2.5-3 The accounts receivable account for James Rivers Inc. had a beginning balance of $6,000. During the
month, the company received payments of $8,000 and additional accounts of $11,000. The ending balance in accounts receivable is _____ and is a ______.
A. B. C. D.
$9,000, credit $9,000, debit $3,000, debit $3,000, credit
LO: 2-5
Diff: 2
EOC: Summary Problem
Answer: B
2.3-53 George P. Smythe Co. purchased equipment from Chester Grahame Co for $200,000, paying 10% as a
down payment and financing the remainder. The proper journal entry for this event is:
A B C D
Equipment
Cash
200,000
200,000
Equipment
200,000
20,000 180,000
Cash
Notes Receivable
Equipment Cash
200,000
20,000 180,000
Cash
Notes Payable
20,000 180,000
200,000 Diff: 2
EOC: Summary Problem
Notes Payable
Equipment
Answer: C LO: 2-3
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2.1-42 John Smith started a consulting business and completed the following transactions:
A. Incorporated the business and invested $10,000 for the issuance of common stock B. Paid $2,000 monthly rent for office space C. Purchased $3,000 of office equipment, paying cash D. Recorded $1,000 of revenue, receiving cash
E. Recorded $1,500 of revenue on account and mailed invoices to the customers
After analyzing these transactions, what is the ending cash balance? Use a T-account to support your
answer. Have any of the transactions not yet affected cash?
Answer: A. 10,000 D. 1,000
Cash B. 2,000 C. 3,000 The ending cash balance is $ 6,000.
Yes, letter E. Cash has not yet been received, but the corresponding revenue has been recognized.
LO: 2-1
Diff: 2
EOC: S2-3
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2.2-16 Accounting has its own vocabulary and basic relationships. Match the following accounting terms with the corresponding definition or meaning. ___ 1. Net income A. The cost of operating a business; a decrease in
stockholders’ equity ___ 2. Receivable B. Always a liability ___ 3. Journal C. Revenues–Expenses ___ 4. Ledger
D. Grouping of accounts ___ 5. Normal balance E. Assets–Liabilities ___ 6. Payable F. Record of transactions ___ 7. Posting
G. Always an asset
___ 8. Owners’ Equity H. Right side of an account
___ 9. Credit I. Side of an account where increases are recorded ___ 10. Expense J. Copying data from the journal to the ledger
Answer: 1. C 6. B 2. G 7. J 3. F 8. E 4. D 9. H 5.
I
10.
A
LO: 2-2
Diff: 2 EOC: S2-11
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2.4-18 Indicate whether the trial balance will be out of balance for each of the following errors, and if so, by what dollar amount.
A. Did not record a utility bill payment for $500
B. Posted a $2,000 debit to Cash as $200
C. Recorded a $1,000 cash payment by debiting accounts receivable; the credit entry was correct
D. Omitted the service revenue account for $2,500 from the trial balance
E. Listed $1,500 of equipment on the trial balance when the correct account balance was $5,100
F. Posted a debit to rent expense and a debit to cash for a $250 rent payment
Answer:
A. No. The debit and credit were omitted, so the trial balance will still balance. B. Yes—$1,800.
C. No. The wrong account was debited, but the entry still balanced. D. Yes—$2,500. E. Yes—$3,600. F. Yes—$500.
LO: 2-4 Diff: 2 EOC: E1-21
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2.5-4 John Smith started a consulting business and completed the following transactions during January 2007. Journalize the transactions. Explanations are not required. 1. John incorporated the business, Consulting Inc., and invested $10,000 for common stock. 2. Paid $2,000 monthly rent for office space. 3. Purchased $3,000 of office equipment, paying cash. 4. Purchased $500 of office supplies on account. 5. Recorded $1,000 of revenue, receiving cash.
6. Recorded $1,500 of revenue on account and mailed invoices to the customers. 7. Paid utilities expense of $300.
8. Collected cash from a customer on account, $500.
Answer:
1. Cash 10,000
Common stock 10,000
2. Rent expense 2,000 Cash 2,000 3. Equipment 3,000 Cash 3,000 4. Supplies 500 Accounts payable 500 5. Cash 1,000 Service Revenue 1,000 6. Accounts receivable 1,500 Service Revenue 1,500 7. Utilities expense 300 Cash 300 8. Cash 500 Accounts receivable 500
LO: 2-5 Diff: 2 EOC: E2-25
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