:
1. A purchase of supplies on account for $245 was posted as a debit to Supplies and as a debit to Accounts Payable.
2. An investment of $500 cash by the owner was debited to Common Stock and credited to Cash.
3. In computing the balance of the Accounts Receivable account, a debit of $600 was omitted from the computation.
4. One debit of $300 to the Dividends account was posted as a credit.
5. Office equipment purchased for $800 was posted to the Shop Equipment account.
6. One entire entry was not posted to the general ledger. The transaction involved the receipt of $125 cash for repair services performed for cash.
Prepare a corrected trial balance for the HG's Auto Maintenance, Inc.e as of October 31.

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Question 2

Mary Sunny began business as Sunny Law Firm, Inc. 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) Mary invested $15,000 cash and a law library valued at $6,000.
b) Purchased $7,500 of office equipment from John Bronx on credit.
c) Completed legal work for a client and received $1,500 cash in full payment.
d) Paid John Bronx. $3,500 cash in partial settlement of the amount owed.
e) Completed $4,000 of legal work for a client on credit.
f) The company paid $2,000 cash in dividends to the owner. (sole shareholder)
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 3

Given each of the following errors, indicate on the table below the amount by which the trial balance will be out of balance and which trial balance column (debit or credit) will have the larger total as a result of the error.
a. $100 debit to Cash was debited to the Cash account twice.
b. $1,900 credit to Sales was posted as a $190 credit.
c. $5,000 debit to Office Equipment was debited to Office Supplies.
d. $625 debit to Prepaid Insurance was posted as a $62.50 debit.
e. $520 credit to Accounts Payable was not posted. $\begin{array}{c}
\begin{array}{lll}
\
 \text { Error}\
 \text { a.}\
 \text { b.}\
 \text { c.}\
 \text { d.}\
 \text { e.}\
\end{array}
\begin{array}{c}
 \text {Amount Out}\
  \text {of Balance}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\end{array}
\begin{array}{c}
  \text {Column Having}\
  \text { Larger Total}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\

\end{array}
\end{array}$

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Question 4

The balances for the accounts of Milo's Management Co., Inc. for the year ended December 31 are shown below. Each account shown had a normal balance. $\begin{array}{c}
\begin{array}{lr}
\text { Accounts payable..... } & \$ 6,500 \
\text { Accounts receivable... } & 7,000 \
\text { Cash ............... } & \text { ? } \
\text { Office supplies. } & 1,200 \
\text { Building ........... } & 125,000 \
\text { Supplies expense..... } & 21,500 \
\text { Common stock ........ } & 118,700 \
\text { Management revenue. } & 175,000 
\end{array}
\begin{array}{lr}
 \text { Wages expense}&36,000\
 \text { Rent expense}&6,000\
\
\

\text { Land}&50,000\
 \text { Unearned management}\
 \text {  fees}&4,000\
 \text { Dividends}&48,000
\end{array}
\end{array}$
 Calculate the correct balance for Cash and prepare a trial balance.

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Question 5

Jackson Advertising Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.

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Question 6

Based on the following trial balance for Sally's Salon, Inc, prepare an income statement, statement of retained earnings, and a balance sheet. Sally Crawford made no additional investments in the company during the year.
Sally's Salon, Inc.
Trial Balance
December 31 $\begin{array}{llcc}
  \text {Cash.  } &\$7,500\
 \text {  Accounts receivable.} &475\
 \text { Beauty supplies } &2,500\
\text { Beauty shop equipment } &17,000\
 \text { Accounts payable } &&\$745\
 \text { Common stock } &&1,000\
 \text {Retained earnings  } &&21,155\
 \text {Dividends  } &&63,000\
 \text {Revenue eatned.  } &&72,000\
 \text { Beauty supplies expense } &3,425\
 \text {  Rent expense.} &6,000\
 \text {Wages expense.  } &\underline{22,000}&\underline{\quad\quad}\
 \text {  Totals.} &\underline{\$94,900}&\underline{\$94,900}\

\end{array}$

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Question 7

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year:
$\begin{array}{llcc}
 & \text { Assets} &\text {  Liabilities  }\
 \text { Beginning of the year ............ } &\$114,000& \$68,000\
 \text { End of the year ......................} &135,000&73,000\
\end{array}$
 
If Jerry 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 Jerry's Butcher Shop, Inc.?

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Question 8

For each of the following accounts, identify whether a debit or credit yields the indicated change $\begin{array}{|l|l|}
\hline \text { a. To increase Fees Eamed } &\quad\quad \
\hline \text { b. To decrease Cash } \
\hline \text { c. To decrease Unearned Revenue } \
\hline \text { d. To increase Accounts Receivable } \
\hline \text { e. To increase Common Stock } \
\hline \text { f. To decrease Notes Payable } \
\hline \text { g. To increase Prepaid Rent } \
\hline \text { h. To increase Salaries Expense } \
\hline \text { i. To increase Accounts Payable } \
\hline \text { i. To decrease Prepaid Insurance }\
\hline  
\end{array}$

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Question 9

Based on the following trial balance for Barry's Automotive Shop, Inc., prepare an income statement, statement of retained earnings, and a balance sheet. Barry made no additional investments in the company during the year.
Barry's Automotive Shop, Inc.
Trial Balance
December 31 $\begin{array}{llcc}
  \text {Cash.................................  } &\$13,500\
 \text { Accounts receivable......... } &1,500\
 \text {Supplies.............................  } &500\
 \text {Repair shop equipment......  } &27,000\
 \text { Service truck.................... } &33,000\
 \text {Accounts payable..............  } &&\$2,600\
  \text { Common stock.................. } &&1,000\
 \text {Retained earnings..............  } &&38,525\
 \text { Dividends.......................... } &36,000\
 \text { Service revenue................. } &&125,000\
 \text {Supplies expense................  } &3,425\
 \text {Rent expense.....................  } &18,000\  
\text {Utilities expense................  } &5,000\
 \text {Gas expense......................  } &7,200\
 \text {Wages expense..................  } &\underline{22,000}&\underline{\quad\quad}\
 \text {Totals .............................. } &\underline{\$167,125}&\underline{167,125}\
\end{array}$

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Question 10

Figgaro Company Inc.'s accounts and their balances, as of the end of August, are included below. All accounts have normal balances: $\begin{array}{c}
\begin{array}{lc}
\text { Accounts receiv able..... } & \$ 36,000 \
& \
\text { Equipment............ } & 59,000 \
\text { Service revenues earned. } & 75,000 \
\text { Rent exp ense ........... } & 3,600 \
\text { Office supplies......... } & 1,500 \
\text { Notes payable......... } & 22,000 
\end{array}
\begin{array}{cr} \text { Cash ................. } & \$ 28,000 \
\text { Common stock } & 1,000 \
\text { Advertising expense ...... } & 5,000 \
\text { Accounts payable........ } & 31,000 \
\text { Dividends.. } & 24,000 \
\text { Salaries expense......... } & 30,000 \
\text { Retained earnings....... } & 58,100 
\end{array}
\end{array}$
 a. Calculate net income.
b. Determine the amount of retained earnings to be shown on the August 31 balance sheet.

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The answer of Figgaro Company Inc.'s accounts and their balances,...

Question 11

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year:
$\begin{array}{llcc}
 & \text { Assets} &\text {  Liabilities  }\
 \text { Beginning of the year ............ } &\$114,000& \$68,000\
 \text { End of the year ......................} &135,000&73,000\
\end{array}$

If Jerry made no investments in the business but withdrew $5,000 during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

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Question 12

A company had total assets of $350,000, total liabilities of $101,500 and total equity of $248,500. Calculate the company's debt ratio.

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Question 13

Pippa's Paralegal Services, Inc. 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 paralegal services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary.

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Question 14

After preparing an (unadjusted) trial balance at year-end, R. Chang of Chang Window Company, Inc. discovered the following errors:
1. Cash payment of the $225 telephone bill for December was recorded twice.
2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000.
3. A $900 cash dividend paid to the owner was recorded to the correct accounts as $90.
4. An additional investment of $5,000 cash by the owner was recorded as a debit to Common Stock and a credit to Cash.
5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry.
Using the form below, indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column. Would the error cause the trial balance to be out of balance? $\begin{array}{c}
\begin{array}{lll}
 \text {Error }\
1.\
2.\
3.\
4.\
5.
\end{array}
\begin{array}{lll}
\text { Yes }\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\

\end{array}
\begin{array}{lll}
\text { No }\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\end{array}
\end{array}$

Would the error cause the trial balance to be out of balance?

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The answer of After preparing an (unadjusted) trial balance at...

Question 15

_________________ documents identify and describe transactions and events and provide objective evidence and amounts for recording.

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The answer of _________________ documents identify and describe transactions and...

Question 16

A record containing all the separate accounts for a company as well as all of their balances is called the___________________

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The answer of A record containing all the separate accounts...

Question 17

___________________ are promises of payment from customers to sellers.

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The answer of ___________________ are promises of payment from customers...

Question 18

_____________________________ requires that each transaction affect, and be recorded in, at least two accounts. It also means that total amounts debited must equal total amounts credited for each transaction.

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The answer of _____________________________ requires that each transaction affect, and...

Question 19

The steps in the accounting process focus on analyzing and recording financial transactions and events within a company. Those steps are shown below. Using the number system of 1 as the first step and 4 as the last step in the process, number the steps in the correct order in which they would occur (1 thru 4).
A)Record relevant transactions and events in a journal,
B)Post journal information to the ledger accounts
C)Prepare and analyze the trial balance
D)Analyzing each transaction

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The answer of The steps in the accounting process focus...

Question 20

The second step in the analyzing and recording process is to record the transactions and events in the book of original entry, called the ______________.

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Quiz 2: Analyzing for Business Transactions