P2-1A

Frontier Park was started on April 1 by C. J. Mendez and associates. The

following selected events and transactions occurred during April.

Apr.  1 Shareholders invested $40,000 cash in the business in

exchange for ordinary shares.
4 Purchased land costing $30,000 for cash.
8 Incurred advertising expense of $1,800 on account.
11 Paid salaries to employees $1,500.
12 Hired park manager at a salary of $4,000 per month,
effective May 1.
17 Declared and paid a $1,000 cash dividend.
20 Received $5,700 in cash for admission fees.
30 Received $8,900 in cash admission fees.
30 Paid $900 on balance owed for advertising incurred on April
8.

Mendez uses the following accounts: Cash, Land, Accounts Payable, Share
Capital—Ordinary; Dividends; Admission Revenue, Advertising Expense,
and Salaries Expense.

Instructions

Journalize the April transactions.

 PROBLEM 2-1A

Apr. 1 Cash 40,000

Share Capital—Ordinary.......................... 40,000

4 Land 30,000
Cash........................................................... 30,000

8 Advertising Expense......................................... 1,800

Accounts Payable.................................... 1,800

11 Salaries Expense............................................... 1,500

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

12 No entry—Not a transaction. 0 0

17 Dividends............................................................ 1,000
Cash........................................................... 1,000

20 Cash 5,700
Admission Revenue................................. 5,700

30 Cash................................................................... 8,900
Admission Revenue................................. 8,900

30 Accounts Payable............................................. 900

Cash........................................................... 900
P2-2A
Kara Shin is a licensed accountant. During the first month of operations of
her business, Kara Shin, Inc., the following events and transactions occurred.
May 1, Shareholders invested €20,000 cash in exchange for
2014 ordinary shares.
2 Hired a secretary-receptionist at a salary of €2,000 per
month.
3 Purchased €1,500 of supplies on account from Hartig
Supply Company.
11 Completed a tax assignment and billed client €2,800 for
services provided.
17 Received cash of €1,200 for services completed for Lucille
Co.
31 Paid secretary-receptionist €2,000 salary for the month.
31 Paid 40% of balance due to Hartig Supply Company.
Kara uses the following chart of accounts: No. 101 Cash, No. 112 Accounts
Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Share
Capital—Ordinary, No. 400 Service Revenue, No. 726 Salaries and Wages
Expense, and No.
Instructions
(a)  Journalize the transactions.
(b)  Post to the ledger accounts.
(c)  Prepare a trial balance on May 31, 2014
d) Prepare Income statement, Retained earnings statement and Balanced
sheet for May, 2014
 PROBLEM 2-2A

(a)

Date Account Titles Debit Credit

2014
May 1 Cash......................................................... 20,000
Share Capital—Ordinary................ 20,000

2 No entry—not a transaction. 0 0

3 Supplies.................................................. 1,500
Accounts Payable.......................... 1,500

11 Accounts Receivable............................. 2,800

Service Revenue............................ 2,800

17 Cash......................................................... 1,200
Service Revenue............................ 1,200

31 Salaries and Wages Expense................ 2,000

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

May 31 Accounts Payable (€1,500 X 40%).......... 600

Cash............................................... 600
(b)

Cash
Date Debit Credit Balance
2014
May 1 20,000 20,000 DR
17 1,200 21,200 DR
31 2,000 19,200 DR
31 600 18,600 DR

Accounts Receivable
Date Debit Credit Balance
2014
May 11 2,800 2,800 DR

Supplies
Date Debit Credit Balance
2014
May 3 1,500 1,500 DR

Accounts Payable
Date Debit Credit Balance
2014
May 3 1,500
31 600 900 CR

Share Capital—Ordinary
Date Debit Credit Balance
2014
May 1 20,000 20,000 CR
Service Revenue
Date Debit Credit Balance
2014
May 11 2,800 2,800 CR
17 1,200 4,000 CR

Salaries and Wages Expense

Date Debit Credit Balance
2014
May 31 2,000 2,000 DR

(c)
KARA SHIN, INC.
Unadjusted Trial Balance
May 31, 2014

  Debit     Credit 
Cash............................................................18600
Accounts Receivable.................................2,800
Supplies.......................................................1,500
Accounts Payable................................................ 900
Share Capital ....................................................... 20,000
Service Revenue.................................................. 4,000
Salaries and Wages Expense……………. 2,000
24900 24900
d)
Kara shin inc
Income statement
For the month ended May 31, 2014
Revenue
Service revenue 4000
Less: Expenses
Salaries and wages expense 2000
Total expense 2000
Net Income 2000

Kara shin inc

Retained earnings statement
For the month ended May 31, 2014
R/E on May 1 2014 0
Add: Net Income 2000
2000
Less: Dividend 0
R/E on May 31 2014 2000

Kara shin inc

Balanced Sheet
May 31, 2014
Assets:
Cash 18600
Accounts receivable 2800
Supplies 1500
Total asset 22900

Liabilities and equities:

Liabilities:
Accounts payable 900
Total liabilities 900

Equities:
Share capital 20000
R/E 2000
Total equity 22000

Total Liabilities and equity 22900

P2-1B

Hyzer Disc Golf Course was opened on March 1 by Barry Schultz. The following
selected events and transactions occurred during March:
Mar.1 Invested €20,000 cash in the business in exchange for ordinary shares.
3 Purchased Heeren's Golf Land for €15,000 cash. The price consists of land
€12,000, shed €2,000, and equipment €1,000. (Make one compound entry.)
5 Advertised the opening of the driving range and miniature golf course, paying
advertising expenses of €700.
10 Purchased golf discs and other equipment for €1,050 from Innova Company
payable in 30 days.
18 Received €340 in cash for golf fees earned.
25 Declared and paid an €800 cash dividend.
30 Paid salaries of €250.
30 Paid Innova Company in full.
31 Received €200 cash for fees earned.

Barry Schultz uses the following accounts: Cash, Land, Buildings, Equipment, Accounts
Payable, Share Capital—Ordinary, Dividends, Golf Revenue, Advertising Expense, and
Salaries Expense
Instructions

Journalize the March transactions.

Date Account Titles Debit Credit

Mar. 1 Cash..........................................................
20,00
0
Share Capital—Ordinary................. 20,000

3 Land..........................................................
12,00
0
Buildings..................................................
2,000
Equipment................................................
1,000
Cash.................................................. 15,000

5 Advertising Expense...............................700
Cash.................................................. 700

10 Equipment................................................
1,050
Accounts Payable........................... 1,050

18 Cash..........................................................340
Golf Revenue................................... 340

25 Dividends.............................................. 800
Cash.............................................. 800
 30 Salaries Expense................................. 250
Cash.............................................. 250
 

30 Accounts Payable................................ 1,050

Cash.............................................. 1,050

31 Cash...................................................... 200
Golf Revenue................................ 200

P2-2B
Maria Juarez is a licensed dentist. During the first month of the operation of her business,
the following events and transactions occurred.

April Shareholders invested $40,000 cash in exchange for ordinary shares.

1
1 Hired a secretary-receptionist at a salary of $600 per week payable
monthly.
2 Paid office rent for the month $1,000.
3 Purchased dental supplies on account from Smile Company $4,000.
10 Provided dental services and billed insurance companies $5,100.
20 Received $2,100 cash for services completed and delivered to John
Stanley.
30 Paid secretary-receptionist for the month $2,400.
30 Paid $1,600 to Smile Company for accounts payable due.

Maria uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable,
No. 126 Supplies, No. 201 Accounts Payable, No. 209 Share Capital—Ordinary; No. 400
Service Revenue, No. 726 Salaries Expense, and No. 729 Rent Expense.

Instructions

Journalize the transactions.

Date Account Titles Debit Credit
Apr. 1 Cash......................................................... 40,000
Share Capital—Ordinary................ 40,000

0
1 No entry—not a transaction. 0

2 Rent Expense.......................................... 1,000

Cash................................................ 1,000

3 Supplies................................................... 4,000
Accounts Payable.......................... 4,000

10 Accounts Receivable............................. 5,100

Service Revenue............................ 5,100

20 Cash......................................................... 2,100
Service Revenue............................ 2,100

30 Salaries Expense.................................... 2,400

Cash................................................ 2,400

30 Accounts Payable............................... 1,600

Cash............................................. 1,600
E3.12

On April 1, Adventures Travel Agency, Inc. began operations. The following transactions
were completed during the month.
Apr. 1. Issued common stock for $24,000 cash.
2. Obtained a bank loan for $7,000 by issuing a note payable.
3. Paid $11,000 cash to buy equipment.
4. Paid $1,200 cash for April office rent.
5. Paid $1,450 for supplies.
6. Purchased $600 of advertising in the Daily Herald, on account.
7. Performed services for $18,000: cash of $2,000 was received from customers, and the
balance of $16,000 was billed to customers on account.
8. Paid $400 cash dividend to stockholders.
9. Paid the utility bill for the month, $2,000.
10. Paid Daily Herald the amount due in transaction (6).
11. Paid $40 of interest on the bank loan obtained in transaction (2).
12. Paid employees' salaries, $6,400.
20. Received $12,000 cash from customers billed in transaction (7).
30. Paid one year’s insurance of $1200 in advance
30. Received $1000 from customer in advance. Service to the customer will be provided next
month

Instructions
Journalize the transactions.
Solution: E3.12

Date ACCOUNT TITLE DR CR

1 CASH 24000
COMMON STOCK 24000
2 CASH 7000
NOTES PAYABLE 7000
3 EQUIPMENT 11000
CASH 11000
4 RENT EXPENSE 1200
CASH 1200
5 SUPPLIES 1450
CASH 1450
6 ADVERTISING EXPENSE 600
ACCOUNTS PAYABLE 600
7 CASH 2000
ACCOUNTS RECEIVABLE 16000
SERVICE REVENUE 18000
8 DIVIDENDS 400
CASH 400
9 UTILITIES EXPENSE 2000
CASH 2000
10 ACCOUNTS PAYABLE 600
CASH 600
11 INTEREST EXPENSE 40
CASH 40
12 SALARIES AND WAGES EXPENSE 6400
CASH 6400
20 CASH 12000
ACCOUNTS RECEIVABLE 12000
30 PREPAID INSURANCE 1200
CASH 1200
30 CASH 1000
UNEARNED SERVICE REVENUE 1000