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Chapter 2: 6RQ (page 90)
When are debits increases? When are debits decreases?
Assets are the resources that generate income in the future for the owners and debit increases in assets, expenses, and dividends. Debit decrease in liabilities and equity (common stock and revenue).
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Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
Terrence Murphy opened a law office on January 1, 2018. During the first month of operations, the business completed the following transactions:
Jan. 1 Murphy contributed \(78,000 cash to the business, Terrence Murphy, Attorney. The business issued common stock to Murphy.
3 Purchased office supplies, \)600, and furniture, \(1,700, on account.
4 Performed legal services for a client and received \)1,000 cash.
7 Purchased a building with a market value of \(130,000, and land with a market value of \)25,000. The business paid \(25,000 cash and signed a note payable to the bank for the remaining amount.
11 Prepared legal documents for a client on account, \)400.
15 Paid assistant’s semimonthly salary, \(1,120.
16 Paid for the office supplies purchased on January 3 on account.
18 Received \)2,700 cash for helping a client sell real estate.
19 Defended a client in court and billed the client for \(1,800.
25 Received a bill for utilities, \)600. The bill will be paid next month.
29 Received cash on account, \(1,500.
30 Paid \)1,200 cash for a 12-month insurance policy starting on February 1.
30 Paid assistant’s semimonthly salary, \(1,120.
31 Paid monthly rent expense, \)1,800.
31 Paid cash dividends of $2,200.
Requirements
2. Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Land, 141; Building, 151; Furniture, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
Terrence Murphy opened a law office on January 1, 2018. During the first month of operations, the business completed the following transactions:
Jan. 1 Murphy contributed \(78,000 cash to the business, Terrence Murphy, Attorney. The business issued common stock to Murphy.
3 Purchased office supplies, \)600, and furniture, \(1,700, on account.
4 Performed legal services for a client and received \)1,000 cash.
7 Purchased a building with a market value of \(130,000, and land with a market value of \)25,000. The business paid \(25,000 cash and signed a note payable to the bank for the remaining amount.
11 Prepared legal documents for a client on account, \)400.
15 Paid assistant’s semimonthly salary, \(1,120.
16 Paid for the office supplies purchased on January 3 on account.
18 Received \)2,700 cash for helping a client sell real estate.
19 Defended a client in court and billed the client for \(1,800.
25 Received a bill for utilities, \)600. The bill will be paid next month.
29 Received cash on account, \(1,500.
30 Paid \)1,200 cash for a 12-month insurance policy starting on February 1.
30 Paid assistant’s semimonthly salary, \(1,120.
31 Paid monthly rent expense, \)1,800.
31 Paid cash dividends of $2,200.
Requirements
4. Prepare the trial balance of Terrence Murphy, Attorney, at January 31, 2018.
Question: Calculating the debt ratio
John Hart, M.D., reported the following trial balance as of September 30, 2018:
Account Title Office Supplies Cash Debit Credit Accounts Receivable Office Equipment Land Building Accounts Payable Utilities Payable Unearned Revenue Notes Payable Advertising Expense Utilities Expense Salaries Expense Service Revenue Dividends Common Stock Total Balance \( 256,700 \) 1,600 24,795 69,000 50,505 110,000 200 \( 30,000 \) 256,700 29,000 23,500 1,100 57,000 7,900 3,000 30,000 75,000 800 J
Calculate the debt ratio for John Hart, M.D
Question: Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance Victor Yang practices medicine under the business title Victor Yang, M.D. During March, the medical practice completed the following transactions:
Mar. 1 Yang contributed \(62,000 cash to the business in exchange for common stock.
5 Paid monthly rent on medical equipment, \)570.
9 Paid \(14,000 cash to purchase land to be used in operations.
10 Purchased office supplies on account, \)1,500.
19 Borrowed \(27,000 from the bank for business use.
22 Paid \)1,400 on account.
28 The business received a bill for advertising in the daily newspaper to be paid in April, \(220.
31 Revenues earned during the month included \)6,700 cash and \(5,800 on account.
31 Paid employees’ salaries \)2,100, office rent \(1,500, and utilities \)350. Record as a compound entry.
31 The business received \(1,000 for medical screening services to be performed next month.
31 Paid cash dividends of \)7,100.
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; and Advertising Expense. Requirements 1. Journalize each transaction. Explanations are not required.
Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:
Sep. 1 Received \(48,000 cash and issued common stock to Simpson.
4 Purchased office supplies, \)1,200, and furniture, \(1,300, on account.
6 Performed services for a law firm and received \)1,900 cash.
7 Paid \(18,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.
14 Paid for the furniture purchased on September 4 on account.
15 Paid assistant’s semimonthly salary, \(1,500.
17 Received cash on account, \)1,000.
20 Prepared a design for a school on account, \(650.
25 Received \)2,100 cash for design services to be performed in October.
28 Received \(2,900 cash for consulting with Plummer & Gordon.
29 Paid \)600 cash for a 12-month insurance policy starting on October 1.
30 Paid assistant’s semimonthly salary, \(1,500.
30 Paid monthly rent expense, \)600.
30 Received a bill for utilities, \(350. The bill will be paid next month.
30 Paid cash dividends of \)3,700.
Requirements 4. Prepare the trial balance of Ann Simpson, Designer, as of September 30, 2018.
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