Chapter 2, Problem 2.42CP

(1)

To determine

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

• Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

T-account: The condensed form of a ledger is referred to as T-account. The left-hand side of this account is known as debit, and the right hand side is known as credit.

Trial balance: Trial balance is a summary of all the asset, liability, and equity accounts and their balances.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Statement of retained earnings: This statement reports the beginning retained earnings and all the changes which led to ending retained earnings. Net income from income statement is added to and dividends is deducted from beginning retained earnings to arrive at the end result, ending retained earnings.

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources, on a specific date.

Debt ratio: The financial ratio which gauges the percentage of assets financed by debt is referred to as debt ratio.

To journalize: The transactions of CC Company for the month of November and December 2018.

(2)

To determine

To open: The T-accounts for CC Company

(3)

To determine

To post: The journal entries in T-accounts for CC Company

(4)

To determine

To prepare: Trial balance of CC Company as on December 31, 2018

(5)

To determine

To prepare: Income statement of CC Company for the month ended December 31, 2018.

(6)

To determine

To prepare: Statement of retained earnings of CC Company for the month ended December 31, 2018.

(7)

To determine

To prepare: Balance sheet of CC Company as of December 31, 2018.

(8)

To determine

The debt ratio of CC Company as of December 31, 2018.