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Chapter 2: Q12E_2 (page 93)

Identifying accounts, increases in accounts, and normal balances

a. Interest Revenue b. Accounts Payable

c. Common Stock d. Office Supplies

e. Advertising Expense f. Unearned Revenue

g. Prepaid Rent h. Utilities Expense

i. Dividends j. Service Revenue

Requirements 2. Identify whether the account is increased with a debit (DR) or credit (CR).

Short Answer

Expert verified

The identification of various accounts with a debit or credit is given in step 2.

Step by step solution

01

Meaning of Prepaid Rent

Prepaid rent refers to the rent paid in advance. It is the current asset of the business and shown on the assets side of the balance sheet.

02

Identification of each account

Accounts

Debit (DR) or Credit (CR)

a. Interest revenue

Credit (CR)

b. Accounts Payable

Credit (CR)

c. Common stock

Credit (CR)

d. Office Supplies

Debit (DR)

e. Advertising Expense

Debit (DR)

f. Unearned Revenue

Credit (CR)

g. Prepaid Rent

Debit (DR)

h. Utility Expense

Debit (DR)

i. Dividends

Debit (DR)

j. Service Revenue

Credit (CR)

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Most popular questions from this chapter

Question:Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance The following transactions occurred during the month for Teresa Parker, CPA:

Jun. 1 Parker opened an accounting firm by contributing \(13,200 cash and office furniture with a fair market value of \)5,300 in exchange for common stock.

5 Paid monthly rent of \(1,300.

9 Purchased office supplies on account, \)600.

14 Paid employee’s salary, \(1,900.

18 Received a bill for utilities to be paid next month, \)370.

21 Paid \(500 of the accounts payable created on June 9.

25 Performed accounting services on account, \)5,700.

28 Paid cash dividends of $6,700

Requirements 1. Open the following four-column accounts of Teresa Parker, CPA: Cash, 110; Accounts Receivable, 120; Office Supplies, 130; Office Furniture, 140; Accounts Payable, 210; Utilities Payable, 220; Common Stock, 310; Dividends, 320; Service Revenue, 410; Salaries Expense, 510; Rent Expense, 520; and Utilities Expense, 530.

Identify which types of accounts have a normal debit balance and which types of accounts have a normal credit balance.

Before you begin this assignment, review the Tying It All Together feature in the chapter. Part of the Fry’s Electronics, Inc.’s experience involves providing technical support to its customers. This includes in-home installations of electronics and also computer support at their retail store locations.

Requirements

  1. Suppose Fry’s Electronics, Inc. provides $10,500 of computer support at the Dallas-Fort Worth store during the month of November. How would Fry’s Electronics record this transaction? Assume all customers paid in cash. What financial statement(s) would this transaction affect?

For each account, identify if the change would be recorded as a debit (DR) or credit (CR).

11. Increase to Cash 16. Increase to Interest Revenue

12. Decrease to Accounts Payable 17. Increase to Rent Expense

13. Increase to Common Stock 18. Decrease to Office Supplies

14. Increase to Unearned Revenue 19. Increase to Prepaid Rent

15. Decrease to Accounts Receivable 20. Increase to Notes Payable

Question:Preparing financial statements from the trial balance and calculating the debt ratio

Preparing financial statements from the trial balance and calculating the debt ratio

Account Title Debit Credit

Office Supplies 1,400

Cash 32,000

Accounts Receivable 9,100

Prepaid Insurance 2,600

Equipment 24,000

Accounts Payable 3,400

Unearned Revenue 1,296

Notes Payable 34,000

Common Stock 20,000

Dividends 3,000

Salaries Expense 1,600

Rent Expense 700

Utilities Expense 100

Service Revenue 15,804

Total Balance \( 74,500 \) 74,500

Requirements 1. Prepare the income statement for the month ended July 31, 2018
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