Chapter 2: 6RQ (page 90)
When are debits increases? When are debits decreases?
Assets are the resources that generate income in the future for the owners and debit increases in assets, expenses, and dividends. Debit decrease in liabilities and equity (common stock and revenue).
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What is the difference between the trial balance and the balance sheet?
Explain the five steps in journalizing and posting transactions.
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.
Journalizing transactions and posting to T-accounts
Roland Foster Optical Dispensary completed the following transactions during the latter part of March:
Mar. 15 Purchased office supplies on account, \(3,400.
28 Paid \)1,800 on account.
Requirements ,
2. Open the following accounts (use T-account format): Cash (Beginning Balance of $21,000), Office Supplies, and Accounts Payable. Post the journal entries from Requirement 1 to the accounts, and compute the balance in each account.
Question:Preparing financial statements from the trial balance and calculating the debt ratio
The trial balance as of July 31, 2018, for Sara Simon, Registered Dietician, is presented below:
Account Title Debit Credit
Office Supplies 2,300
Cash 38,000
Accounts Receivable 9,000
Prepaid Insurance 2,400
Equipment 16,000
Accounts Payable 3,000
Unearned Revenue 3,912
Notes Payable 31,000
Common Stock 18,000
Dividends 2,800
Salaries Expense 1,700
Rent Expense 1,100
Utilities Expense 500
Service Revenue 17,888
Total Balance \( 73,800 \) 73,800
Requirements 3. Prepare the balance sheet as of July 31, 2018.
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