Chapter 2: Q13RQ (page 90)
What is involved in the posting process?
A ledger is an account in which journal entries are transferred and the process of transferring journal entries to a ledger is known as posting.
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Question:The following transactions occurred for Lawrence Engineering:
Jul. 2 Received \(14,000 contribution from Brett Lawrence in exchange for common stock.
4 Paid utilities expense of \)370.
5 Purchased equipment on account, \(1,600.
10 Performed services for a client on account, \)2,900.
12 Borrowed \(7,100 cash, signing a notes payable.
19 Cash dividends of \)200 were paid to stockholders.
21 Purchased office supplies for $840 and paid cash.
27 Paid the liability from July 5.
Requirements 1. Open the following T-accounts for Lawrence Engineering: Cash; Accounts Receivable; Office Supplies; Equipment; Accounts Payable; Notes Payable; Common Stock; Dividends; Service Revenue; and Utilities Expense.
Calculating the balance of a T-account
Accounts Payable
May 2 6,000 21,000 May 1
May 22 11,500 500 May 5
8,500 May 15
500 May 23
Calculate the Accounts Payable balance.
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, \(1,470. 30 Paid monthly rent expense, \)650.
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.
Roy Akins was the accounting manager at Zelco, a tire manufacturer, and he played golf with Hugh Stallings, the CEO, who was something of a celebrity in the community. The CEO stood to earn a substantial bonus if Zelco increased net income by year-end. Roy was eager to get into Hugh’s elite social circle; he boasted to Hugh that he knew some accounting tricks that could increase company income by simply revising a few journal entries for rental payments on storage units. At the end of the year, Roy changed the debits from “rent expense” to “prepaid rent” on several entries. Later, Hugh got his bonus, and the deviations were never discovered.
Requirements 1. How did the change in the journal entries affect the net income of the company at year-end?
Using the following accounts and their balances, calculate the debt ratio for Cooper Furniture Repair as of December 31.
Cash \( 7,000 Advertising Expense \) 1,200
Unearned Revenue 4,500 Utilities Expense 800
Equipment 10,000 Rent Expense 5,000
Service Revenue 8,000 Accounts Payable 2,300
Common Stock 12,200 Dividends 3,000
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