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Chapter 2: Q9SE (page 92)
Calculating debt ratio
Aladdin Carpet Care had the following total assets, liabilities, and equity as of October 31:
Assets $ 200,000
Liabilities 30,000
Equity 170,000
What is Aladdin Carpet Care’s debt ratio as of October 31?
Debt ratio is 0.15 or 15%
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Using the following accounts and their balances, calculate the debt ratio for Cooper Furniture Repair as of December 31.
Cash \( 7,000 Advertising Expense \) 1,200
Unearned Revenue 4,500 Utilities Expense 800
Equipment 10,000 Rent Expense 5,000
Service Revenue 8,000 Accounts Payable 2,300
Common Stock 12,200 Dividends 3,000
Question:The following transactions occurred for Lawrence Engineering:
Jul. 2 Received \(14,000 contribution from Brett Lawrence in exchange for common stock.
4 Paid utilities expense of \)370.
5 Purchased equipment on account, \(1,600.
10 Performed services for a client on account, \)2,900.
12 Borrowed \(7,100 cash, signing a notes payable.
19 Cash dividends of \)200 were paid to stockholders.
21 Purchased office supplies for $840 and paid cash.
27 Paid the liability from July 5.
Requirements 1. Open the following T-accounts for Lawrence Engineering: Cash; Accounts Receivable; Office Supplies; Equipment; Accounts Payable; Notes Payable; Common Stock; Dividends; Service Revenue; and Utilities Expense.
Identify the three categories of the accounting equation, and list at least four accounts associated with each category.
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:
Cash 17,000
Office Supplies 1,200
Accounts Receivable 10,500
Land 29,000
Furniture 0
Automobile 0
Accounts Payable 3,800
Unearned Revenue 0
Common Stock 46,200
Dividends 0
Rent Expense 1,000
Salaries Expense 2,500
Service Revenue 11,200
Total Balance \( 61,200 61,200
During April, the business completed the following transactions:
Apr. 4 Collected \)6,000 cash from a client on account.
8 Performed tax services for a client on account, \(5,500.
13 Paid \)3,300 on account.
14 Purchased furniture on account, \(4,000.
15 Menning contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)11,500.
18 Purchased office supplies on account, \(1,600.
19 Received \)2,750 for tax services performed on April 8.
20 Paid cash dividends of \(7,500.
21 Received \)4,900 cash for consulting work completed.
24 Received \(2,500 cash for accounting services to be completed next month.
27 Paid office rent, \)900.
28 Paid employee salary, $1,200.
Requirements 2. Open the four-column ledger accounts listed in the trial balance, together with their balances as of March 31. Use the following account numbers: Cash, 11; Accounts Receivable, 12; Office Supplies, 13; Land, 14; Furniture, 15; Automobile, 16; Accounts Payable, 21; Unearned Revenue, 22; Common Stock, 31; Dividends, 33; Service Revenue, 41; Salaries Expense, 51; and Rent Expense, 52.
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
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