Case 1 ex 2.

5
For each of the accounts listed below, complete the following requirements:
1. Identify the account as an asset, liability, equity, revenue, or expense.
2. Identify the normal balance of the account.
3. Select debit or credit to identify the kind of entry that would increase the account balance.

Type of Increase with

Account Normal Balance (debit or credit)
1 Office Equipment Asset Debit Debit
2 Accounts Receivable Asset Debit Debit
3 Rent Payable Liability Credit Credit
4 Fees Earned Revenue Credit Credit
5 Utilities Expense Expense Debit Debit
6 Land Asset Debit Debit
7 Prepaid Insurance Asset Debit Debit
8 Rent Expense Expense Debit Debit
9 Accounts Payable Liability Credit Credit
10 Service Revenue Revenue Credit Credit
Case 2 ex 2.6
Harper Inc. bills Jusu Co. $50,000 for services provided and arranges to receive:
(1) $20,000 cash
(2) $70,000 of equipment
As part of this agreement, Harper is also issuing a note payable of $40,000 for the excess owed for the equipment.

Requirements:
1. Analyze the transaction using the accounting equation.
2. Record the transaction using the accounting equation.
3. Post the entry using T-accounts to represent ledger accounts.

1 Accounting Equation 2 Journal Entries

Assets Liabilities Equity Date Accounts Debit
Cash Equipment = Notes Payable + Service Revenue NA Cash 20,000
20,000 70,000 = 40,000 + 50,000 Equipment 70,000
Notes Payable
Service Revenue
 General Ledger (T-Accounts)
3
Credit Cash Notes Payable
20,000 40,000

40,000
50,000

Equipment Service Revenue

70,000 50,000
Case 3 ex 2.7
Requirements: Use the information in each of the following separate cases to calculate the unknown amount.

1. Corentine Company had $154,000 of accounts payable on September 30 and $133,500 on October 31. Total purchases on credit during October were
$283,000. Determine how much cash was paid on accounts payable during October.

2. On September 30, Valerian Company had a $103,500 balance in Accounts Receivable. During October, the company collected $103,890 from its credit
customers. The October 31 balance in Accounts Receivable was $91,000. Determine the amount of sales on credit that occurred in October.

3. During October, Alameda Company had $104,500 of cash receipts and $105,150 of cash disbursements. The October 31 cash balance was $19,600.
Determine how much cash the company had at the close of business on September 30.

1 2 3
Accounts Payable Accounts Receivable
Begin Balance 154,000 Begin Balance 103,500 Begin Balance
Add; purchases 283,000 Add: sales 91,390 Add: receipts
Less: cash paid 303,500 Less: collections 103,890 Less: disb

End Balance 133,500 End Balance 91,000 End Balance

s on credit during October were

ollected $103,890 from its credit

occurred in October.

31 cash balance was $19,600.

Cash
20,250
104,500
105,150

19,600
Case 4 ex 2.8
The following are the transactions of Sustain Company.

June 1 T. James, owner, invested $15,000 cash in Sustain Company.

June 2 The company purchased $8,000 of furniture made from reclaimed wood on credit.
June 3 The company paid $1,400 cash for a 12-month prepaid insurance policy on the reclaimed furniture.
June 4 The company billed a customer $7,000 for sustainability services provided.
June 12 The company paid $8,000 cash toward the payable from the June 2 furniture purchase.
June 20 The company collected $7,000 cash for services billed on June 4.
June 21 T. James invested an additional $14,000 cash in Sustain Company.
June 30 The company received $9,000 cash for providing sustainability services to a customer.

Requirements: Create journal entries for the above transactions.

Journal Entries
Date Accounts Debit Credit
1-Jun Cash 15,000
James Capital 15,000

2-Jun Furniture 8,000

Accounts Payable 8,000

3-Jun Prepaid Insurance 1,400

Cash 1,400

4-Jun Accounts Receivable 7,000

Service Revenue 7,000

12-Jun Accounts Payable 8,000

Cash 8,000

20-Jun Cash 7,000

Accounts Receivable 7,000

21-Jun Cash 14,000

 James Capital 14,000

30-Jun Cash 9,000

Service Revenue 9,000
Case 5 pr 2.1
Karla Tanner opened a Web consulting business called Linkworks and completed the following transactions in its fir

April 1 Tanner invested $100,000 cash along with office equipment valued at $24,000 in the company.
April 2 The company prepaid $7,200 cash for 12 months' rent for office space. Hint: Debit Prepaid Rent for $7,200.
April 3 The company made credit purchases for $12,000 in office equipment and $2,400 in office supplies. Payment
April 6 The company completed services for a client and immediately received $2,000 cash.
April 9 The company completed a $8,000 project for a client, who must pay within 30 days.
April 13 The company paid $14,400 cash to settle the account payable created on April 3.
April 19 The company paid $6,000 cash for the premium on a 12-month prepaid insurance policy. Hint: Debit Prepa
April 22 The company received $6,400 cash as partial payment for the work completed on April 9.
April 25 The company completed work for another client for $2,640 on credit.
April 28 Tanner withdrew $6,200 cash from the company for personal use.
April 29 The company purchased $800 of additional office supplies on credit.
April 30 The company paid $700 cash for this month's utility bill.

Requirements:

1. Prepare general journal entries to record these transaction using the following titles: Cash (101); Accounts Receiv
Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); K. Tanner, Capital (30
Services Revenue (403); and Utilities Expense (690)
2. Post the journal entries from Part 1 to the ledger accounts.
3. Prepare a trial balance as of April 30.

1 Journal Entries
Date Accounts Debit Credit
1-Apr Cash 100000
office equipment 24000
K. Tanner Capital 124000

2-Apr Prepaid Rent 7200

Cash 7200

3-Apr Office Equipment 12000

Office Supplies 2400
Accounts Payable 14400

6-Apr Cash 2000

Service Revenue 2000

9-Apr Accounts Receivable 8000

Service Revenue 8000
13-Apr Accounts Payable 14400
Cash 14400

19-Apr Prepaid Insurance 6000

Cash 6000

22-Apr Cash 6400

Accounts Receivable 6400

25-Apr Accounts Receivable 2640

Service Revenue 2640

28-Apr K. Tanner Drawings 6200

Cash 6200

29-Apr Office Supplies 800

Accounts Payablle 800

30-Apr Utilities Expense 700

Cash 700
 following transactions in its first month of operations.

0 in the company.
Debit Prepaid Rent for $7,200.
400 in office supplies. Payment is due within 10 days.
0 cash.
0 days.
ril 3.
rance policy. Hint: Debit Prepaid Insurance for $6,000.
ed on April 9.

es: Cash (101); Accounts Receivable (106); Office Supplies (124);

ble (201); K. Tanner, Capital (301); K. Tanner, Withdrawls (302);

2 General Ledger (T-Accounts) 3

Cash balance Accounts Receivable balance

100,000 7,200 92,800 8,000 6,400 1,600
2,000 14,400 80,400 2,640 4,240
6,400 6,000 80,800 4,240
6,200 74,600 4,240
700 73,900 4,240
73,900 4,240
73,900 4,240
73,900 4,240
73,900 4,240

Office Supplies balance Prepaid Insurance balance

2,400 2,400 6,000 6,000
800 3,200 6,000
3,200 6,000
 Prepaid Rent balance Office Equipment balance
7,200 7,200 12,000 12,000
7,200 24,000 36,000
7,200 36,000

Accounts Payable balance K. Tanner Capital balance

14,400 14,400 124,000 124,000
14,400 800 800 124,000
800 124,000

Service Revenue balance K. Tanner Drawings balance

2,000 2,000 6,200 6,200
8,000 10,000 6,200
2,640 12,640 6,200

Utilities Expense balance

700 700
700
700
 LINKWORKS
Trial Balance
30-Apr
Account Name Debit Credit
Cash 73,900
Office Supplies 3,200
Prepaid Rent 7,200
Accounts Receivable 4,240
Prepaid Insurance 6,000
Office Equipment 36,000
Accounts Payable 800
K. Tanner Capital 124,000
K. Tanner Drawings 6,200
Service Revenue 12,640
Utilities Expense 700
Total 137,440 137,440
Case 6 pr 2.7

Angela Lopez owns and manages a consulting firm called Metrix, which began operations on December 1. On December 31, Metrix shows the following
selected accounts and amounts for the month of December

Cash $9,600 A. Lopez, Capital

Accounts receivable 4,300 A. Lopez, Withdrawals
Notes receivable 3,300 Consulting revenue
Office supplies 2,300 Rental revenue
Prepaid insurance 1,800 Salaries expense
Equipment 8,000 Rent expense
Accounts payable 3,860 Advertising expense
Notes payable 3,200 Utilities expense
Unearned revenue 460

Required:
1. Prepare a December income statement for the business.

2. Prepare a December statement of owner's equity. The A. Lopez, Capital account balance at December 1 was $0, and the owner invested $14,800 cash in
company on December 2.

3. Prepare a December 31 balance sheet. Hint: Use the A. Lopez, Capital account balance calculated in Part 2.

1 Metiix 2 Metiix 3
Income Statement Statement of Owner's Equity
FYE 12/31/XX FYE 12/31/XX

Revenues: A. Lopez Capital Dec 1 -

Consulting Revenue 16,000 Add: Investments 14,800
Rent Revenue 1,300 Net Income 9,780
Total Revenue 17,300
Less: Withdrawals 2,800
Salaries Expense 3,800
Rent Expense 2,800 A. Lopez Capital, Dec 31 21,780
Advertising Expense 560
Utilities Expense 360
Total Expenses 7,520

Net Income 9,780

ber 31, Metrix shows the following

$14,800
ls 2,800
16,000
1,300
3,800
2,800
560
360

nd the owner invested $14,800 cash in the

Metiix
Balance Sheet
As Of 12/31/XX

Assets
Cash 9,600
Accounts Receivable 4,300
Notes Receivable 3,300
Office Supplies 2,300
Prepaid Insurance 1,800
Equipment 8,000
Total Assets 29,300

Liabilities
Accounts Payable 3,860
Notes Payable 3,200
Unearned Revenue 460
Total Liabilities 7,520

Equity
A. Lopez Capital, Dec 31 21,780

Total Liab & Equity 29,300