CHAPTER 2

EXERCISES: SET B
E2-1B Aby Bazil has prepared the following list of statements about accounts. Analyze statements about
accounting and the recording
1. An account is an accounting record of either a specific asset or a specific owner’s equity item.
process.
2. An account shows both increases and decreases in the item it relates to.
3. Some items, such as Accounts Payable and Accounts Receivable, are combined into (LO 1)
one account.
4. An account has a left, or debit side, and a right, or credit side.
5. A simple form of an account consisting of just the account title, and one column, is
called a T-account.

Instructions
Identify each statement as true or false. If false, indicate how to correct the statement.

E2-2B Selected transactions for B. Dawes, an interior decorator, in her first month of Identify debits, credits, and
business, are as follows. normal balances.

Jan. 2 Invested $20,000 cash in business. (LO 1)

3 Paid $500 cash for advertising.
9 Purchased equipment for $7,000 cash.
11 Billed customers $2,300 for services performed.
16 Purchased supplies on account for $700.
20 Received $1,100 cash from customers billed on January 11.
23 Paid creditor $400 cash on balance owed.
28 Withdrew $1,200 cash for personal use by owner.

Instructions
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset, liability, owner’s equity).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased or decreased.
(d) The normal balance of the specific account.
Use the following format, in which the January 2 transaction is given as an example.

Account Debited Account Credited

(a) (b) (c) (d) (a) (b) (c) (d)
Basic Specific Normal Basic Specific Normal
Date Type Account Effect Balance Type Account Effect Balance
Jan. 2 Asset Cash Increase Debit Owner’s Owner’s Increase Credit
Equity Capital

E2-3B Data for B. Dawes, interior decorator, are presented in E2-2B. Journalize transactions.
(LO 2)
Instructions
Journalize the transactions using journal page J1. (You may omit explanations.)

E2-4B Presented below is information related to West Lake Real Estate Agency. Analyze transactions and
determine their effect on
Oct. 1 Paul Ebu begins business as a real estate agent with a cash investment of $22,000. accounts.
2 Paid rent, $700, on office space.
(LO 1)
3 Purchases office furniture for $2,800, on account.
6 Sells a house and lot for Jane Hung; bills Jane Hung $5,400 for realty services
provided.
27 Pays $1,100 on the balance related to the transaction of October 3.
30 Receives bill for October utilities, $180 (not paid at this time).

Instructions
Prepare the debit-credit analysis for each transaction as illustrated on pages xx–xx.

E2-5B Transaction data for West Lake Real Estate Agency are presented in E2-4B. Journalize transactions.

Instructions (LO 2)
Journalize the transactions. (You may omit explanations.)
2 2 The Recording Process

Analyze transactions and E2-6B Bluma Industries had the following transactions.
journalize.
1. Borrowed $15,000 from the bank by signing a note.
(LO 1, 2) 2. Paid $3,100 cash for a computer.
3. Paid $900 for rent.

Instructions
(a) Indicate what accounts are increased and decreased by each transaction.
(b) Journalize each transaction. (Omit explanations).

Analyze transactions and E2-7B Shirley Enterprises had the following selected transactions.
journalize.
1. Shirley Estrada invested $6,000 cash in the business.
(LO 1, 2) 2. Purchased $1,100 of supplies on account.
3. Performed consulting services and billed a client $4,500.
4. Shirley Estrada withdrew $1,200 cash for personal use.

Instructions
(a) Indicate the effect each transaction has on the basic accounting equation
(Assets 5 Liabilities 1 Owner’s Equity), using plus and minus signs.
(b) Journalize each transaction. (Omit explanations).

Analyze statements about the E2-8B Al Eby has prepared the following list of statements about the general ledger.
ledger and the general journal.
1. The general ledger contains all the liability and owners’ equity accounts, but no asset
(LO 3) accounts.
2. The general ledger is sometimes referred to as simply the journal.
3. The accounts in the general ledger are arranged in alphabetical order.
4. Each account in the general ledger is numbered for easier identification.
5. The general journal is a book of original entry.

Instructions
Identify each statement as true or false. If false, indicate how to correct the statement.

Post journal entries and E2-9B Selected transactions from the journal of Bret Quandt, investment broker, are pre-
prepare a trial balance. sented below.
(LO 3, 4)

Date Account Titles and Explanation Ref. Debit Credit

Aug. 1 Cash 6,000
Owner’s Capital 6,000
(Owner’s investment of cash in business)
10 Cash 1,700
Service Revenue 1,700
(Received cash for services performed)
12 Equipment 6,000
Cash 1,000
Notes Payable 5,000
(Purchased equipment for cash
and notes payable)
25 Accounts Receivable 2,500
Service Revenue 2,500
(Billed clients for services performed)
31 Cash 1,500
Accounts Receivable 1,500
(Receipt of cash on account)

Instructions
(a) Post the transactions to T accounts.
(b) Prepare a trial balance at August 31, 2017.
 Exercises: Set B 3

E2-10B The T accounts below summarize the ledger of Carrie’s Gardening Company at Journalize transactions from
the end of the first month of operations. account data and prepare a
trial balance.
(LO 2, 4)
Cash No. 101 Unearned Service Revenue No. 209
4/1 18,000 4/15 700 4/30 1,400
4/12 1,200 4/25 1,600
4/29 900
4/30 1,400
Accounts Receivable No. 112 Owner’s Capital No. 301
4/7 2,900 4/29 900 4/1 18,000
Supplies No. 126 Service Revenue No. 400
4/4 1,900 4/7 2,900
4/12 1,200
Accounts Payable No. 201 Salaries and Wages Expense No. 726
4/25 1,600 4/4 1,900 4/15 700

Instructions
(a) Prepare the complete general journal (including explanations) from which the post-
ings to Cash were made.
(b) Prepare a trial balance at April 30, 2017.

E2-11B Presented below is the ledger for Nolasko Co. Journalize transactions from
account data and prepare a
trial balance.
Cash No. 101 Owner’s Capital No. 301 (LO 2, 4)
10/1 8,500 10/4 400 10/1 8,500
10/10 800 10/12 1,500 10/25 2,000
10/10 3,000 10/15 250
Owner’s Drawings No. 306
10/20 450 10/30 300
10/25 2,000 10/31 500 10/30 300
Accounts Receivable No. 112 Service Revenue No. 400
10/6 800 10/20 450 10/6 800
10/20 1,070 10/10 800
10/20 1,070
Supplies No. 126 Salaries and Wages Expense No. 726
10/4 400 10/31 500
Equipment No. 157 Rent Expense No. 729
10/3 2,000 10/15 250
Notes Payable No. 200
10/10 3,000
Accounts Payable No. 201
10/12 1,500 10/3 2,000

Instructions
(a) Reproduce the journal entries for the transactions that occurred on October 1, 10, and 20,
and provide explanations for each.
(b) Determine the October 31 balance for each of the accounts above, and prepare a trial
balance at October 31, 2017.
4 2 The Recording Process

Prepare journal entries and E2-12B Selected transactions for Reyes Company during its first month in business are
post using standard account presented below.
form.
Sept. 1 Invested $25,000 cash in the business.
(LO 2, 3)
5 Purchased equipment for $30,000 paying $7,500 in cash and the balance on
account.
25 Paid $6,500 cash on balance owed for equipment.
30 Withdrew $1,000 cash for personal use.

Reyes’s chart of accounts shows: No. 101 Cash, No. 157 Equipment, No. 201 Accounts
Payable, No. 301 Owner’s Capital, No. 306 Owner’s Drawings.

Instructions
(a) Journalize the transactions on page J1 of the journal. (Omit explanations).
(b) Post the transactions using the standard account form.

Analyze errors and their E2-13B The bookkeeper for Linebarger Electronic Repair made a number of errors in
effects on trial balance. journalizing and posting, as described below.
(LO 4) 1. A credit posting of $500 to Accounts Receivable was omitted.
2. A debit posting of $750 for Insurance Expense was debited to Prepaid Insurance.
3. A collection from a customer of $200 in payment of its account owed was posted as a
debit to Cash $200 and a debit to Service Revenue $200.
4. A debit posting of $400 to Property Taxes Payable was made twice.
5. A cash purchase of supplies for $250 was journalized and posted as a debit to Supplies
$25 and a credit to Cash $25.
6. A debit of $594 to Advertising Expense was posted as $549.

Instructions
For each error:
(a) Indicate whether the trial balance will balance.
(b) If the trial balance will not balance, indicate the amount of the difference.
(c) Indicate the trial balance column that will have the larger total.

Consider each error separately. Use the following form, in which error (1) is given as an
example.

(a) (b) (c)

Error In Balance Difference Larger Column
(1) No $500 debit

Prepare a trial balance. E2-14B The accounts in the ledger of Moran Delivery Service contain the following bal-
(LO 1, 4) ances on July 31, 2017.
Accounts Receivable $ 5,220 Prepaid Insurance $ 1,190
Accounts Payable 5,110 Maintenance and Repairs Expense 580
Cash ? Service Revenue 6,360
Equipment 30,000 Owner’s Drawings 420
Gasoline Expense 450 Owner’s Capital 26,780
Insurance Expense 310 Salaries and Wages Expense 2,660
Notes Payable 16,000 Salaries and Wages Payable 490

Instructions
Prepare a trial balance with the accounts arranged as illustrated in the chapter and fill in
the missing amount for Cash.