Lesson 3
Analyzing and Recording Accounting Transactions
Exercises
1,Identify the effects,if any,of each of the following items of information on assets,liabilities,owners’ equity,revenues,or expenses,Indicate effects with a plus or minus sign,If no adjustment is needed,write,no entry”.
Earned $9,200 by providing services to customers in exchange for cash.
Used cash to prepay 12 months of office rent,$2,400.
Used cash to purchase office furniture,$16,000,
Borrowed $60,000 from Great Western Bank.
Earned $10,500 by providing services to customers on credit,
Depreciation of the long-term assets amounts to $1,000.
Wages and salaries earned by employees but unpaid amounts to $4,000.
Two months of the office rent has been used up,$400.
Item
Assets
Liabilities
Owners’ Equity
Revenues
Expenses
2,Review the following information of a company,then accomplish the required assignments,
Date Description Debit Credit
March 2 Cash 3,000.00
Paid-in Capital 3,000.00
Issued 100 shares of $30 par value
31 Salary Expense 500.00
Salary payable 500.00
Accrued wages owed to employees
April 1 Supplies 900.00
Cash 900.00
Paid cash for supplies
Required:
Classify each account and indicate its normal balance.
Show how these transactions would be posted to the Cash account using a T-account format,Assume the Cash account had a $10,000 balance on March 1st.
c. What balance would appear in the Cash account following these transactions?
3,Tony Smith Company experienced the following events during the month of June of the current year,
Required:
1) Record each event into the journal provided,If the event is NOT a completed transaction write,No Entry Needed”.
2) Determine the balance of cash as of June 30,(Hint,You will need to set up a ledger (a T-account) for cash.)
Earned $10,000 by providing services to customers in exchange for cash.
Used cash to prepay 12 months of office rent,$5,000.
Borrowed $60,000 from Great Western Bank.
Earned $20,000 by providing services to customers on credit,
Wages and salaries earned by employees but unpaid amounts to $8,000.
Two months of the office rent has been used up,$1,400.
The owner invested $39,000 of his own money.
Item
Accounts
Debit
Credit
4,Healy Toy Builders experienced all of the following events during the month of November 2003,
a,Sold toys for $28,000,000 to K-Mart on credit.
b,Paid employees $60,000,000 for work performed during the months of October and November,Half of the work relates to November 2003.
c,Purchased $70,000,000 of wood and other materials needed to make more toys on account,
d,Used half the wood and other materials to make toys.
e,Received a $12,000,000 utility bill that relates to the month of November 2003,The bill will not be paid until December 15,2003.
f,Paid $70,000,000 to the supplier of the wood and other materials.
g,Collected $15,000,000 worth of receivables that relate to October 2003 credit sales.
h,Received $7,000,000 in advance payments for toys not yet made or shipped.
i,Sold toys for $50,000,000 to Wal-Mart on credit,
Required:
1) Identify all of the events that would result in recognizing revenue in the month of November 2003.
2) Identify all of the events that would result in recognizing expenses in the month of November 2003.
3) Determine the net income or net loss for the month of November 2003.
Analyzing and Recording Accounting Transactions
Exercises
1,Identify the effects,if any,of each of the following items of information on assets,liabilities,owners’ equity,revenues,or expenses,Indicate effects with a plus or minus sign,If no adjustment is needed,write,no entry”.
Earned $9,200 by providing services to customers in exchange for cash.
Used cash to prepay 12 months of office rent,$2,400.
Used cash to purchase office furniture,$16,000,
Borrowed $60,000 from Great Western Bank.
Earned $10,500 by providing services to customers on credit,
Depreciation of the long-term assets amounts to $1,000.
Wages and salaries earned by employees but unpaid amounts to $4,000.
Two months of the office rent has been used up,$400.
Item
Assets
Liabilities
Owners’ Equity
Revenues
Expenses
2,Review the following information of a company,then accomplish the required assignments,
Date Description Debit Credit
March 2 Cash 3,000.00
Paid-in Capital 3,000.00
Issued 100 shares of $30 par value
31 Salary Expense 500.00
Salary payable 500.00
Accrued wages owed to employees
April 1 Supplies 900.00
Cash 900.00
Paid cash for supplies
Required:
Classify each account and indicate its normal balance.
Show how these transactions would be posted to the Cash account using a T-account format,Assume the Cash account had a $10,000 balance on March 1st.
c. What balance would appear in the Cash account following these transactions?
3,Tony Smith Company experienced the following events during the month of June of the current year,
Required:
1) Record each event into the journal provided,If the event is NOT a completed transaction write,No Entry Needed”.
2) Determine the balance of cash as of June 30,(Hint,You will need to set up a ledger (a T-account) for cash.)
Earned $10,000 by providing services to customers in exchange for cash.
Used cash to prepay 12 months of office rent,$5,000.
Borrowed $60,000 from Great Western Bank.
Earned $20,000 by providing services to customers on credit,
Wages and salaries earned by employees but unpaid amounts to $8,000.
Two months of the office rent has been used up,$1,400.
The owner invested $39,000 of his own money.
Item
Accounts
Debit
Credit
4,Healy Toy Builders experienced all of the following events during the month of November 2003,
a,Sold toys for $28,000,000 to K-Mart on credit.
b,Paid employees $60,000,000 for work performed during the months of October and November,Half of the work relates to November 2003.
c,Purchased $70,000,000 of wood and other materials needed to make more toys on account,
d,Used half the wood and other materials to make toys.
e,Received a $12,000,000 utility bill that relates to the month of November 2003,The bill will not be paid until December 15,2003.
f,Paid $70,000,000 to the supplier of the wood and other materials.
g,Collected $15,000,000 worth of receivables that relate to October 2003 credit sales.
h,Received $7,000,000 in advance payments for toys not yet made or shipped.
i,Sold toys for $50,000,000 to Wal-Mart on credit,
Required:
1) Identify all of the events that would result in recognizing revenue in the month of November 2003.
2) Identify all of the events that would result in recognizing expenses in the month of November 2003.
3) Determine the net income or net loss for the month of November 2003.
