The correct balance of Accounts Receivable is $3,900 ($7,200 – $3,300). After this correction, total debits will be $47,200 ($50,500 – $3,300), the same as total credits. (continued) E 2-16
Req. 2
Road Runner, Inc. Trial Balance December 31, 20X5
Cash ($4,200 – $400)…………………… Accounts receivable
($7,200 – $3,300 + $7,000)………….. Supplies………………………………….. Land ($34,000 + $80,000)……………… Accounts payable ($5,800 + $2,000)… Note payable ($5,000 + $80,000)……... Common stock………………………….. Retained earnings……………………… Service revenue ($9,100 + $7,000)…… Salary expense ($3,400 + $400)……… Advertising expense ($900 + $2,000). Totals……………………………………...
Req. 3
a. Total assets = $129,500 ($3,800 + $10,900 + $800 + $114,000).
b. Road Runner is profitable, as indicated by the excess of revenue ($16,100) over total
expenses ($6,700 = $3,800 + $2,900).
(10-15 min.) E 2-17
San Francisco:
Income statement
Medical expense…………..
Balance sheet
Cash………………………… Accounts payable…………
Bay Area:
Income statement
Service revenue…………..
Balance sheet
Cash………………………… Accounts receivable……..
72 Financial Accounting 6/e Solutions Manual
$ 3,800
10,900 800 114,000
$ 7,800 85,000 20,000 7,300 16,100 3,800 2,900 $136,200 $136,200
June
$40,000
June 30 $55,000 40,000
June $40,000
June 30 $ -0-
40,000
July
$ -0-
July 31 $23,000* 8,000**
July
$ -0-
July 31 $32,000 8,000**
Explanation:
San Francisco’s expense is Bay Area’s revenue.
San Francisco’s cash payment is Bay Area’s cash receipt.
San Francisco’s account payable is Bay Area’s account receivable. __________
*$55,000 – $32,000 = $23,000 **$40,000 – $32,000 = $ 8,000
Chapter 2 Transaction Analysis 73