Question 1

Larry Matt completed these transactions during December of the current year:
 $\begin{array} { | l | l | } 
\hline \text { Dec. 1 } & \begin{array} { l } 
\text { Began a financial services practice by investing } \$ 15,000 \text { cash and office } \
\text { equipment having a } \$ 5,000 \text { value. }
\end{array} \
\hline 2 & \text { Purchased } \$ 1,200 \text { of office equipment on credit. } \
\hline 3 & \text { Purchased } \$ 300 \text { of office supplies on credit. } \
\hline
\end{array}$
$\begin{array}{|l|l|}
\hline 4 & \begin{array}{l}
\text { Completed work for a client and immediately received a payment of } \$ 900 \
\text { cash. }
\end{array} \
\hline 8 & \text { Completed work for Precept Paper Co. on credit, } \$ 1,700 . \
\hline 10 & \text { Paid for the supplies purchased on credit on December } 3 . \
\hline 14 & \text { Paid for the annual } \$ 960 \text { premium on an insurance policy. } \
\hline 18 & \begin{array}{l}
\text { Received payment in full from Precept Paper Co. for the work completed on } \
\text { December } 8 .
\end{array} \
\hline 27 & \text { Larry withdrew } \$ 650 \text { cash from the practice to pay personal expenses. } \
\hline 30 & \text { Paid } \$ 175 \text { cash for the December utility bills. } \
\hline 30 & \text { Received } \$ 2,000 \text { from a client for financial services to be rendered next year. } \
\hline
\end{array}$
 Prepare general journal entries to record these transactions.

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Question 2

List the four steps in recording transactions.

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Question 3

Jerry's Butcher Shop had the following assets and liabilities at the beginning and end of the current year:
$\begin{array} { l c c } 
& \text { Assets } & \text { Liabilities } \
\text { Beginning of the year } \$ 114,000 & \$ 68,000 \
\text { End of the year } & 135,000 & 73,000
\end{array}$
- 
If Jerry invested an additional $12,000 in the business and withdrew $5,000 during the year, what was the amount of net income earned by Jerry's Butcher Shop?

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Question 4

Mary Sunny began business as Sunny 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) 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) Mary 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 Charles Nice (the owner of the business) for his 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

Figgaro Company's accounts and their balances, as of the end of August, are included below. All accounts have normal balances:
 $\begin{array}{|l|c|l|c|}
\hline \text { Accounts receivable } & \$ 36,000 & \text { Cash. } & \$ 27,00 \
\hline \text { Equipm ent ........... } & 59,000 & \text { Advertising expense. } & 5,000 \
\hline \text { Service revenues earned. } & 75,000 & \text { Accounts payable......... } & 31,000 \
\hline \text { Rent expense................ } & 3,600 & \text { J. Figgaro, Withdrawals.. } & 24,000 \
\hline \text { Office supplies......... } & 1,500 & \text { Salaries expense............ } & 30,000 \
\hline \text { Notes payable. } & 22,000 & \text { J. Figgaro, Capital. } & 58,100 \
\hline
\end{array}$
 a. Calculate net income.
b. Determine the amount of owner's equity to be shown on the August 31 balance sheet.

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Question 7

ABC Company made a $2,500 payment on account, 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 8

Jarrod Automotive, owned and operated by Jarrod Johnson, began business in September of the current year. Jarrod, a mechanic, had no experience with recording business transactions. As a result, Jarrod entered all of September's transactions directly into 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 9

The following trial balance is prepared from the general ledger of HG's Auto Maintenance.
HG'S AUTO MAINTENANCE
Trial Balance October 31
 $\begin{array}{l|r|r}
\hline & \text { Debit } & \text { Credit } \
\hline \text { Cash } & \$ 1,975 & \
\hline \text { Accounts receivable } & 2,800 & \
\hline \text { Supplies } & 500 & \
\hline \text { Shop equipment } & 13,000 & \
\hline \text { Office equipment } & 6,600 & \
\hline \text { Accounts payable } & & \$ 4,510 \
\hline \text { Hal Grifin, Capital } & & 22,000 \
\hline \text { Hal Griffin, Withdrawals } & 4,200 & \
\hline \text { Repair fees earned } & & 11,875 \
\hline \text { Supplies expense } & 8,600 & \
\hline \text { Totals } & \$ 37,675 & \$ 38,385 \
\hline
\end{array}$
 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 Hal Griffin, Capital 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 Hal Griffin, Withdrawals 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 as of October 31.

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Question 10

On February 5, Teddy's Catering purchased an oven 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 11

Using the following list of accounts and identification letters A through J for Homer's Management Co., enter the type of account and its normal balance into the table below. The first item is filled in as an example:
A. Homer, Capital F. Prepaid Rent
B. Interest Payable G. Advertising Expense
C. Land H. Unearned Rent Revenue
D. Homer, Withdrawals I. Commissions Earned
E. Fees Earned J. Notes Receivable

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Question 12

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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Question 13

Jerry's Butcher Shop had the following assets and liabilities at the beginning and end of the current year:
$\begin{array} { l c c } 
& \text { Assets } & \text { Liabilities } \
\text { Beginning of the year } \$ 114,000 & \$ 68,000 \
\text { End of the year } & 135,000 & 73,000
\end{array}$
-
If Jerry made no investments in the business and withdrew no assets during the year, what was the amount of net income earned by Jerry's Butcher Shop?

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Question 14

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 15

On December 3, the ABBJ Company paid $1,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction.

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Question 16

The balances for the accounts of Milo's Management Co. for the year ended December 31 are shown below. Each account shown had a normal balance.
 $\begin{array} { l | r | l | r } 
\text { Accounts Payable..... } & \$ 6,500 & \text { Wages Expense } \ldots \ldots \ldots & 36,000 \
\hline \text { Accounts Receivable... } & 7,000 & \text { Rent Expense } \ldots \ldots \ldots \ldots & 6,000 \
\hline \text { Cash } \ldots \ldots \ldots \ldots \ldots \ldots \ldots & ? & & \
\hline
\end{array}$
$$\begin{array} { | l | r | l | r } 
\hline \text { Offee Supplies. } &  { 1,200 } & & \
\hline \text { Building } \ldots \ldots \ldots \ldots \ldots & 125,000 & & \
\hline \text { Supplies Expense...... } & 21,500 & \text { Land } \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 50,000 \
\hline \text { D. Milo, Capital ......... } & 118,700 & \text { Unearned Management Fegt } & 4,000 \
\hline \text { Management Revenue. } & 175,000 & \text { D. Milo. Withdrawrals } & 48,000
\end{array}$$ Calculate the correct balance for Cash and prepare a trial balance.

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Question 17

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

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Question 18

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 19

At year-end, Henry Laundry Service noted the following errors in its trial balance:
1. It understated the total debits to the Cash account by $500 when computing the account balance.
2. A credit sale for $311 was recorded as a credit to the revenue account, but the offsetting debit was not posted.
3. A cash payment to a creditor for $2,600 was never recorded.
4. The $680 balance of the Prepaid Insurance account was listed in the credit column of the trial
128
balance.
5. A $24,900 van purchase was recorded as a $24,090 debit to Equipment and a $24,090 credit to Notes Payable.
6. A purchase of office supplies for $150 was recorded as a debit to Office Equipment. The offsetting credit entry was correct.
7. An additional investment of $4,000 by Del Henry was recorded as a debit to Del Henry, Capital and as a credit to Cash.
8. The cash payment of the $510 utility bill for December was recorded (but not paid) twice.
9. The revenue account balance of $79,817 was listed on the trial balance as $97,817.
10. A $1,000 cash withdrawal was recorded as a $100 debit to Del Henry, Withdrawal and $100 credit to cash.
Using the form below, indicate whether each error would cause the trial balance to be out of balance, the amount of any imbalance, and whether a correcting journal entry is required.

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Question 20

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

Accepted Answer

The answer of Jerry's Butcher Shop had the following assets...

Quiz 2: Analyzing and Recording Transactions

List the four steps in recording transactions.

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

ABC Company made a $2,500 payment on account, 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.

On February 5, Teddy's Catering purchased an oven 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.

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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

On December 3, the ABBJ Company paid $1,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction.

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.