Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Textbook Question
Chapter 2, Problem 60BPSB
Problem 2-603 Journalizing and Posting Transactions
Findlay Testing Inc. provides water testing and maintenance services for owners of hot tubs and swimming pool. During September the following transactions occurred:
Sept. 1 Issued common stock for $20,000.
2 Purchased chemical supplies for $1,880 cash.
5 Paid office rent for October, November, and December; the rent is $800 per month.
8 Purchased $12.90 of advertising for September on account.
13 Billed the city of Bellefontaine $2,100 for testing the water in the city’s outdoor pools during September,
18 Received $3250 from Alexander Blanchard upon completion of overhaul of his swimming pool water circulation system. Since the job was completed and collected for on the same day, no bill was sent, to Blanchard.
Sept. 25 Received $835 from the city of Bellefontaine for water testing that was previously billed.
30 Recorded and paid September salaries of $3,970.
Required:
1. Prepare a
2.
Expert Solution
To determine
Journal Entries:
Journal entries are medium of recording business transactions. A business enterprise must record all the business transaction to evaluate net income or loss and analyze the financial performance of a company during a specified accounting period.
Requirement: 1
Journalize the each transaction.
Answer to Problem 60BPSB
Journal entries in the books of Findlay Testing Inc. for the month of September
| Date | Account and Explanation | Debit | Credit |
| Sept. | |||
| 1 | Cash | $20,000 | |
| Common Stock | $20,000 | ||
| 2 | Supplies | 1,880 | |
| Cash | 1,880 | ||
| 5 | Prepaid Rent | 2,400 | |
| Cash | 2,400 | ||
| 8 | Advertising Expense | 1,290 | |
| Cash | 1,290 | ||
| 13 | Accounts Receivable | 2,100 | |
| Service Revenue | 2,100 | ||
| 18 | Cash | 8,250 | |
| Service Revenue | 8,250 | ||
| 25 | Cash | 835 | |
| Accounts Receivable | 835 | ||
| 30 | Wages Expense | 3,970 | |
| Cash | 3,970 | ||
Explanation of Solution
| Date | Assets | Liabilities | Stockholders’ Equity |
| Sept. | |||
| 1 | Increase (Cash) | Increase (Common Stock) | |
| 2 | Increase (Supplies) | ||
| Decrease (Cash) | |||
| 5 | Increase (Prepaid Rent) | ||
| Decrease (Cash) | |||
| 8 | Decrease (Cash) | Decrease (Advertising Expense) | |
| 13 | Increase (Accounts Receivable) | Increase (Service Revenue) | |
| 18 | Increase (Cash) | Increase (Service Revenue) | |
| 25 | Increase (Cash) | ||
| Decrease (Accounts Receivable) | |||
| 30 | Decrease (Cash) | Decrease (Wages Expense) |
Expert Solution
To determine
Introduction:
T-accounts as its name derived from shape of the account, is representation of business transaction in their respective account. It helps in organizing and analyzing the transaction according to their similar nature of account.
Requirement 2
Posting the journal entries into their concerned T-accounts
Answer to Problem 60BPSB
| Accounts | Amount |
| Cash | $20,835 |
| Accounts Receivable | 1,265 |
| Supplies | 1,880 |
| Prepaid Rent | 2,400 |
| Accounts Payable | 1,290 |
| Common Stock | 20,000 |
| Service Revenue | 10,350 |
| Wages Expense | 3,970 |
| Advertising Expense | 1,290 |
Explanation of Solution
Cash
| Sept. 1 20,000 18 8,250 25 835 | Sept. 2 1,880 5 2,400 30 3,970 |
| Bal. 20,835 |
Accounts Receivable
| Sept. 13 2,100 | Sept. 25 835 |
| Bal. 1,265 |
Supplies
| Sept. 3 1,880 | |
| Bal. 1,880 |
Prepaid Rent
| Sept. 5 2,400 | |
| Bal. 2,400 |
Accounts Payable
| Sept. 8 1,290 | |
| Bal. 1,290 |
Common Stock
| Sept. 1 20,000 | |
| Bal. 20,000 |
Service Revenue
| Sept. 13 2,100 18 8,250 | |
| Bal. 10,350 |
Wages Expense
| Sept. 30 3,970 | |
| Bal. 3,970 |
Advertising Expense
| Sept. 8 1,290 | |
| Bal. 1,290 |
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TRANSACTIONS
Jan.
2
Purchased supplies for $14,000; issued Check 1015.
2
Purchased a one-year insurance policy for $16,800.
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Sold services for $30,000 in cash and $20,000 on credit during the first week of January.
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Collected a total of $8,000 on account from credit customers during the first week of January.
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Issued Check 1017 for $7,200 to pay for special promotional advertising to new businesses on the local radio station during the month.
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Collected a total of $9,000 on account from credit customers during the second week of January.
14
Returned supplies that were damaged for a cash refund of $1,500.
15
Sold services for $41,400 in cash and $4,600 on credit during the second week of January.
20
Purchased supplies for $10,000 from White’s, Inc.; received Invoice 2384 payable in 30 days.
20
Sold services for $25,000 in cash and $7,000 on credit during the third week of January.
20
Collected a total of $11,200 on account from credit…
None
Chapter 2 Solutions
Cornerstones of Financial Accounting
Ch. 2 - What is the conceptual framework of accounting?Ch. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Describe the constraint on providing useful...Ch. 2 - Prob. 6DQCh. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Of all the events that occur each day, how would...Ch. 2 - Prob. 10DQ
Ch. 2 - Prob. 11DQCh. 2 - In analyzing a transaction, can a transaction only...Ch. 2 - How do revenues and expenses affect the accounting...Ch. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - The words debit and credit are used in two ways in...Ch. 2 - Prob. 17DQCh. 2 - Prob. 18DQCh. 2 - Prob. 19DQCh. 2 - Prob. 20DQCh. 2 - Prob. 21DQCh. 2 - Prob. 22DQCh. 2 - Prob. 1MCQCh. 2 - Prob. 2MCQCh. 2 - Prob. 3MCQCh. 2 - Prob. 4MCQCh. 2 - Prob. 5MCQCh. 2 - Which principle requires that expenses be recorded...Ch. 2 - Taylor Company recently purchased a piece of...Ch. 2 - Prob. 8MCQCh. 2 - The effects of paying salaries for the current...Ch. 2 - Which of the following statements is false? The...Ch. 2 - Which of the following statements are true? Debits...Ch. 2 - Debits will: increase assets. expenses, and...Ch. 2 - Which of the following statements are true? A...Ch. 2 - Posting: involves transferring the information in...Ch. 2 - A trial balance: lists only revenue and expense...Ch. 2 - CORNERSTONE 2.1 Cornerstone Exercise 2-16...Ch. 2 - Prob. 17CECh. 2 - CORNERSTONE 2.1 Four statements are given below....Ch. 2 - Prob. 19CECh. 2 - Cornerstone Exercise 2-20 Transaction Analysis...Ch. 2 - Cornerstone Exercise 2-21 Transaction Analysis...Ch. 2 - Cornerstone Exercise 2-22 Transaction Analysis The...Ch. 2 - Cornerstone Exercise 2-23 Debit and Credit...Ch. 2 - Cornerstone Exercise 2-24 Journalize Transactions...Ch. 2 - Cornerstone Exercise 2-25 Journalize Transactions...Ch. 2 - Cornerstone Exercise 2-26 Preparing a Trial...Ch. 2 - Prob. 27BECh. 2 - Brief Exercise 2-28 Assumptions and Principles...Ch. 2 - Brief Exercise 2-2? Events and Transactions...Ch. 2 - Brief Exercise 2-30 Transaction Analysis Galle...Ch. 2 - Brief Exercise 2-31 Debit and Credit Procedures...Ch. 2 - Brief Exercise 2-32 Journalize Transactions Galle...Ch. 2 - Brief Exercise 2-33 Posting Journal Entries Listed...Ch. 2 - Brief Exercise 2-34 Preparing a Trial Balance The...Ch. 2 - Prob. 35ECh. 2 - Prob. 36ECh. 2 - Exercise 2-37 Events and Transactions Several...Ch. 2 - Exercise 2-38 Events and Transactions The...Ch. 2 - Exercise 2-39 Transaction Analysis OBJECTIVE e The...Ch. 2 - Exercise 2-40 Transaction Analysis Amanda Webb...Ch. 2 - Exercise 2-41 Transaction Analysis and Business...Ch. 2 - Exercise 2-42 Inferring Transactions from Balance...Ch. 2 - Exercise 2-43 Transaction Analysis Goal Systems, a...Ch. 2 - Exercise 2-44 Transaction Analysis OBJECTIVE 9...Ch. 2 - Prob. 45ECh. 2 - Exercise 2-46 Normal Balances and Financial...Ch. 2 - OBJECTIVE 9 Exercise 2-47 Debit and Credit Effects...Ch. 2 - Prob. 48ECh. 2 - Exercise 2-49 Journalizing Transactions Kauai...Ch. 2 - Exercise 2-50 Journalizing Transactions Remington...Ch. 2 - Exercise 2-51 Transaction Analysis and Journal...Ch. 2 - Exercise 2-52 Accounting Cycle Rosenthal...Ch. 2 - Exercise 2-53 Preparing a Trial Balance...Ch. 2 - Exercise 2-54 Effect of Errors on a Trial Balance...Ch. 2 - Problem 2-55A Events and Transactions The...Ch. 2 - Problem 2-56A Analyzing Transactions Luis Madero,...Ch. 2 - Problem 2-57A Inferring Transactions from...Ch. 2 - Prob. 58APSACh. 2 - Problem 2-59A Journalizing Transactions Monroe...Ch. 2 - Problem 2-60A Journalizing and Posting...Ch. 2 - Problem 2-61A The Accounting Cycle Karleens...Ch. 2 - Problem 2-62B Comprehensive Problem Mulberry...Ch. 2 - Prob. 55BPSBCh. 2 - Prob. 56BPSBCh. 2 - Prob. 57BPSBCh. 2 - Problem 2-58B Debit and Credit Procedures A list...Ch. 2 - Problem 2-593 Journalizing Transactions Monilast...Ch. 2 - Problem 2-603 Journalizing and Posting...Ch. 2 - Problem 2-6B The Accounting Cycle Sweetwater...Ch. 2 - Problem 2-62B Comprehensive Problem Mulberry...Ch. 2 - Prob. 63.1CCh. 2 - Prob. 63.2CCh. 2 - Prob. 63.3CCh. 2 - Prob. 64.1CCh. 2 - Prob. 64.2CCh. 2 - Case 2-64 Analysis of the Effects of Current Asset...Ch. 2 - Prob. 64.4CCh. 2 - Prob. 65.1CCh. 2 - Prob. 65.2CCh. 2 - Prob. 66.1CCh. 2 - Prob. 66.2CCh. 2 - Prob. 66.3CCh. 2 - Case 2-67 Comparative Analysis: Under Armour,...Ch. 2 - Prob. 67.2CCh. 2 - Case 2-67 Comparative Analysis: Under Armour,...Ch. 2 - Case 2-68 Accounting for Partially Completed...Ch. 2 - Prob. 68.2CCh. 2 - Prob. 69.1CCh. 2 - Case 2-69 CONTINUING PROBLEM: FRONT ROW...Ch. 2 - Case 2-69 CONTINUING PROBLEM: FRONT ROW...
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