Solution manual accounting 21e by warreni ch 02

CHAPTER 2
ANALYZING TRANSACTIONS
CLASS DISCUSSION QUESTIONS
1. An account is a form designed to record
changes in a particular asset, liability,
owner's equity, revenue, or expense. A
ledger is a group of related accounts.
2. The terms debit and credit may signify
either an increase or decrease, depending
upon the nature of the account. For
example, debits signify an increase in asset
and expense accounts but a decrease in
liability, owner's capital, and revenue
accounts.
3. Liabilities and owner's equity both have
rights or claims to assets as indicated by
the accounting equation, Assets =
Liabilities + Owner's Equity. Therefore, the
same rules of debit and credit apply to both
liabilities and owner's equity.
4. a. Decrease in owner's equity
b. Increase in expense
5. a. Increase in owner's equity
b. Increase in revenue
6. a. Assuming no errors have occurred, the
credit balance in the cash account
resulted from drawing checks for
$3,000 in excess of the amount of cash
on deposit.
b. The $3,000 credit balance in the cash
account as of August 31 is a liability

owed to the bank. It is usually referred
to as an "overdraft" and should be
classified on the balance sheet as a
liability.
7. a. The revenue was earned in May.
b. (1) Debit Accounts Receivable and
credit Fees Earned or another
appropriately
titled
revenue
account in May.
(2) Debit Cash and credit Accounts
Receivable in June.
8. The trial balance is a proof of the equality
of the debits and the credits in the ledger.
9. No. Errors may have been made that had
the same erroneous effect on both debits
and credits, such as failure to record and/or
post a transaction, recording the same
transaction more than once, and posting a

10.
11.

12.

13.

41

transaction correctly but to the wrong
account.
The listing of $18,590 is a transposition;
the listing of $720 is a slide.
a. No. Because the same error occurred
on both the debit side and the credit
side of the trial balance, the trial
balance would not be out of balance.
b. Yes. The trial balance would not
balance. The error would cause the
credit total of the trial balance to
exceed the debit total by $270.
a. The equality of the trial balance would
not be affected.
b. On the income statement, total
operating expenses (salary expense)
would be overstated by $7,500, and net
income would be understated by
$7,500. On the statement of owner’s
equity, the beginning and ending
capital would be correct. However, net
income and withdrawals would be
understated
by
$7,500.
These
understatements offset one another,
and, thus, ending owner’s equity is
correct. The balance sheet is not
affected by the error.

a. The equality of the trial balance would
not be affected.
b. On the income statement, revenues
(fees earned) would be overstated by
$25,000, and net income would be
overstated by $25,000. On the
statement of owner’s equity, the
beginning capital would be correct.
However, net income and ending
capital would be overstated by
$25,000. The balance sheet total
assets is correct. However, liabilities
(notes payable) is understated by
$25,000, and owner’s equity is
overstated
by
$25,000.
The
understatement of liabilities is offset by
the overstatement of owner’s equity,
and, thus, total liabilities and owner’s
equity is correct.


14. The preferred procedure is to journalize
and post a correcting entry debiting
Accounts
Receivable
and
crediting

Accounts Payable.

15. a. From the viewpoint of Kennon Storage,
the balance of the checking account
represents an asset.
b. From the viewpoint of Livingston
Savings Bank, the balance of the
checking account represents a liability.

42


EXERCISES
Ex. 2–1
Balance Sheet Accounts

Income Statement Accounts

Assets
Flight Equipment
Purchase Deposits
for Flight Equipment*
Spare Parts and Supplies

Revenue
Cargo and Mail Revenue
Passenger Revenue
Expenses
Aircraft Fuel Expense
Commissions***

Landing Fees****

Liabilities
Accounts Payable
Air Traffic Liability**
Owner's Equity
None
*
**
***
****

Advance payments on aircraft purchases
Passenger ticket sales not yet recognized as revenue
Commissions paid to travel agents
Fees paid to airports for landing rights

Ex. 2–2
Account
Number
21
12
11
31
32
41
13
53
52
51

Account
Accounts Payable
Accounts Receivable
Cash
Corey Krum, Capital
Corey Krum, Drawing
Fees Earned
Land
Miscellaneous Expense
Supplies Expense
Wages Expense

43


Ex. 2–3
Balance Sheet Accounts
11
12
13
14
15

1. Assets
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment

21
22

2. Liabilities
Accounts Payable
Unearned Rent

31
32

3. Owner's Equity
Millard Fillmore, Capital
Millard Fillmore, Drawing

Income Statement Accounts
41

4. Revenue
Fees Earned

51
52
53
59

5. Expenses
Wages Expense
Rent Expense
Supplies Expense

Miscellaneous Expense

Note: The order of some of the accounts within the major classifications is
somewhat arbitrary, as in accounts 13–14 and accounts 51–53. In a new business,
the order of magnitude of balances in such accounts is not determinable in
advance. The magnitude may also vary from period to period.

Ex. 2–4
a. and b.
Transaction

Account Debited
Type
Effect

(1)
(2)
(3)

asset
asset
asset

+
+
+

(4)
(5)
(6)

(7)
(8)
(9)

expense
asset
liability
asset
drawing
expense

+
+
–
+
+
+

Account Credited
Type
Effect
owner's equity
asset
asset
liability
asset
revenue
asset
asset
asset

asset

44

+
–
–
+
–
+
–
–
–
–


Ex. 2–5
(1)
(2)
(3)

(4)
(5)
(6)
(7)
(8)
(9)

Cash.....................................................................
Ira Janke, Capital............................................

40,000

Supplies...............................................................
Cash................................................................

1,800

Equipment...........................................................
Accounts Payable..........................................
Cash................................................................

24,000

Operating Expenses............................................
Cash................................................................

3,050

Accounts Receivable..........................................
Service Revenue............................................

12,000

Accounts Payable...............................................
Cash................................................................

7,500

Cash.....................................................................

Accounts Receivable.....................................

9,500

Ira Janke, Drawing...............................................
Cash................................................................

5,000

Operating Expenses............................................
Supplies..........................................................

1,050

40,000
1,800
15,000
9,000
3,050
12,000
7,500
9,500
5,000
1,050

Ex. 2–6
MALTA CO.
Trial Balance
February 28, 2006
Cash....................................................................................

Accounts Receivable.........................................................
Supplies.............................................................................
Equipment..........................................................................
Accounts Payable..............................................................
Ira Janke, Capital...............................................................
Ira Janke, Drawing.............................................................
Service Revenue................................................................
Operating Expenses..........................................................

45

23,150
2,500
750
24,000
7,500
40,000
5,000
12,000
4,100
59,500

59,500


Ex. 2–7
1.
2.
3.
4.

5.
6.
7.

debit and credit (c)
debit and credit (c)
debit and credit (c)
credit only (b)
debit only (a)
debit only (a)
debit only (a)

Ex. 2–8
a.
b.
c.
d.

Liability—credit
Asset—debit
Asset—debit
Owner's equity
(Cindy Yost, Capital)—credit
e. Owner's equity
(Cindy Yost, Drawing)—debit

f.
g.
h.
i.

j.

Revenue—credit
Asset—debit
Expense—debit
Asset—debit
Expense—debit

g.
h.
i.
j.
k.
l.

debit
debit
debit
credit
debit
credit

Ex. 2–9
a.
b.
c.
d.
e.
f.

credit
credit
debit
credit
debit
credit

Ex. 2–10
a. Debit (negative) balance of $1,500 ($10,500 – $4,000 – $8,000). Such a
negative balance means that the liabilities of Seth’s business exceed the
assets.
b. Yes. The balance sheet prepared at December 31 will balance, with Seth
Fite, Capital, being reported in the owner’s equity section as a negative
$1,500.
46


Ex. 2–11
a. The increase of $28,750 in the cash account does not indicate earnings of
that amount. Earnings will represent the net change in all assets and
liabilities from operating transactions.
b. $7,550 ($36,300 – $28,750)

Ex. 2–12
a. $40,550 ($7,850 + $41,850 – $9,150)
b. $63,000 ($61,000 + $17,500 – $15,500)
c. $20,800 ($40,500 – $57,700 + $38,000)

Ex. 2–13
2005

Aug. 1
2
4
6
8
12
20
25
30
31
31

Rent Expense......................................................
Cash................................................................

1,500

Advertising Expense...........................................
Cash................................................................

700

Supplies...............................................................
Cash................................................................

1,050

Office Equipment................................................
Accounts Payable..........................................

7,500

Cash.....................................................................
Accounts Receivable.....................................

3,600

Accounts Payable...............................................
Cash................................................................

1,150

Gayle McCall, Drawing........................................
Cash................................................................

1,000

Miscellaneous Expense......................................
Cash................................................................

500

Utilities Expense.................................................
Cash................................................................

195

Accounts Receivable..........................................
Fees Earned...................................................

10,150

Utilities Expense.................................................
Cash................................................................

380

47

1,500
700
1,050
7,500
3,600
1,150
1,000
500
195
10,150
380


Ex. 2–14
a.
JOURNAL
Date

2006
Oct. 27

Page 43
Post.
Ref.

Description

Supplies..................................................
Accounts Payable..............................
Purchased supplies on account.

Debit

15
21

Credit

1,320
1,320

b., c., d.
Supplies

15

Date

2006
Oct. 1
27

Item

Balance.................................
..............................................

Post.
Ref.


43

Dr.

Cr.

........... ...........
1,320 ...........

Balance
Dr.
Cr.

585 ...........
1,905 ...........

Accounts Payable
2006
Oct. 1
27

Balance.................................
..............................................

21

43

48

........... ........... ...........
...........
1,320 ...........

6,150
7,470


Ex. 2–15
a.
(1)
(2)
(3)
(4)

Accounts Receivable..........................................
Fees Earned...................................................

12,190

Supplies...............................................................
Accounts Payable..........................................

1,250

Cash.....................................................................
Accounts Receivable.....................................

9,150

Accounts Payable...............................................
Cash................................................................

750

12,190
1,250
9,150
750

b.
(3)

Cash
9,150 (4)

(2)

Supplies
1,250

(1)

Accounts Receivable
12,190 (3)

(4)

750

9,150

49

Accounts Payable
750 (2)

1,250

Fees Earned
(1)

12,190


Ex. 2–16
HALEAKALA PARK CO.
Trial Balance
March 31, 2006
Cash....................................................................................

Accounts Receivable.........................................................
Supplies.............................................................................
Prepaid Insurance..............................................................
Land....................................................................................
Accounts Payable..............................................................
Unearned Rent...................................................................
Notes Payable....................................................................
Neil Orzeck, Capital...........................................................
Neil Orzeck, Drawing.........................................................
Fees Earned.......................................................................
Wages Expense.................................................................
Rent Expense.....................................................................
Utilities Expense................................................................
Supplies Expense..............................................................
Insurance Expense............................................................
Miscellaneous Expense.....................................................

17,450
37,500
2,100
3,000
85,000
18,710
9,000
40,000
86,640
20,000
310,000
175,000
60,000

41,500
7,900
6,000
8,900
464,350

464,350

Ex. 2–17
Inequality of trial balance totals would be caused by errors described in (b) and
(d).

50


Ex. 2–18
ESCALADE CO.
Trial Balance
December 31, 2006
Cash....................................................................................
Accounts Receivable.........................................................
Prepaid Insurance..............................................................
Equipment..........................................................................
Accounts Payable..............................................................
Unearned Rent...................................................................
Erin Capelli, Capital...........................................................
Erin Capelli, Drawing.........................................................
Service Revenue................................................................
Wages Expense.................................................................
Advertising Expense.........................................................

Miscellaneous Expense.....................................................

13,375
24,600
8,000
75,000
11,180
4,250
82,420
10,000
83,750
42,000
7,200
1,425
181,600

181,600

Ex. 2–19
Error

(a)
Out of Balance

(b)
Difference

(c)
Larger Total

1.
2.
3.
4.
5.
6.
7.

yes
yes
yes
yes
no
yes
no

$1,250
18
4,175
800
—
180
—

debit
credit
debit
credit
—
credit

—

51


Ex. 2–20
1. The debit column total is added incorrectly. The sum is $97,250, rather
than $152,750.
2. The trial balance should be dated January 31, 2006, not for the month of
January.
3. The Accounts Receivable balance should be in the debit column.
4. The Accounts Payable balance should be in the credit column.
5. The Susan Appleby, Drawing, balance should be in the debit column.
6. The Advertising Expense balance should be in the debit column.
A corrected trial balance would be as follows:
DINERO CO.
Trial Balance
January 31, 2006
Cash....................................................................................
Accounts Receivable.........................................................
Prepaid Insurance..............................................................
Equipment..........................................................................
Accounts Payable..............................................................
Salaries Payable.................................................................
Susan Appleby, Capital......................................................
Susan Appleby, Drawing...................................................
Service Revenue................................................................
Salary Expense..................................................................
Advertising Expense.........................................................
Miscellaneous Expense.....................................................

7,500
16,400
3,600
50,000
1,850
1,250
43,200
6,000
78,700
32,810
7,200
1,490
125,000

125,000

Ex. 2–21
a.
b.

Gerald Owen, Drawing........................................
Wages Expense..............................................

15,000

Prepaid Rent........................................................
Cash................................................................

4,500

52

15,000
4,500


Ex. 2–22
a.

b.

Supplies...............................................................
Accounts Payable..........................................

550

Prepaid Rent........................................................
Miscellaneous Expense.................................

550

Cash.....................................................................
Accounts Payable..........................................
Accounts Receivable.....................................

7,500

550
550

3,750
3,750

Ex. 2–23
a.

1. Net sales: $4,694 million increase ($58,247 – $53,553)
8.8% increase ($4,694 ÷ $53,553)
2. Total operating
expenses:

$1,063 million increase ($12,278 – $11,215)
9.5% increase ($1,063 ÷ $11,215)

b. During the year ending February 2, 2003, the percent increase in total
operating expenses (9.5%) is more than the percent increase in net sales
(8.8%), an unfavorable trend.

53


Ex. 2–24
a.

KMART CORPORATION
Income Statement
For the Years Ending January 31, 2000 and 1999
(in millions)
Increase (Decrease)
2000

1999
Amount Percent
1. Sales.................................................. $ 37,028 $ 35,925
$ 1,103
3.1%
2. Cost of sales..................................... (29,658) (28,111)
1,547
5.5%
3. Selling, general, and admin.
expenses........................................... (7,415)
(6,514)
901
13.8%
4. Operating income (loss)
before taxes...................................... $
(45) $ 1,300 $(1,345) (103.5%)

b. The horizontal analysis of Kmart Corporation reveals deteriorating operating
results from 1999 to 2000. While sales increased by $1,103 million, a 3.1%
increase, cost of sales increased by $1,547 million, a 5.5% increase. Selling,
general, and administrative expenses also increased by $901 million, a 13.8%
increase. The end result was that operating income decreased by $1,345
million, over a 100% decrease, and created a $45 million loss in 2000. Little
over a year later, Kmart filed for bankruptcy protection. It has now emerged
from bankruptcy, hoping to return to profitability.

54


PROBLEMS

Prob. 2–1A
1. and 2.
(a)
(g)
9,410

Cash
17,500 (b)
3,725 (c)
21,225 (d)
(f)
(h)
(i)
(l)
(m)
(n)
(o)

(k)

Accounts Receivable
3,500

(d)

Supplies
660

(f)

Prepaid Insurance
1,200

(b)

Automobiles
15,300

(e)

Equipment
5,200

(n)

Notes Payable
200 (b)
11,100

(h)

4,000
2,200
660
1,200
1,800
235
1,300
105
200

115
11,815

Accounts Payable
1,800 (e)
(j)
4,050

5,200
650
5,850

Shaun Wilcox, Capital
(a)
17,500
Professional Fees
(g)
(k)

(c)

Rent Expense
2,200

(l)

Salary Expense
1,300

(j)

Blueprint Expense
650

(o)

Automobile Expense
115

(i)
(m)

11,300

55

Miscellaneous Expense
235
105
340

3,725
3,500
7,225


Prob. 2–1A Concluded
3.
SHAUN WILCOX, ARCHITECT
Trial Balance

April 30, 2006
Cash....................................................................................
Accounts Receivable.........................................................
Supplies.............................................................................
Prepaid Insurance..............................................................
Automobiles.......................................................................
Equipment..........................................................................
Notes Payable....................................................................
Accounts Payable..............................................................
Shaun Wilcox, Capital........................................................
Professional Fees..............................................................
Rent Expense.....................................................................
Salary Expense..................................................................
Blueprint Expense.............................................................
Automobile Expense.........................................................
Miscellaneous Expense.....................................................

56

9,410
3,500
660
1,200
15,300
5,200
11,100
4,050
17,500
7,225
2,200

1,300
650
115
340
39,875

39,875


Prob. 2–2A
1.
(a)
(b)
(c)
(d)
(e)
(f)
(g)

(h)
(i)

Cash.....................................................................
Tim Cochran, Capital.....................................

12,000

Supplies...............................................................
Accounts Payable..........................................

850

Cash.....................................................................
Sales Commissions.......................................

12,600

Rent Expense......................................................
Cash................................................................

2,000

Accounts Payable...............................................
Cash................................................................

450

Tim Cochran, Drawing........................................
Cash................................................................

1,500

Automobile Expense...........................................
Miscellaneous Expense......................................
Cash................................................................

1,700
375

Office Salaries Expense......................................

Cash................................................................

3,000

Supplies Expense...............................................
Supplies..........................................................

605

57

12,000
850
12,600
2,000
450
1,500

2,075
3,000
605


Prob. 2–2A Concluded
2.
(a)
(c)
15,575

Cash

12,000 (d)
12,600 (e)
24,600 (f)
(g)
(h)
Supplies
850 (i)

(b)
245
(e)

Accounts Payable
450 (b)
400

Sales Commissions
(c)
12,600

2,000
450
1,500
2,075
3,000
9,025
605

850

Tim Cochran, Capital
(a)
12,000
(f)

Tim Cochran, Drawing
1,500

3.

(d)

Rent Expense
2,000

(h)

Office Salaries Expense
3,000

(g)

Automobile Expense
1,700

(i)

Supplies Expense
605

(g)

Miscellaneous Expense
375

STAR REALTY
Trial Balance
March 31, 2006

Cash....................................................................................
Supplies.............................................................................
Accounts Payable..............................................................
Tim Cochran, Capital.........................................................
Tim Cochran, Drawing.......................................................
Sales Commissions...........................................................
Rent Expense.....................................................................
Office Salaries Expense....................................................
Automobile Expense.........................................................
Supplies Expense..............................................................
Miscellaneous Expense.....................................................
4. a. $12,600
b. $7,680
c. $4,920

58

15,575
245
400
12,000

1,500
12,600
2,000
3,000
1,700
605
375
25,000

25,000


Prob. 2–3A
1.
JOURNAL
Date

2006
July 1
5
10

13
14
15
15
21
24
26
27

27

Pages 1 and 2

Description

Post.
Ref.

Cash........................................................
Leon Cruz, Capital..............................

11
31

18,000

Rent Expense.........................................
Cash....................................................

53
11

1,500

Truck.......................................................
Cash....................................................
Notes Payable....................................

18

11
21

15,000

Equipment..............................................
Accounts Payable..............................

16
22

4,500

Supplies..................................................
Cash....................................................

13
11

975

Prepaid Insurance..................................
Cash....................................................

14
11

3,000

Cash........................................................

Fees Earned.......................................

11
41

4,100

Accounts Payable..................................
Cash....................................................

22
11

2,400

Accounts Receivable.............................
Fees Earned.......................................

12
41

6,100

Truck Expense........................................
Accounts Payable..............................

55
22

580

Utilities Expense....................................
Cash....................................................

54
11

950

Miscellaneous Expense.........................
Cash....................................................

59
11

315

59

Debit

Credit

18,000
1,500
5,000
10,000
4,500
975
3,000

4,100
2,400
6,100
580
950
315


Prob. 2–3A Continued
JOURNAL
Description

Post.
Ref.

Cash........................................................
Accounts Receivable.........................

11
12

3,420

Wages Expense......................................
Cash....................................................

51
11

2,500

Leon Cruz, Drawing................................
Cash....................................................

32
11

2,000

Date

2006
July 29
30
31

Pages 1 and 2
Debit

Credit

3,420
2,500
2,000

2.
Cash

11
Item

Post.
Ref.

..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................

1
1
1
1
1
1
2
2
2
2
2
2

Date

2006
July 1
5
10
14
15
15
21
27
27
29
30
31

Dr.

Cr.

18,000 ...........
...........
1,500
...........
5,000
...........
975
...........
3,000
4,100 ...........

...........
2,400
...........
950
...........
315
3,420 ...........
...........
2,500
...........
2,000

Accounts Receivable
2006
July 24
29

Balance
Dr.
Cr.

18,000
16,500
11,500
10,525
7,525
11,625
9,225
8,275
7,960

11,380
8,880
6,880

...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
12

..............................................
..............................................

2
2

60

6,100 ...........
...........
3,420

6,100 ...........
2,680 ...........


Prob. 2–3A Continued
Supplies

13
Item

Post.
Ref.

..............................................

1

Date

2006
July 14

Dr.

Cr.

975 ...........

Balance
Dr.

Cr.

975 ...........

Prepaid Insurance
2006
July 15

14

..............................................

1

3,000 ...........

3,000 ...........

Equipment
2006
July 13

16

..............................................

1

4,500 ...........

4,500 ...........

Truck
2006
July 10

18
..............................................

1

.15,000 ...........

15,000 ...........

Notes Payable
2006
July 10

21

..............................................

1

...........

10,000 ........... .10,000

Accounts Payable

2006
July 13
21
26

22

..............................................
..............................................
..............................................

1
2
2

...........
4,500 ...........
2,400 ........... ...........
...........
580 ...........

Leon Cruz, Capital
2006
July 1

31

..............................................

1

...........

18,000 ...........

Leon Cruz, Drawing
2006
July 31

4,500
2,100
2,680

18,000
32

..............................................

2

61

2,000 ...........

2,000 ...........


Prob. 2–3A Continued
Fees Earned
Item

Post.
Ref.

Dr.

..............................................
..............................................

1
2

...........
...........

Date

2006
July 15
24

41
Cr.

4,100 ...........
6,100 ...........

Wages Expense
2006
July 30

..............................................

2

2,500 ...........

..............................................

1

1,500 ...........

..............................................

2

950 ...........

950 ...........
55

..............................................

2

580 ...........

Miscellaneous Expense
2006

July 27

1,500 ...........
54

Truck Expense
2006
July 26

2,500 ...........
53

Utilities Expense
2006
July 27

4,100
10,200
51

Rent Expense
2006
July 5

Balance
Dr.
Cr.

580 ...........
59

..............................................

2

62

315 ...........

315 ...........


Prob. 2–3A Concluded
3.
INGRES DESIGNS
Trial Balance
July 31, 2006
Cash....................................................................................
Accounts Receivable.........................................................
Supplies.............................................................................
Prepaid Insurance..............................................................
Equipment..........................................................................
Truck...................................................................................
Notes Payable....................................................................
Accounts Payable..............................................................
Leon Cruz, Capital.............................................................
Leon Cruz, Drawing...........................................................
Fees Earned.......................................................................
Wages Expense.................................................................
Rent Expense.....................................................................

Utilities Expense................................................................
Truck Expense...................................................................
Miscellaneous Expense.....................................................

63

6,880
2,680
975
3,000
4,500
15,000
10,000
2,680
18,000
2,000
10,200
2,500
1,500
950
580
315
40,880

40,880


Prob. 2–4A
2. and 3.
JOURNAL

Date

2006
Aug. 1
2
3
5
9
17
23
29
30
31
31
31
31

31
31

Pages 18 and 19

Description

Post.
Ref.

Office Supplies.......................................
Accounts Payable..............................

14
21

1,760

Rent Expense.........................................
Cash....................................................

52
11

2,500

Cash........................................................
Accounts Receivable.........................

11
12

38,720

Prepaid Insurance..................................
Cash....................................................

13
11

3,600

Accounts Payable..................................

Office Supplies...................................

21
14

240

Advertising Expense..............................
Cash....................................................

53
11

3,450

Accounts Payable..................................
Cash....................................................

21
11

2,670

Miscellaneous Expense.........................
Cash....................................................

59
11

350

Automobile Expense..............................
Cash....................................................

54
11

1,360

Cash........................................................
Salary and Commission Expense.....

11
51

800

Salary and Commission Expense.........
Cash....................................................

51
11

17,400

Accounts Receivable.............................
Fees Earned.......................................

12
41

41,900

Land........................................................
Cash....................................................
Notes Payable....................................

16
11
23

75,000

Larissa Sanchez, Drawing.....................
Cash....................................................

32
11

2,500

Cash........................................................
Unearned Rent...................................

11
22

1,500

64

Debit

Credit

1,760
2,500
38,720
3,600
240
3,450
2,670
350
1,360
800
17,400
41,900
10,000
65,000
2,500
1,500


Prob. 2–4A Continued
1. and 3.
Cash

11
Item

Post.
Ref.

Dr.

Balance.................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................


18
18
18
18
18
19
19
19
19
19

19
19

...........
...........
38,720
...........
...........
...........
...........
...........
800
...........
...........
...........
1,500

Date

2006
Aug. 1
2
3
5
17
23
29
30
31
31

31
31
31

Cr.

........... 31,200 ...........
2,500 28,700 ...........
........... 67,420 ...........
3,600 63,820 ...........
3,450 60,370 ...........
2,670 57,700 ...........
350 57,350 ...........
1,360 55,990 ...........
........... .56,790 ...........
17,400 39,390 ...........
10,000 29,390 ...........
2,500 26,890 ...........
........... 28,390 ...........

Accounts Receivable
2006
Aug. 1
3
31

Balance.................................
..............................................
..............................................

12

18
19

........... ........... 45,750 ...........
........... 38,720
7,030 ...........
41,900 ........... 48,930 ...........

Prepaid Insurance
2006
Aug. 1
5

Balance.................................
..............................................

13

18

........... ...........
3,600 ...........

Office Supplies
2006
Aug. 1
1
9

Balance.................................
..............................................
..............................................

2,800 ...........
6,400 ...........
14


18
18

........... ...........
1,760 ...........
...........
240

Land
2006
Aug. 31

Balance
Dr.
Cr.

1,000 ...........
2,760 ...........
2,520 ...........
16

..............................................

19

65

75,000 ...........

75,000 ...........