Professional Documents
Culture Documents
Analyze transactions and journalize. E2.7 (LO 1, 2) Halladay Enterprises had the following selected transactions.
1. Bo Halladay invested $4,000 cash in the business.
2. Paid office rent of $840.
3. Performed consulting services and billed a client $5,200.
4. Bo Halladay withdrew $750 cash for personal use.
Instructions
a. Indicate the effect each transaction has on the accounting equation
(Assets = Liabilities + Owner’s Equity), using plus and minus signs.
b. Journalize each transaction. (Omit explanations.)
Journalize a series of transactions. E2.8 (LO 2) Selected transactions for Sophie’s Dog Care are as follows during the month of March.
March 1 Paid monthly rent of $1,200.
3 Performed services for $160 on account.
5 Performed services for cash of $75.
8 Purchased equipment for $600. The company paid cash of $90 and the balance was on
account.
12 Received cash from customers billed on March 3.
14 Paid salaries and wages to employees of $525.
22 Paid utilities of $72.
24 Borrowed $1,500 from Grafton State Bank by signing a note.
27 Paid $220 to repair service for plumbing repairs.
28 Paid balance amount owed from equipment purchase on March 8.
30 Paid $1,800 for six months of insurance.
Instructions
Journalize the transactions. (Omit explanations.)
Record journal entries. E2.9 (LO 2) On April 1, Adventures Travel Agency began operations. The following transactions were
completed during the month.
1. Owner invested $24,000 in the business.
2. Obtained a bank loan for $7,000 by issuing a note payable.
3. Paid $11,000 cash to buy equipment.
4. Paid $1,200 cash for April office rent.
5. Paid $1,450 for supplies.
6. Purchased $600 of advertising in the Daily Herald, on account.
7. Performed services for $18,000: cash of $2,000 was received from customers, and the balance of
$16,000 was billed to customers on account.
8. Cash withdrawal of $400 by owner for personal use.
9. Paid the utility bill for the month, $2,000.
10. Paid Daily Herald the amount due in transaction (6).
11. Paid $40 of interest on the bank loan obtained in transaction (2).
12. Paid employees’ salaries and wages, $6,400.
13. Received $12,000 cash from customers billed in transaction (7).
Instructions
Journalize the transactions. (Omit explanations).
Analyze statements about the ledger. E2.10 (LO 3) Alma Ortiz has prepared the following list of statements about the general ledger.
1. The general ledger contains all the asset and liability accounts but no owner’s equity accounts.
2. The general ledger is sometimes referred to as simply the ledger.
3. The accounts in the general ledger are arranged in alphabetical order.
4. Each account in the general ledger is numbered for easier identification.
5. The general ledger is a book of original entry.
Exercises 2-37
Instructions
Identify each statement as true or false. If false, indicate how to correct the statement.
E2.11 (LO 3, 4) Selected transactions from the journal of June Feldman, investment broker, are pre- Post journal entries and prepare a
sented below. trial balance.
Instructions
a. Post the transactions to T-accounts.
b. Prepare a trial balance at August 31, 2020.
E2.12 (LO 2, 4) The T-accounts below summarize the ledger of Negrete Landscaping Company at the Journalize transactions from account
end of the first month of operations. data and prepare a trial balance.
Instructions
a. Prepare the complete general journal (including explanations) from which the postings to Cash were
made.
b. Prepare a trial balance at April 30, 2020.
2-38 CH A PT E R 2 The Recording Process
Journalize transactions from account E2.13 (LO 2, 4) Presented below is the ledger for Shumway Co.
data and prepare a trial balance.
Instructions
a. Reproduce the journal entries for the transactions that occurred on October 1, 10, and 20, and pro-
vide explanations for each.
b. Determine the October 31 balance for each of the accounts above, and prepare a trial balance at
October 31, 2020.
Prepare journal entries and post E2.14 (LO 2, 3) Selected transactions for Bonnie Donne Company during its first month in business are
using standard account form. presented below.
Sept. 1 Invested $10,000 cash in the business.
5 Purchased equipment for $14,000 paying $4,000 in cash and the balance on account.
25 Paid $3,000 cash on balance owed for equipment.
30 Withdrew $900 cash for personal use.
Donne’s chart of accounts shows No. 101 Cash, No. 157 Equipment, No. 201 Accounts Payable, No. 301
Owner’s Capital, and No. 306 Owner’s Drawings.
Instructions
a. Journalize the transactions on page J1 of the journal. (Omit explanations.)
b. Post the transactions using the standard account form.
Analyze errors and their effects on E2.15 (LO 4) The bookkeeper for J.L. Kang Equipment Repair made a number of errors in journalizing
trial balance. and posting, as described below.
1. A credit posting of $525 to Accounts Receivable was omitted.
2. A debit posting of $750 for Prepaid Insurance was debited to Insurance Expense.
3. A collection from a customer of $100 in payment of its account owed was journalized and posted
as a debit to Cash $100 and a credit to Service Revenue $100.
4. A credit posting of $415 to Property Taxes Payable was made twice.
5. A cash purchase of supplies for $250 was journalized and posted as a debit to Supplies $25 and a
credit to Cash $25.
6. A debit of $625 to Advertising Expense was posted as $652.
Problems: Set A 2-39
Instructions
For each error:
a. Indicate whether the trial balance will balance.
b. If the trial balance will not balance, indicate the amount of the difference.
c. Indicate the trial balance column that will have the larger total.
Consider each error separately. Use the following form, in which error (1) is given as an example.
(a) (b) (c)
Error In Balance Difference Larger Column
(1) No $525 debit
E2.16 (LO 4) The accounts in the ledger of Prompt Delivery Service contain the following balances on Prepare a trial balance.
July 31, 2020.
Accounts Receivable $ 7,640 Prepaid Insurance $ 1,968
Accounts Payable 8,394 Maintenance and Repairs Expense 961
Cash ? Service Revenue 10,610
Equipment 45,360 Owner’s Drawings 700
Gasoline Expense 758 Owner’s Capital 38,000
Utilities Expense 523 Salaries and Wages Expense 4,428
Notes Payable 17,000 Salaries and Wages Payable 815
Instructions
Prepare a trial balance with the accounts arranged as illustrated in the chapter and fill in the missing
amount for Cash.
E2.17 (LO 2, 3, 4) Beyers Security Company provides security services. Selected transactions for Beyers Journalize transactions, post transac-
are presented below. tions to T-accounts, and prepare trial
balance.
Oct. 1 Invested $66,000 cash in the business.
2 Hired part-time security consultant. Salary will be $2,000 per month. First day of work will
be October 15.
4 Paid one month of rent for building for $2,000.
7 Purchased equipment for $18,000, paying $4,000 cash and the balance on account.
8 Paid $500 for advertising.
10 Received bill for equipment repair cost of $390.
12 Provided security services for event for $3,200 on account.
16 Purchased supplies for $410 on account.
21 Paid balance due from October 7 purchase of equipment.
24 Received and paid utility bill for $148.
27 Received payment from customer for October 12 services performed.
31 Paid employee salaries and wages of $5,100.
Instructions
a. Journalize the transactions. Do not provide explanations.
b. Post the transactions to T-accounts.
c. Prepare a trial balance at October 31, 2020. (Hint: Compute ending balances of T-accounts first.)
Problems: Set A
P2.1A (LO 1, 2) Holz Disc Golf Course was opened on March 1 by Ian Holz. The following selected Journalize a series of transactions.
events and transactions occurred during March.
Mar. 1 Invested $20,000 cash in the business. GLS
3 Purchased Rainbow Golf Land for $15,000 cash. The price consists of land $12,000, shed
$2,000, and equipment $1,000. (Make one compound entry.)
5 Paid advertising expenses of $900.
6 Paid cash $600 for a one-year insurance policy.
10 Purchased golf discs and other equipment for $1,050 from Stevenson Company payable in
30 days.