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9/8/13

wild - financial and managerial accounting - 5e, solutions manual and test bank 0078025605

wild - financial and managerial accounting - 5e, solutions manual and test bank 0078025605


Solutions for Financial and Managerial Accounting: Information for Decisions, 5/E by John J. Wild, Ken W. Shaw, Barbara Chiappetta
http://www.mediafire.com/view/eoqjogf37xt2z7f/SMChap002.doc
Test Bank for Financial and Managerial Accounting: Information for Decisions, 5/E by John J. Wild, Ken W. Shaw, Barbara Chiappetta
http://www.mediafire.com/view/7qe46jxblkd7qfo/ch5.docx

Product Details:
Book Name : Financial and Managerial Accounting: Information for Decisions, 5/E
Authors : John J. Wild, Ken W. Shaw, Barbara Chiappetta
Edition : 5th E
ISBN 10: 0078025605
ISBN 13: 978-0078025600
Items available : Solutions/Test Bank
Financial and Managerial Accounting: Information for Decisions, 5/E by John J. Wild, Ken W. Shaw, Barbara Chiappetta“. This is the complete Solutions for this book.(Test Bank for this book is also available).
Solutions Financial and Managerial Accounting,5E Wild



Chapter 2


Analyzing and Recording Transactions

QUESTIONS

1.     a. Common asset accounts: cash, accounts receivable, notes receivable, prepaid expenses (rent, insurance, etc.), office supplies, store supplies, equipment, building, and land.
        b. Common liability accounts: accounts payable, notes payable, and unearned revenue, wages payable, and taxes payable.
        c.   Common equity accounts: common stock and dividends.
2.     A note payable is formal promise, usually denoted by signing a promissory note to pay a future amount. A note payable can be short-term or long-term, depending on when it is due. An account payable also references an amount owed to an entity. An account payable can be oral or implied, and often arises from the purchase of inventory, supplies, or services.  An account payable is usually short-term.
3.     There are several steps in processing transactions: (1) Identify and analyze the transaction or event, including the source document(s), (2) apply double-entry accounting, (3) record the transaction or event in a journal, and (4) post the journal entry to the ledger.  These steps would be followed by preparation of a trial balance and then with the reporting of financial statements.
4.     A general journal can be used to record any business transaction or event.
5.     Debited accounts are commonly recorded first. The credited accounts are commonly indented.
6.     A transaction is first recorded in a journal to create a complete record of the transaction in one place.  (The journal is often referred to as the book of original entry.)  This process reduces the likelihood of errors in ledger accounts.
7.     Expense accounts have debit balances because they are decreases to equity (and equity has a normal credit balance).
8.     The recordkeeper prepares a trial balance to summarize the contents of the ledger and to verify the equality of total debits and total credits.  The trial balance also serves as a helpful internal document for preparing financial statements and other reports.


  9. The error should be corrected with a separate (subsequent) correcting entry. The entry’s explanation should describe why the correction is necessary.
10.   The four financial statements are: income statement, balance sheet, statement of retained earnings, and statement of cash flows.
11.   The balance sheet provides information that helps users understand a company’s financial position at a point in time.  Accordingly, it is often called the statement of financial position.  The balance sheet lists the types and dollar amounts of assets, liabilities, and equity of the business. 
12.   The income statement lists the types and amounts of revenues and expenses, and reports whether the business earned a net income (also called profit or earnings) or a net loss. 
13.   An income statement user must know what time period is covered to judge whether the company’s performance is satisfactory.  For example, a statement user would not be able to assess whether the amounts of revenue and net income are satisfactory without knowing whether they were earned over a week, a month, a quarter, or a year.
14.   (a) Assets are probable future economic benefits obtained or controlled by a specific entity as a result of past transactions or events. (b) Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.  (c) Equity is the residual interest in the assets of an entity that remains after deducting its liabilities.  (d) Net assets refer to equity.
15.   The balance sheet is sometimes referred to as the statement of financial position.
16.   Debit balance accounts on the Polaris balance sheet include: Cash and cash equivalents; Trade receivables, net; Inventories, net; Prepaid expenses and other; Income taxes receivable; Deferred tax assets; Land, buildings and improvements; Equipment and tooling; Property and equipment, net; Investments in finance affiliate; Investments in other affiliates; Goodwill and other intangible assets, net.
        Credit balance accounts on the Polaris balance sheet include: Accumulated depreciation; Current portion of long-term borrowings under credit agreement; Current portion of capital lease obligations; Accounts payable; Accrued expenses (including compensation, warranties, sales promotions and incentives, dealer holdback and other); Income taxes payable; Deferred income taxes; Capital lease obligations; Long-term debt; Preferred stock; Common stock; Additional paid-in capital; Retained earnings; Accumulated other comprehensive income, net.
17.   The asset account with receivable in its account title is: Accounts receivable, less allowances.  The liabilities with payable in the account title are: Accounts payable and Income taxes payable.
18.   KTM’s revenue account is titled “Net sales.”
19.  Piaggio calls the asset referring to its merchandise available for sale: “Inventories.”



Quick Studies

Quick Study 2-1 (10 minutes)

The likely source documents include:
a.     Sales ticket
d.    Telephone bill
e.     Invoice from supplier
i.      Bank statement



Quick Study 2-2 (5 minutes)

a.     B    Balance sheet
b.     E    Statement of retained earnings
c.     I     Income statement
d.     B    Balance sheet
e.     B    Balance sheet
f.     I      Income statement
g.     B    Balance sheet
h.     B    Balance sheet
i.      B    Balance sheet


Quick Study 2-3 (10 minutes)

a.
Debit
d.
Debit
g.
Credit
b.
Debit
e.
Debit
h.
Debit
c.
Credit
f.
Debit
i.
Credit


Quick Study 2-4 (10 minutes)

a.
Debit
e.
Debit
i.
Credit
b.
Debit
f.
Credit
j.
Debit
c.
Credit
g.
Credit
k.
Debit
d.
Credit
h.
Debit
l.
Credit


Quick Study 2-5 (10 minutes)

a.
Debit
e.
Debit
i.
Credit
b.
Credit
f.
Credit
j.
Debit
c.
Debit
g.
Credit


d.
Credit
h.
Credit







Quick Study 2-6 (15 minutes)

May 15  Cash..........................................................................    70,000
              Equipment ...............................................................    30,000
                       Common Stock................................................               100,000
                    Owner invests cash and equipment for stock.

       21   Office Supplies.........................................................         280
                       Accounts Payable............................................                      280
                     Purchased office supplies on credit.

       25   Cash..........................................................................      7,800
                       Landscaping Services Revenue....................                   7,800
                    Received cash for landscaping services.

       30   Cash..........................................................................      1,000
                       Unearned Landscaping Services Revenue...                   1,000
                    Received cash in advance for landscaping services.




Quick Study 2-7 (10 minutes)

The correct answer is a.

Explanation: If a $2,250 debit to Utilities Expense is incorrectly posted as a credit, the effect is to understate the Utilities Expense debit balance by $4,500.  This causes the Debit column total on the trial balance to be $4,500 less than the Credit column total. 


Quick Study 2-8 (10 minutes)

a.
I
e.
B
i.
E
b.
B
f.
B
j.
B
c.
B
g.
B
k.
I
d.
I
h.
I
l.
I








Quick Study 2-9 (10 minutes)

a.  Accounting under IFRS follows the same debit and credit system as under US GAAP.

b.  The same four basic financial statements are prepared under IFRS and US GAAP: income statement, balance sheet, statement of changes in equity, and statement of cash flows. Although some variations from these titles exist within both systems, the four basic statements are present.

c.  Accounting reports under both IFRS and US GAAP are likely different depending on the extent of accounting controls and enforcement. For example, the absence of controls and enforcement increase the possibility of fraudulent transactions and misleading financial statements. Without controls and enforcement, all accounting systems run the risk of abuse and manipulation.




Exercises

Exercise 2-1 (10 minutes)

   1      a.  Analyze each transaction from source documents.
   4      b.  Prepare and analyze the trial balance.
   2      c.  Record relevant transactions in a journal.
   3      d.  Post journal information to ledger accounts.






Exercise 2-2 (10 minutes)

a.
3
d.
5
b.
4
e.
2
c.
1







Exercise 2-3 (5 minutes)

a.
2
b.
1


Exercise 2-4 (15 minutes)



Type of
Normal
Increase

Account
Account
Balance
(Dr. or Cr.)
a.
Cash...........................................
asset
debit
debit
b.
Legal Expense..........................
expense
debit
debit
c.
Prepaid Insurance.....................
asset
debit
debit
d.
Land........................................... ...................................................
asset
debit
debit
e.
Accounts Receivable................
asset
debit
debit
f.
Dividends..................................
equity
debit
debit
g.
License Fee Revenue...............
revenue
credit
credit
h.
Unearned Revenue...................
liability
credit
credit
i.
Fees Earned..............................
revenue
credit
credit
j.
Equipment.................................
asset
debit
debit
k.
Notes Payable...........................
liability
credit
credit
l.
Common Stock.........................
equity
credit
credit



Exercise 2-5 (15 minutes)

a.
Beginning accounts payable (credit).........................
$152,000

Purchases on account in October (credits)...............
281,000

Payments on accounts in October (debits)................
(           ?)  

Ending accounts payable (credit)..............................
$132,500




Payments on accounts in October (debits)................
$300,500



b.
Beginning accounts receivable (debit).......................
$102,500

Sales on account in October (debits)........................
     ?

Collections on account in October (credits)..............
(102,890)

Ending accounts receivable (debit)............................
$  89,000




Sales on account in October (debits)........................
$  89,390



c.
Beginning cash balance (debit)..................................
$           ?

Cash received in October (debits).............................
102,500

Cash disbursed in October (credits)..........................
(103,150)

Ending cash balance (debit)......................................
$  18,600




Beginning cash balance (debit)..................................
$  19,250


Exercise 2-6 (15 minutes)
Of the items listed, the following effects should be included:
a.    $28,000 increase in a liability account.
b.    $10,000 increase in the Cash account.
e.    $62,000 increase in a revenue account.


Explanation: This transaction created $62,000 in revenue, which is the value of the service provided. Payment is received in the form of a $10,000 increase in cash, an $80,000 increase in computer equipment, and a $28,000 increase in its liabilities.  The net value received by the company is $62,000.




Exercise 2-7 (25 minutes)

Aug. 1  Cash...................................................................      6,500
             Photography Equipment..................................    33,500
                   Common Stock...........................................                         40,000
             Owner investment in business for stock.
        2   Prepaid Insurance.............................................      2,100
                   Cash............................................................                           2,100
             Acquired 2 years of insurance coverage.
        5   Office Supplies..................................................         880
                   Cash............................................................                              880
             Purchased office supplies.
      20   Cash...................................................................      3,331
                   Photography Fees Earned.........................                           3,331
                  Collected photography fees.
   31   Utilities Expense...............................................         675
                   Cash............................................................                              675
                  Paid for August utilities.


Exercise 2-8 (30 minutes)

Cash

Photography Equipment
Aug.  1
6,500

 Aug.   2
2,100

Aug.  1
33,500


        20
3,331

5
880








31
675

Common Stock
Balance
6,176






Aug.  1
40,000










Office Supplies

Photography Fees Earned
Aug. 5
880






Aug. 20
3,331





Prepaid Insurance

Utilities Expense
Aug. 2
2,100




Aug. 31
675





Pose-for-pics
Trial Balance
August 31

      Debit
    Credit
Cash.............................................
$  6,176

Office supplies............................
880

Prepaid insurance.......................
2,100

Photography equipment.............
33,500

Common stock............................

$40,000
Photography fees earned...........

3,331
Utilities expense..........................
       675
______
Totals...........................................
$43,331
$43,331


Exercise 2-9 (30 minutes)

a.     Cash...........................................................................   100,750
               Common Stock..................................................                   100,750
           Owner invested in the business for stock.

b.    Office Supplies..........................................................       1,250
               Cash....................................................................                       1,250
                Purchased supplies with cash.

c.     Office Equipment.......................................................     10,050
               Accounts Payable..............................................                     10,050
           Purchased office equipment on credit.

d.    Cash...........................................................................     15,500
               Fees Earned.......................................................                     15,500
              Received cash from customer for services.

e.     Accounts Payable......................................................     10,050
               Cash....................................................................                     10,050
              Made payment toward account payable.

f.     Accounts Receivable................................................       2,700
               Fees Earned.......................................................                       2,700
              Billed customer for services provided.

g.    Rent Expense............................................................       1,225
               Cash....................................................................                       1,225
              Paid for this period’s rental charge.

h.    Cash...........................................................................       1,125
               Accounts Receivable.........................................                       1,125
              Received cash toward an account receivable.

i.      Dividends...................................................................     10,000
               Cash....................................................................                     10,000
              Paid cash dividends.


Exercise 2-9 (concluded)

Cash

Accounts Payable
(a)
100,750

(b)
1,250

(e)
10,050
(c)
10,050
(d)
15,500

(e)
10,050



Balance
0
(h)
1,125

(g)
1,225








(i)
10,000





Balance
94,850




Common Stock








(a)
 100,750








Balance
100,750










Accounts Receivable

Dividends
(f)
2,700

(h)
1,125

(i)
10,000


Balance
1,575




Balance
10,000












Office Supplies

Fees Earned
(b)
1,250






(d)
15,500
Balance
1,250






(f)
2,700








Balance
18,200










Office Equipment

Rent Expense
(c)
10,050




(g)
1,225


Balance
10,050




Balance
1,225





Exercise 2-10 (15 minutes)

SPADE COMPANY
Trial Balance
May 31, 2013

       Debit
    Credit
Cash..........................................
$  94,850

Accounts receivable..................
1,575

Office supplies..........................
1,250

Office equipment.......................
10,050

Accounts payable......................
$          0
Common stock..........................
100,750
Dividends......................................
10,000

Fees earned...............................
18,200
Rent expense..............................
      1,225
________
Totals.........................................
$118,950
$118,950




Exercise 2-11 (20 minutes)

Transactions that created revenues:
b.         Accounts Receivable..........................................     2,300
                  Services Revenue.........................................                          2,300
                  Provided services on credit.

c.         Cash.....................................................................        875
                  Services Revenue.........................................                             875
                  Provided services for cash.


[Note: Revenues are inflows of assets (or decreases in liabilities) received in exchange for goods or services provided to customers.]


Transactions that did not create revenues along with the reasons are:
a.    This transaction brought in cash, but this is an owner investment.
d.    This transaction brought in cash, but it created a liability because the services have not yet been provided to the client.
e.    This transaction changed the form of the asset from accounts receivable to cash.  Total assets were not increased (revenue was recognized when the receivable was originally recorded).
f.     This transaction brought in cash and increased assets, but it also increased a liability by the same amount (no goods or services were provided to generate revenue).


Exercise 2-12  (20 minutes)

Transactions that created expenses:
b.         Salaries Expense.........................................            1,233
                  Cash.......................................................                                 1,233
                 Paid salary of receptionist.
d.         Utilities Expense..........................................               870
                  Cash.......................................................                                    870
                 Paid utilities for the office.

[Note: Expenses are outflows or using up of assets (or the creation of liabilities) that occur in the process of providing goods or services to customers.]

Transactions a, c, and e are not expenses for the following reasons:
a.    This transaction decreased assets in settlement of a previously existing liability, and equity did not change.  Cash payment does not mean the same as using up of assets (expense is recorded when the supplies are used).
c.    This transaction involves the purchase of an asset.  The form of the company’s assets changed, but total assets did not change, and the equity did not decrease.
e.   This transaction is a distribution of cash to the owner.  Even though equity decreased, the decrease did not occur in the process of providing goods or services to customers.


Exercise 2-13 (15 minutes)

HELP TODAY
Income Statement
For Month Ended August 31
Revenues
     Consulting fees earned.........................                       $ 27,000
Expenses
     Rent expense.........................................     $ 9,550
     Salaries expense...................................        5,600
     Telephone expense...............................           860
     Miscellaneous expenses.......................      520
     Total expenses......................................                      16,530
          Net income..................................................                       $ 10,470


Exercise 2-14 (15 minutes)


HELP TODAY
Statement of Retained Earnings
For Month Ended August 31
Retained earnings, July 31.........................                 $           0
Add:   Net income (from Exercise 2-13)......                       10,470
                                                                                               10,470
Less:  Dividends.........................................                      6,000
          Retained earnings, August 31...................                   $    4,470





Exercise 2-15 (15 minutes)

HELP TODAY
Balance Sheet
August 31

                   Assets                                              Liabilities
Cash.............................. $  25,360        Accounts payable................ ....................... $  10,500
Accounts receivable.....       22,360
Office supplies..............         5,250                       Equity
Office equipment..........     20,000        Common stock.....................               102,000
Land...............................    44,000       Retained earnings*...............                   4,470
Total assets.................. $116,970       Total liabilities & equity........ ........................ $116,970

* Amount from Exercise 2-14.


Exercise 2-16 (20 minutes)

Calculation of change in equity for part a through part d

Assets
-
Liabilities
=
Equity

Beginning of the year......
$  60,000
-
$20,000
=
$40,000

End of the year................
105,000
-
36,000
=
  69,000

Net increase in equity......




$29,000

a.       Net income..........................................................
$         ?

          Plus owner investments....................................
0

          Less dividends ..................................................
 (0)
          Change in equity.................................................
$29,000



Net Income = $29,000

Since there were no additional investments or dividends, the net income for the year equals the net increase in equity.

b.       Net income..........................................................
$         ?

          Plus owner investments....................................
0

          Less dividends ($1,250/mo. x 12 mo.)..............
 (15,000)
          Change in equity.................................................
$29,000



Net Income = $44,000

The dividends were added back because they reduced equity without reducing net income.

c.       Net income.........................................................
$         ?

          Plus owner investment.....................................
 55,000

          Less dividends...................................................
          (0)
          Change in equity................................................
$29,000



Net Loss = $26,000

The investment was deducted because it increased equity without creating net income.

d.       Net income........................................................
$         ?

          Plus owner investment....................................
  35,000

          Less dividends ($1,250/mo. X 12 mo.)............
 (15,000)
          Change in equity...............................................
$29,000



Net Income = $9,000

The dividends were added back because they reduced equity without reducing net income and the investments were deducted because they increased equity without creating net income.




Exercise 2-17 (15 minutes)


(a)

(b)

(c)

(d)
Answers    
$(28,000)

$42,000

$73,000

$(45,000)








Computations:







Equity, Dec. 31, 2012........................
$          0

$         0

$         0

$           0
Owner's investments...........
110,000

42,000

87,000

210,000
Dividends...............
(28,000)

(47,000)

(10,000)

(55,000)
Net income (loss)..
    22,000

  90,000

   (4,000)

  (45,000)
Equity, Dec. 31, 2013........................
$104,000

$85,000

$73,000

$110,000





Exercise 2-18 (25 minutes)

a.    Belle created a new business and invested $6,000 cash, $7,600 of equipment, and $12,000 in automobiles, all in exchange for stock.
b.    Paid $4,800 cash in advance for insurance coverage.
c.    Paid $900 cash for office supplies.
d.    Purchased $300 of office supplies and $9,700 of equipment on credit.
e.    Received $4,500 cash for delivery services provided.
f.     Paid $1,600 cash towards accounts payable.
g.    Paid $820 cash for gas and oil expenses.


Exercise 2-19 (30 minutes)

a.     Cash...........................................................................       6,000
        Equipment..................................................................       7,600
        Automobiles...............................................................     12,000
               Common Stock..................................................                     25,600
           Owner investment in exchange for stock.

b.    Prepaid Insurance.....................................................       4,800
               Cash....................................................................                       4,800
              Purchased insurance coverage.

c.     Office Supplies..........................................................          900
               Cash....................................................................                          900
                Purchased supplies with cash.

d.    Office Supplies..........................................................          300
        Equipment..................................................................       9,700
               Accounts Payable..............................................                     10,000
           Purchased supplies and equipment on credit.

e.     Cash...........................................................................       4,500
               Delivery Services Revenue...............................                       4,500
          Received cash from customer for services provided.

f.     Accounts Payable......................................................       1,600
               Cash....................................................................                       1,600
              Made payment on payables.

g.    Gas and Oil Expense.................................................          820
               Cash....................................................................                          820
           Paid for gas and oil.


Exercise 2-20 (20 minutes)







Description
(1)
Difference between Debit and Credit Columns
(2)

Column with the Larger Total
(3)

Identify account(s) incorrectly stated
(4)

Amount that account(s) is overstated or understated
a.
$3,600 debit to Rent Expense is posted as a $1,340 debit.
$2,260
Credit
Rent Expense
Rent Expense is understated by $2,260
b.
$6,500 credit to Cash is posted twice as two credits to Cash.
$6,500
Credit
Cash
Cash is understated by $6,500
c.
$10,900 debit to the Dividends account is debited to Common Stock
$0
––
Common Stock
Dividends
Common Stock is understated by $10,900
Dividends is understated by $10,900
d.
$2,050 debit to Prepaid Insurance is posted as a debit to Insurance Expense.
$0
––
Prepaid Insurance
Insurance Expense
Prepaid Insurance is understated by $2,050
 Insurance Expense is overstated by $2,050
e.
$38,000 debit to Machinery is posted as a debit to Accounts Payable.
$0
––
 Machinery
Accounts Payable
Machinery is understated by $38,000 Accounts Payable is understated by $38,000
f.
$5,850 credit to Services Revenue is posted as a $585 credit.
$5,265
Debit
Services Revenue
Services Revenue is understated by $5,265
g.
$1,390 debit to Store Supplies is not posted.
$1,390
Credit
Store Supplies
Store Supplies is understated by $1,390


Exercise 2-21 (15 minutes)
a.    The debit column is correctly stated because the erroneous debit (to Accounts Payable) is deducted from an account with a (larger assumed) credit balance.
b.    The credit column is understated by $37,900 because Accounts Payable was debited — it should have been credited.
c.    The Automobiles account balance is correctly stated.
d.    The Accounts Payable account balance is understated by $37,900.  It should have been increased (credited) by $18,950 but the posting error decreased (debited) it by $18,950.
e.    The credit column is $37,900 less than the debit column, or $162,100 in total ($200,000 - $37,900).


Exercise 2-22  (15 minutes)

a.

Co.

Liabilities

/

Assets

=
Debt
Ratio

Net
Income

/
Average
Assets

=

ROA

  1
$11,765

$ 90,500

0.13

$20,000

$100,000

0.200


  2
  46,720

   64,000

0.73

  3,800

   40,000

0.095


  3
  26,650

32,500

0.82

  650

50,000

0.013


  4
  55,860

147,000

0.38

21,000

200,000

0.105


  5
  31,280

92,000

0.34

7,520

40,000

0.188


  6
  52,250

104,500

0.50

  12,000

80,000

0.150



b.   Company 3 relies most heavily on creditor (non-owner) financing with 82% of its assets financed by liabilities.
c.   Company 1 relies least on creditor (non-owner) financing at only 13%.  This implies that 87% of the assets are financed by equity (owners).
d.   The companies with the highest debt ratios indicate the greatest risk.  The two companies with the highest debt ratios are 2 and 3.
e.   Company 1 yields the highest return on assets at 20%; followed by Company 5 at 18.8%.
f.    As an investor, one prefers high returns at low risk.  Company 1 is the preferred investment since it yields the lowest risk (debt ratio is 13%) and highest return on assets (20%).


Exercise 2-23 (10 minutes)


BMW
Balance Sheet (in Euro millions)
December 31, 2011
Assets                                                     Equity and liabilities
Noncurrent assets........ €  9,826          Total equity...........................           €  8,222
Current assets..............     17,682         Noncurrent liabilities............    7,767
                                                                           Current liabilities                                                       11,519
Total assets..................   €27,508          Total equity and liabilities.... .......................... €27,508




Problem  sET  A

Problem 2-1A (90 minutes)
Part 1
          
a.          Cash.......................................................... 101  100,000     
               Office Equipment...................................... 163      5,000
               Drafting Equipment.................................. 164    60,000     
                       Common Stock................................. 307                      165,000
                     Owner invested cash and equipment for stock.


b.            Land.......................................................... 172    49,000     
                       Cash.................................................. 101                          6,300
                       Notes Payable................................... 250                        42,700
                     Purchased land with cash and notes payable.


c.            Building..................................................... 170    55,000
                           Cash.................................................. 101                          55,000
                     Purchased building.


d.            Prepaid Insurance.................................... 108      3,000
                       Cash.................................................. 101                          3,000
                     Purchased 18-month insurance policy.


e.            Cash.......................................................... 101      6,200
                       Engineering Fees Earned................. 402                          6,200
                     Collected cash for completed work.


f.             Drafting Equipment.................................. 164    20,000
                       Cash.................................................. 101                          9,500
                       Notes Payable................................... 250                        10,500
                     Purchased equipment with cash and notes payable.


g.            Accounts Receivable............................... 106    14,000
                       Engineering Fees Earned................. 402                        14,000
                     Completed services for client.


h.            Office Equipment...................................... 163      1,150
                       Accounts Payable............................. 201                          1,150
                     Purchased equipment on credit.



Problem 2-1A (Part 1 Continued)



i.            Accounts Receivable............................... 106    22,000
                       Engineering Fees Earned................. 402                        22,000
                     Billed client for completed work.

j.             Equipment Rental Expense..................... 602      1,333
                       Accounts Payable............................. 201                          1,333
                     Incurred equipment rental expense.


k.            Cash.......................................................... 101      7,000
                       Accounts Receivable....................... 106                          7,000
                     Collected cash on account.


l.             Wages Expense....................................... 601      1,200                   
                       Cash.................................................. 101  1,200
                     Paid assistant’s wages.

m.           Accounts Payable.................................... 201      1,150                   
                           Cash.................................................. 101                           1,150
                  Paid amount due on account.

n.            Repairs Expense...................................... 604         925                   
                           Cash.................................................. 101                             925
                     Paid for repair of equipment.

o.            Dividends.................................................. 319      9,480                   
                       Cash.................................................. 101                         9,480
                     Paid cash dividends.

p.            Wages Expense....................................... 601      1,200                   
                       Cash.................................................. 101                          1,200
                     Paid assistant’s wages.

q.            Advertising Expense................................ 603      2,500                   
                       Cash.................................................. 101         2,500

                     Paid for advertising expense.






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