Chapter 2: Q3DQ (page 79)
Discuss the steps in processing business transactions.
Processing of business transactions starts from identifying the events and ends with making final accounts. The middle steps include the presentation, classification, and summarization of accounts.
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Question: 1.Prepare general journal entries for the following transactions of Valdez Services.
a. Brina Valdez invested \(20,000 cash in the company in exchange for common stock.
b. The company provided services to a client and immediately received \)900 cash.
c. The company received \(10,000 cash from a client in payment for services to be provided next year.
d. The company received \)3,500 cash from a client in partial payment of accounts receivable.
e. The company borrowed $5,000 cash from the bank by signing a note payable.
2. Transactions a, c, d,and edid not yield revenue. Match each transaction (a, c, d,and e) with one of the following reasons for not recording revenue.
_______This transaction changed the form of an asset from a receivable to cash. Total assets were not increased (revenue was recognized when the services were originally provided).
_______This transaction brought in cash (increased assets), and it also increased a liability by the same amount (represented by the signing of a note to repay the amount).
_______This transaction brought in cash, but this is an owner investment.
This transaction brought in cash, and it created a liability to provide services to the client in the next year.
What information is reported in a balance sheet?
Question:Enter the number for the item that best completes each of the descriptions below.
1. Asset 3. Account 5. Three
2. Equity 4. Liability
a. Balance sheet accounts are arranged into __________ general categories.
b. Common Stock and Dividends are examples of __________ accounts.
c. Accounts Payable, Unearned Revenue, and Note Payable are examples of __________ accounts.
d. Accounts Receivable, Prepaid Accounts, Supplies, and Land are examples __________ of accounts.
e. A(n) __________ is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.
Business transactions completed by Hannah Venedict during the month of September are as follows.
a. Venedict invested \(60,000 cash along with office equipment valued at \)25,000 in exchange for common stock of a new company named HV Consulting.
b. The company purchased land valued at \(40,000 and a building valued at \)160,000. The purchase is paid with \(30,000 cash and a long-term note payable for \)170,000.
c. The company purchased \(2,000 of office supplies on credit.
d. Venedict invested her personal automobile in the company in exchange for more common stock. The automobile has a value of \)16,500 and is to be used exclusively in the business.
e. The company purchased \(5,600 of additional office equipment on credit.
f. The company paid \)1,800 cash salary to an assistant.
g. The company provided services to a client and collected \(8,000 cash.
h. The company paid \)635 cash for this month’s utilities.
i. The company paid \(2,000 cash to settle the account payable created in transaction c.
j. The company purchased \)20,300 of new office equipment by paying \(20,300 cash.
k. The company completed \)6,250 of services for a client, who must pay within 30 days.
l. The company paid \(1,800 cash salary to an assistant.
m. The company received \)4,000 cash in partial payment on the receivable created in transaction k.
n. The company paid $2,800 cash in dividends.
Required
1. Prepare general journal entries to record these transactions (use account titles listed in part 2).
If an incorrect amount is journalized and posted to the accounts, how should the error be corrected?
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