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Chapter 2: Q2SE (page 91)

Identifying increases and decreases in accounts For each account, identify whether the changes would be recorded as a debit (DR) or credit (CR). a. Increase to Accounts Receivable b. Decrease to Unearned Revenue c. Decrease to Cash d. Increase to Interest Expense e. Increase to Salaries Payable f. Decrease to Prepaid Rent g. Increase to Common Stock h. Increase to Notes Receivable i. Decrease to Accounts Payable j. Increase to Interest Revenue

Short Answer

Expert verified

Identification of debit or credit

Changes

Debit or Credit

  1. Increase to Accounts Receivable

Debit (Dr)

b. Decrease to Unearned Revenue

Debit (Dr)

c. Decrease to Cash

Credit (Cr)

d. Increase to Interest Expense

Debit (Dr

e. Increase to Salaries Payable

Credit (Cr)

f. Decrease to Prepaid Rent

Credit (Cr)

g. Increase to Common Stock

Credit (Cr)

h. Increase to Notes Receivable

Debit (Dr)

i. Decrease to Accounts Payable

Debit (Dr)

j. Increase to Interest Revenue

Credit (Cr)

Step by step solution

01

Definition of Accounts Receivables

The Accounts receivables are defined as the balance sheet item representing any amount owed to the business.

02

Changes recorded as debited when

An account isdebitedwhen there is an increase in assets, expenses and a decrease in capital, revenues, and liabilities.

03

Changes recorded as credited when

An account is credited when there is a decrease in assets, expenses and an increase in capital, revenues, and liabilities.

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Most popular questions from this chapter

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.

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 2. Prepare the statement of retained earnings for the month ended July 31, 2018. The beginning balance of retained earnings was $0.

Question: The following transactions occurred for Wilke Technology Solutions:

May 1 The business received cash of \(105,000 and issued common stock to Zoe Wilke.

2 Purchased office supplies on account, \)550.

4 Paid \(57,000 cash for building and land. The building had a fair market value of \)45,000.

6 Performed services for customers and received cash, \(3,600.

9 Paid \)350 on accounts payable.

17 Performed services for customers on account, \(3,500.

19 Paid rent expense for the month, \)1,200.

20 Received \(1,500 from customers for services to be performed next month.

21 Paid \)900 for advertising in next month’s IT Technology magazine.

23 Received \(3,100 cash on account from a customer.

31 Incurred and paid salaries, \)1,700.

Analyzing and journalizing transactions

Journalize the transactions of Wilke Technology Solutions. Include an explanation with each journal entry. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Advertising; Land; Building; Accounts Payable; Unearned Revenue; Common Stock; Service Revenue; Rent Expense; and Salaries Expense

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

Question:E2-21 Journalizing transactions from T-accounts In December 2018, the first five transactions of Abling’s Lawn Care Company have been posted to the T-accounts. Prepare the journal entries that served as the sources for the five transactions. Include an explanation for each entry

Cash

  1. 57,000 40,000 (3) 3,800 (5) (2) 800 (3) 40,000 Office Supplies Common Stock Building Equipment Accounts Payable 800 (2) 46,000 (4) (5) 3,800 Notes Payable 57,000 (1) (4) 46,000 40,000 (3) 3,800 (5) (2) 800 (3) 40,000 Office Supplies Common Stock Building Equipment Accounts Payable 800 (2) 46,000 (4) (5) 3,800 Notes Payable 57,000 (1)
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