PART II — JOURNAL ENTRIES (26 points)

The ledger accounts given below, with an identification number for each, are used by Hansen
Company.
Instructions: Indicate the appropriate entries for the month of June by placing the appropriate
identification number(s) in the debit and credit columns provided. Item 0 is given as an example.
Write "none" if no entry is appropriate.

1. Cash 7. Salaries Payable 13. Service Revenue

2. Accounts Receivable 8. Accounts Payable 14. Equipment Expense
3. Supplies 9. Unearned Service Revenue 15. Advertising Expense
4. Prepaid Salaries 10. Notes Payable 16. Supplies Expense
5. Prepaid Advertising 11. T. Hansen, Capital 17. Rent Expense
6. Equipment 12. T. Hansen, Drawings 18. Salaries Expense
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Entry Account(s) Account(s)
No. Entry Information Debited Credited
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0. June 1 T. Hansen invested $30,000 in the business. 1 11
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1. June 4 Paid a supplier $2,000 cash on account.
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2. June 5 Equipment was purchased at a cost of $4,000; a three-month, 8%
note payable was signed for this
amount.
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3. June 8 Received $6,000 from customers for services
rendered during the week.
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4. June 10 Hansen agreed to hire C. Kimler as an assistant.
She will be paid at the rate of $4,000 monthly,
receiving $2,000 on the 15th and 30th of each
month. She will begin work June 16.
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5. June 14 Paid $400 cash to the Daily News for advertise-
ments run this past week.
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6. June 16 C. Kimler began work.
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7. June 19 Paid $2,000 in cash to Carson Company for June
rent.
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8. June 25 Additional office supplies were purchased on
account at a cost of $1,000 from Supply
Company. These supplies will be used during
July.
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9. June 26 Paid the Daily News $400 for an advertisement
that will run the first week in July.
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10. June 27 Received $8,000 from customers for services to
be rendered early in July.
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11. June 28 Billed customers $6,000 for services rendered but
not collected during June.
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12. June 30 Hansen withdrew $900 for personal use.
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13. June 30 C. Kimler was paid $2,000 cash for her salary.
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PART III — SHORT PROBLEMS (10 points)

Instructions: Present the solutions, with appropriate supporting calculations, for each of the
following independent problems.

A. Given the following information, calculate 2001 net income for Kline Company.
K. Kline, Capital—January 1, 2001 $125,000
K. Kline, Capital—December 31, 2001 140,000
Kline investments during 2001 20,000
Kline withdrawals during 2001 38,000

B. Given the following information, determine the three missing amounts.

Owner's Equity Changes

Beginning of the Year End of the Year During the Year
Total Assets $75,000 Total Assets $80,000 Investments $10,000
Total Liabilities ??? Total Liabilities 50,000 Drawings 20,000
Total Owner's Equity 25,000 Total Owner's Equity ??? Revenues 80,000
Expenses ???
PART IV — TYPES OF ACCOUNTS (10 points)
Instructions: Place a check in the appropriate columns to designate whether each of the
following accounts: (1) has a debit or credit normal balance; and (2) is an asset, liability, or
owner's equity account.
____________________________________________________________________________

(1) (2)
Owner's
Account Debit Credit Asset Liability Equity
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1. Service Revenue
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2. Insurance Expense
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3. Supplies
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4. J. Morgan, Capital
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5. Accounts Payable
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6. Salaries Payable
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7. J. Morgan, Drawings
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8. Accounts Receivable
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9. Prepaid Insurance
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10. Mortgage Payable
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