Chapter 2: 2RQ (page 90)
What is the purpose of the chart of accounts? Explain the numbering typically associated with the accounts.
The companies organize accounts by using the chart of accounts and numbering helps in providing order in accounts.
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Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions:
Nov. 1 Received \(41,000 cash and issued common stock to Stewart.
4 Purchased office supplies, \)1,200, and furniture, \(2,300, on account.
6 Performed services for a law firm and received \)2,100 cash.
7 Paid \(27,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the \)800 within one week.
14 Paid for the furniture purchased on November 4 on account.
15 Paid assistant’s semimonthly salary, \(1,470.
17 Received cash on account, \)500.
20 Prepared a design for a school on account, \(680.
25 Received \)1,900 cash for design services to be performed in December.
28 Received \(3,100 cash for consulting with Plummer & Gordon.
29 Paid \)840 cash for a 12-month insurance policy starting on December 1.
30 Paid assistant’s semimonthly salary,
30 Received a bill for utilities, \(650. The bill will be paid next month.
30 Paid cash dividends of \)2,800.
Requirements 2. Open a T-account for each of the accounts.
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:
Cash 17,000
Office Supplies 1,200
Accounts Receivable 10,500
Land 29,000
Furniture 0
Automobile 0
Accounts Payable 3,800
Unearned Revenue 0
Common Stock 46,200
Dividends 0
Rent Expense 1,000
Salaries Expense 2,500
Service Revenue 11,200
Total Balance \( 61,200 61,200
During April, the business completed the following transactions:
Apr. 4 Collected \)6,000 cash from a client on account.
8 Performed tax services for a client on account, \(5,500.
13 Paid \)3,300 on account.
14 Purchased furniture on account, \(4,000.
15 Menning contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)11,500.
18 Purchased office supplies on account, \(1,600.
19 Received \)2,750 for tax services performed on April 8.
20 Paid cash dividends of \(7,500.
21 Received \)4,900 cash for consulting work completed.
24 Received \(2,500 cash for accounting services to be completed next month.
27 Paid office rent, \)900.
28 Paid employee salary, $1,200.
Requirements 2. Open the four-column ledger accounts listed in the trial balance, together with their balances as of March 31. Use the following account numbers: Cash, 11; Accounts Receivable, 12; Office Supplies, 13; Land, 14; Furniture, 15; Automobile, 16; Accounts Payable, 21; Unearned Revenue, 22; Common Stock, 31; Dividends, 33; Service Revenue, 41; Salaries Expense, 51; and Rent Expense, 52.
What is the calculation for the debt ratio? Explain what the debt ratio evaluates.
Question: Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Vince York practices medicine under the business title Vince York, M.D. During July, the medical practice completed the following transactions:
Jul. 1 York contributed \(63,000 cash to the business in exchange for common stock.
5 Paid monthly rent on medical equipment, \)510.
9 Paid \(23,000 cash to purchase land to be used in operations.
10 Purchased office supplies on account, \)1,600.
19 Borrowed \(22,000 from the bank for business use.
22 Paid \)1,100 on account.
28 The business received a bill for advertising in the daily newspaper to be paid in August, \(240.
31 Revenues earned during the month included \)6,400 cash and \(6,000 on account.
31 Paid employees’ salaries \)2,200, office rent
31 The business received \(1,120 for medical screening services to be performed next month.
31 Paid cash dividends of \)7,200.
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; and Advertising Expense.
Requirements 2. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal.
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:
Cash 11,000
Office Supplies 400
Accounts Receivable 16,500
Land 30,000
Furniture 0
Automobile 0
Accounts Payable 3,800
Unearned Revenue 0
Common Stock 52,300
Dividends 0
Rent Expense 800
Salaries Expense 5,600
Service Revenue 8,200
Total Balance \( 64,300 64,300
During April, the business completed the following transactions:
Apr. 4 Collected \)2,500 cash from a client on account.
8 Performed tax services for a client on account, \(5,400.
13 Paid \)3,000 on account.
14 Purchased furniture on account, \(3,600.
15 Merry contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)9,500.
18 Purchased office supplies on account, \(900.
19 Received \)2,700 for tax services performed on April 8.
20 Paid cash dividends of \(6,500.
21 Received \)5,700 cash for consulting work completed.
24 Received \(2,400 cash for accounting services to be completed next month.
27 Paid office rent, \)600.
28 Paid employee salary, $1,700.
Requirements
2. Open the four-column ledger accounts listed in the trial balance, together with their balances as of March 31. Use the following account numbers: Cash, 11; Accounts Receivable, 12; Office Supplies, 13; Land, 14; Furniture, 15; Automobile, 16; Accounts Payable, 21; Unearned Revenue, 22; Common Stock, 31; Dividends, 33; Service Revenue, 41; Salaries Expense, 51; and Rent Expense, 52
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