Chapter 2: 3RQ (page 90)
What does a ledger show? What’s the difference between a ledger and a chart of accounts?
The ledger shows the change and balance of various accounts and a chart of accounts shows only account name and account number.
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Question:Preparing a trial balance from T-accounts
The T-accounts of McMahon Farm Equipment Repair follow as of May 31, 2018.
ASSETS Salaries Payable LIABILITIES EQUITY Retained Earnings 4,000 29,000 Notes Payable 3,500 400 Accounts Receivable 14,000 Land 29,000 Building 16,000 Equipment Common Stock Contributed Capital Dividends Property Tax Expense 1,000 Advertising Expense 280
Cash 31,000 1,800 400 14,000 4,200 800 4,000 2,000 3,380
Service Revenue 3,500 1,800 4,200 31,000 2
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 \(1,900, and utilities \)560. Record as a compound entry.
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
Theodore McMahon opened a law office on April 1, 2018. During the first month of operations, the business completed the following transactions:
Apr. 1 McMahon contributed \(70,000 cash to the business, Theodore McMahon, Attorney. The business issued common stock to McMahon.
3 Purchased office supplies, \)1,100, and furniture, \(1,300, on account.
4 Performed legal services for a client and received \)2,000 cash.
7 Purchased a building with a market value of \(150,000, and land with a market value of \)30,000. The business paid \(40,000 cash and signed a note payable to the bank for the remaining amount.
11 Prepared legal documents for a client on account, \)400.
15 Paid assistant’s semi monthly salary, \(1,200.
16 Paid for the office supplies purchased on April 3 on account. 18 Received \)2,700 cash for helping a client sell real estate.
19 Defended a client in court and billed the client for \(1,700.
25 Received a bill for utilities, \)650. The bill will be paid next month.
28 Received cash on account, \(1,100.
29 Paid \)3,600 cash for a 12-month insurance policy starting on May 1.
29 Paid assistant’s semi monthly salary, \(1,200.
30 Paid monthly rent expense, \)2,100.
30 Paid cash dividends of $3,200.
Requirements 3. Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal references, and posting references. Assume the journal entries were recorded on page 1 of the journal.
Question:Preparing financial statements from the trial balance and calculating the debt ratio
Preparing financial statements from the trial balance and calculating the debt ratio
Account Title Debit Credit
Office Supplies 1,400
Cash 32,000
Accounts Receivable 9,100
Prepaid Insurance 2,600
Equipment 24,000
Accounts Payable 3,400
Unearned Revenue 1,296
Notes Payable 34,000
Common Stock 20,000
Dividends 3,000
Salaries Expense 1,600
Rent Expense 700
Utilities Expense 100
Service Revenue 15,804
Total Balance \( 74,500 \) 74,500
Requirements 1. Prepare the income statement for the month ended July 31, 2018
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
Theodore McMahon opened a law office on April 1, 2018. During the first month of operations, the business completed the following transactions:
Apr. 1 McMahon contributed \(70,000 cash to the business, Theodore McMahon, Attorney. The business issued common stock to McMahon.
3 Purchased office supplies, \)1,100, and furniture, \(1,300, on account.
4 Performed legal services for a client and received \)2,000 cash.
7 Purchased a building with a market value of \(150,000, and land with a market value of \)30,000. The business paid \(40,000 cash and signed a note payable to the bank for the remaining amount.
11 Prepared legal documents for a client on account, \)400.
15 Paid assistant’s semi monthly salary, \(1,200.
16 Paid for the office supplies purchased on April 3 on account. 18 Received \)2,700 cash for helping a client sell real estate.
19 Defended a client in court and billed the client for \(1,700.
25 Received a bill for utilities, \)650. The bill will be paid next month.
28 Received cash on account, \(1,100.
29 Paid \)3,600 cash for a 12-month insurance policy starting on May 1.
29 Paid assistant’s semi monthly salary, \(1,200.
30 Paid monthly rent expense, \)2,100.
30 Paid cash dividends of $3,200.
Requirements 4. Prepare the trial balance of Theodore McMahon, Attorney, at April 30, 2018.
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