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Chapter 2: Q.2-6E (page 82)

Question:Use the information in each of the following separate cases to calculate the unknown amount.

a. Corentine Co. had \(152,000 of accounts payable on September 30 and \)132,500 on October 31. Total purchases on account during October were \(281,000. Determine how much cash was paid on accounts payable during October.

b. On September 30, Valerian Co. had a \)102,500 balance in Accounts Receivable. During October, the company collected \(102,890 from its credit customers. The October 31 balance in Accounts Receivable was \)89,000. Determine the amount of sales on account that occurred in October.

c. During October, Alameda Company had \(102,500 of cash receipts and \)103,150 of cash disbursements. The October 31 Cash balance was $18,600. Determine how much cash the company had at the close of business on September 30.

Short Answer

Expert verified

Answer

a) $300,500

b) $89,390

c) $19,250

Step by step solution

01

Case a.

Totalaccountspayable(duringoctober)=Openinigaccountspayable+creaditpurchase=$152,000+$281,000=$433,000paymentmodetoaccountpayable=Totalaccountspayable(duuringoctober)-closingaccountspayable=$433,000-$132,500=300,500

02

step 2:case b

Totalaccountspayable(duringoctober)=closingaccountsreceivable+collectionfromreceivable=$89,000+$102,890=$192,890creaditsales(duringoctober)=Totalaccountsrecivable(duuringoctober)-openingaccountsreceivable=$191,890-$102,500=89,390

03

step 3:case c.

Totalcashgenerated(duringoctober)=cashreceipts-cashdisbursment=$102,500-$103,150=-$650openingcashbalance=Closingcashbalance-cashgeneratedduringmonth=$18,600-(-$650)=$19,250

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Most popular questions from this chapter

Question:For each of the following, (1) identify the type of account as an asset, liability, equity, revenue, or expense; (2) identify the normal balance of the account; and (3) enter debit(Dr.) or credit(Cr.) to identify the kind of entry that would increase the account balance.

a. Land e. Accounts Receivable i. Fees Earned

b. Cash f. Dividends j. Equipment

c. Legal Expense g. License Fee Revenue k. Notes Payable

d. Prepaid Insurance h. Unearned Revenue l. Common Stock

Nuncio Consulting completed the following transactions during June.

a. Armand Nuncio, the owner, invested \(35,000 cash along with office equipment valued at \)11,000 in the new company in exchange for common stock.

b. The company purchased land valued at \(7,500 and a building valued at \)40,000. The purchase is paid with \(15,000 cash and a long-term note payable for \)32,500.

c. The company purchased \(500 of office supplies on credit.

d. Nuncio invested his personal automobile in the company in exchange for more common stock. The automobile has a value of \)8,000 and is to be used exclusively in the business.

e. The company purchased \(1,200 of additional office equipment on credit.

f. The company paid \)1,000 cash salary to an assistant.

g. The company provided services to a client and collected \(3,200 cash.

h. The company paid \)540 cash for this month’s utilities.

i. The company paid \(500 cash to settle the payable created in transaction c.

j. The company purchased \)3,400 of new office equipment by paying \(3,400 cash.

k. The company completed \)4,200 of services for a client, who must pay within 30 days.

l. The company paid \(1,000 cash salary to an assistant.

m. The company received \)2,200 cash in partial payment on the receivable created in transaction k.

n. The company paid $1,100 cash in dividends.

Required

3. Prepare a trial balance as of the end of June.

If an incorrect amount is journalized and posted to the accounts, how should the error be corrected?

Question:Aracel Engineering completed the following transactions in the month of June.

a. Jenna Aracel, the owner, invested \(100,000 cash, office equipment with a value of \)5,000, and \(60,000 of drafting equipment to launch the company in exchange for common stock.

b. The company purchased land worth \)49,000 for an office by paying \(6,300 cash and signing a longterm note payable for \)42,700.

c. The company purchased a portable building with \(55,000 cash and moved it onto the land acquired in b.

d. The company paid \)3,000 cash for the premium on an 18-month insurance policy.

e. The company completed and delivered a set of plans for a client and collected \(6,200 cash.

f. The company purchased \)20,000 of additional drafting equipment by paying \(9,500 cash and signing a long-term note payable for \)10,500.

g. The company completed \(14,000 of engineering services for a client. This amount is to be received in 30 days.

h. The company purchased \)1,150 of additional office equipment on credit.

i. The company completed engineering services for \(22,000 on credit.

j. The company received a bill for rent of equipment that was used on a recently completed job. The \)1,333 rent cost must be paid within 30 days.

k. The company collected \(7,000 cash in partial payment from the client described in transaction g.

l. The company paid \)1,200 cash for wages to a drafting assistant.

m. The company paid \(1,150 cash to settle the account payable created in transaction h.

n. The company paid \)925 cash for minor maintenance of its drafting equipment.

o. The company paid \(9,480 cash in dividends.

p. The company paid \)1,200 cash for wages to a drafting assistant.

q. The company paid $2,500 cash for advertisements on the web during June.

Required

1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).

Question:Denzel Brooks opened a web consulting business called Venture Consultants and completed the following transactions in March.

March 1 Brooks invested \(150,000 cash along with \)22,000 in office equipment in the company in exchange for common stock.

2 The company prepaid \(6,000 cash for six months’ rent for an office. (Hint:Debit Prepaid Rent for \)6,000.)

3 The company made credit purchases of office equipment for \(3,000 and office supplies for \)1,200. Payment is due within 10 days.

6 The company completed services for a client and immediately received \(4,000 cash.

9 The company completed a \)7,500 project for a client, who must pay within 30 days.

12 The company paid \(4,200 cash to settle the account payable created on March 3.

19 The company paid \)5,000 cash for the premium on a 12-month insurance policy. (Hint:Debit Prepaid Insurance for \(5,000.)

22 The company received \)3,500 cash as partial payment for the work completed on March 9.

25 The company completed work for another client for \(3,820 on credit.

29 The company paid \)5,100 cash in dividends.

30 The company purchased \(600 of additional office supplies on credit.

31 The company paid \)500 cash for this month’s utility bill.

Required

1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).
See all solutions

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