Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158809
Author: Wild, John
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 2, Problem 2SP
1.
Summary Introduction
Introduction: Expenses means the
1.
Expert Solution
Answer to Problem 2SP
All the journal entries required are maintained and the ledger of the accounts is maintained with trial balance.
Explanation of Solution
| Date | Particulars | Debit ($) | Credit($) |
| Oct 1. | Cash | 45,000 | |
| Office Equipment | 8,000 | ||
| Computer Equipment | 20,000 | ||
| Common stock | 73,000 | ||
| (Being cash and equipment invested by owner in stock) | |||
| Oct 2 | Prepaid Rent | 3,300 | |
| Cash | 3,300 | ||
| (Being 4 months advance paid) | |||
| Oct 3 | Computer Supplies | 1,420 | |
| Accounts Payable | 1,420 | ||
| (Being supply purchased on credit) | |||
| Oct 5 | Prepaid Insurance | 2,220 | |
| Cash | 2,220 | ||
| (Being 12 month premium paid in advance) | |||
| Oct 6 | 4,800 | ||
| Computer Service Provider | 4,800 | ||
| (Being customer billed for services) | |||
| Oct 8 | Account Payable | 1,420 | |
| Cash | 1,420 | ||
| (Being balance paid due on account payable) | |||
| Oct 12 | Accounts Receivable | 1,400 | |
| Computer Services Revenue | 1,400 | ||
| (Being customer billed for services) | |||
| Oct 15 | Cash | 4,800 | |
| Accounts Receivables | 4,800 | ||
| (Being account receivables collected) | |||
| Oct 17 | Repairs Expense- Computer | 805 | |
| Cash | 805 | ||
| (Being payment made for Computer repairs) | |||
| Oct 20 | Advertising Expenses | 1,728 | |
| Cash | 1,728 | ||
| (Being advertising expenses paid off) | |||
| Oct 22 | Cash | 1,400 | |
| Account Receivables | 1,400 | ||
| (Being Account receivable collected) | |||
| Oct 28 | Accounts Receivables | 5,208 | |
| Computer Services revenue | 5,208 | ||
| (Being customer billed for services) | |||
| Oct 31 | Wages expenses | 875 | |
| Cash | 875 | ||
| (Being Employee paid for part time work) | |||
| Oct 31 | Dividends | 3,600 | |
| Cash | 3,600 | ||
| (Being dividend paid off) | |||
| Nov 1 | Mileage Expenses | 320 | |
| Cash | 320 | ||
| (Being Mileage expenses reimbursed) | |||
| Nov 2 | Cash | 4,633 | |
| Computer Service Revenue | 4,633 | ||
| (Being cash collected from customer) | |||
| Nov 5 | Computer Supplies | 1,125 | |
| Cash | 1,125 | ||
| (Being computer supplies purchased) | |||
| Nov 8 | Accounts Receivables | 5,668 | |
| Computer Service Revenue | 5,668 | ||
| (Being customer billed for services) | |||
| Nov18 | Cash | 2,208 | |
| Accounts receivable | 2,208 | ||
| (Being Accounts receivable collected) | |||
| Nov 22 | Miscellaneous Expenses | 250 | |
| Cash | 250 | ||
| (Being donation recorded) | |||
| Nov 24 | Accounts Receivables | 3,950 | |
| Computer Service Revenue | 3,950 | ||
| (Being customer billed for services) | |||
| Nov 28 | Mileage Expenses | 384 | |
| Cash | 384 | ||
| (Being Mileage expenses reimbursed) | |||
| Nov 30 | Wages expenses | 1,750 | |
| Cash | 1,750 | ||
| (Being Employee paid for part time work) | |||
| Nov 30 | Dividends | 2,000 | |
| Cash | 2,000 | ||
| (Being dividend paid off) | |||
2.
Summary Introduction
Introduction: Expenses means the cash outflow from the organization and it is shown on the debit side of the company’s account. As expenses arise when any service or good is purchased, they do not cause a regular outflow of cash. Considering income and revenues refers to the credit balance in the company’s account. Assets of the company always have debit balance as it is owned by the company.
To calculate: Journal entries, trial balance and general ledgers of the accounts.
2.
Expert Solution
Answer to Problem 2SP
All the journal entries required are maintained and the ledger of the accounts is maintained with trial balance.
Explanation of Solution
General Ledger Accounts
| Date | Debit($) | Credit($) | Balance($) |
| Oct 1 | 4500 | 45,000 | |
| Oct 2 | 3,300 | 41,700 | |
| Oct 5 | 2,220 | 39,480 | |
| Oct 8 | 1,420 | 38,060 | |
| Oct 15 | 4,800 | 42,860 | |
| Oct 17 | 805 | 42,055 | |
| Oct 20 | 1,728 | 40,327 | |
| Oct 22 | 1,400 | 41,727 | |
| Oct 31 | 875 | 40,852 | |
| Oct 31 | 3,600 | 37,252 | |
| Nov 1 | 320 | 36,932 | |
| Nov 2 | 4,633 | 41,565 | |
| Nov 5 | 1,125 | 40,440 | |
| Nov 18 | 2,208 | 42,648 | |
| Nov 22 | 250 | 42,398 | |
| Nov 28 | 384 | 42,014 | |
| Nov 30 | 1,750 | 40,264 | |
| Nov 30 | 2,000 | 38,264 |
Account Receivable
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 6 | 4,800 | 4,800 | |
| Oct 12 | 1,400 | 6,200 | |
| Oct 15 | 4,800 | 1,400 | |
| Oct 22 | 1,400 | 0 | |
| Oct 28 | 5,208 | 5,208 | |
| Nov 8 | 5,668 | 10,876 | |
| Nov 18 | 2,208 | 8,668 | |
| Nov 28 | 3,950 | 12,618 |
Computer Supplies
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 3 | 1,420 | 1,420 | |
| Nov 5 | 1,125 | 2,545 |
Prepaid Insurance
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 3 | 2,220 | 2,220 |
Prepaid Rent
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 2 | 3,330 | 3,330 |
Office Equipment
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 1 | 8,000 | 8,000 |
Computer Equipment
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 1 | 20,000 | 20,000 |
Account payable
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 3 | 1,420 | 1,420 | |
| Oct 8 | 1,420 | 0 |
Common Stock
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 1 | 73,000 | 73,000 |
Dividends
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 31 | 3,600 | 3,600 | |
| Nov 30 | 2,000 | 5,600 |
Computer Service Revenue
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 6 | 4,800 | 4,800 | |
| Oct 12 | 1,400 | 6,200 | |
| Oct 28 | 5,208 | 11,408 | |
| Nov 2 | 4,633 | 16,041 | |
| Nov 28 | 5,668 | 21,709 | |
| Nov 24 | 3,950 | 25,659 |
Wages Expense
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 31 | 875 | 875 | |
| Nov 30 | 1,750 | 2,625 |
Advertising Expenses
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 30 | 1,728 | 1,728 |
Mileage Expenses
| Date | Debit ($) | Credit($) | Balance($) |
| Nov 1 | 320 | 320 | |
| Nov 28 | 384 | 704 |
Miscellaneous Expenses
| Date | Debit ($) | Credit($) | Balance($) |
| Nov 22 | 250 | 250 |
Repair expenses-Computer
| Date | Debit ($) | Credit($) | Balance($) |
| Oct 17 | 805 | 805 |
3.
Summary Introduction
Introduction: Expenses means the cash outflow from the organization and it is shown on the debit side of the company’s account. As expenses arise when any service or good is purchased, they do not cause a regular outflow of cash. Considering income and revenues refers to the credit balance in the company’s account. Assets of the company always have debit balance as it is owned by the company. To calculate: Journal entries, trial balance and general ledgers of the accounts.
3.
Expert Solution
Answer to Problem 2SP
All the journal entries required are maintained and the ledger of the accounts is maintained with trial balance.
Explanation of Solution
Trial Balance (As on November 30)
| Particulars | Debit | Credit |
| Cash | $38,264 | |
| Supplies | $2,545 | |
| Equipment | $8,000 | |
| Account Receivable | $12,618 | |
| Rent in Advance | $3,300 | |
| Prepaid Insurance | $2,220 | |
| Computer equipment | $20,000 | |
| Accounts payable | 0 | |
| Common Stock | $73,000 | |
| Dividend Paid | $5,600 | |
| Wage Expenses | $2,625 | |
| Advertisement | $1,728 | |
| Mileage expenses | $704 | |
| Miscellaeous Expenses | $250 | |
| Repair | $805 | |
| Service revenue | $25,659 | |
| Total | $98,659 | $98,659 |
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Financial Accounting: Information for Decisions
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