PROBLEM 2-1A

J1
Date Account Titles and Explanation Ref. Debit Credit
Apr. 1 Cash ...................................................... 50,000
Share Capital— 50,000
Ordinary............... (Issued
shares for cash)

4 Land....................................................... 34,000
Cash .............................................. 34,000
(Purchased land for cash)

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

Accounts Payable......................... 1,800
(Incurred advertising
expense on account)

11 Salaries and Wages Expense .............. 1,500

Cash .............................................. 1,500
(Paid salaries)

12 No entry—Not a transaction.

13 Prepaid Insurance ................................ 1,500

Cash .............................................. 1,500
(Paid for one-year
insurance policy)

17 Dividends .............................................. 1,400

Cash .............................................. 1,400
(Declared and paid a
cash dividend)

20 Cash ...................................................... 6,400

Service Revenue........................... 6,400
(Received cash for services
performed)
 PROBLEM 2-1A (Continued)

Date Account Titles and Explanation Ref. Debit Credit

Apr. 25 Cash...................................................... 3,000
Unearned Service Revenue ............ 3,000
(Received cash for future
services)

30 Cash...................................................... 8,500
Service Revenue ........................... 8,500
(Received cash for
services performed)

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

(Paid creditor on account)

PROBLEM 2-2A

(a)
J1
Date Account Titles and Explanation Ref. Debit Credit
2017
May 1 Cash ...................................................... 101 20,000
Share Capital—Ordinary............... 311 20,000
(Issued shares for cash)

2 No entry—not a transaction.

3 Supplies ................................................ 126 1,500

Accounts Payable......................... 201 1,500
(Purchased supplies on
account)

7 Rent Expense........................................ 729 900

Cash .............................................. 101 900
(Paid office rent)
11 Accounts Receivable ........................... 112 2,800
Service Revenue........................... 400 2,800
(Billed client for services
performed)

12 Cash ...................................................... 101 3,500

Unearned Service Revenue.......... 209 3,500
(Received cash for future
services)

17 Cash ...................................................... 101 1,200

Service Revenue........................... 400 1,200
(Received cash for services
performed)

31 Salaries and Wages Expense .............. 726 2,000

Cash .............................................. 101 2,000
(Paid salaries)
PROBLEM 2-2A (Continued)

Date Account Titles and Explanation Ref. Debit Credit

May 31 Accounts Payable (€1,500 X 40%) ......... 201 600
Cash.............................................. 600
101
(Paid creditor on account)
(b)
Cash No. 101
Date Explanation Ref. Debit Credit Balance
2017
May 1 J1 20,000 20,000
7 J1 900 19,100
12 J1 3,500 22,600
17 J1 1,200 23,800
31 J1 2,000 21,800
31 J1 600 21,200
Accounts Receivable No. 112
Date Explanation Ref. Debit Credit Balance
2017
May 11 J1 2,800 2,800
Supplies No. 126
Date Explanation Ref. Debit Credit Balance
2017
May 3 J1 1,500 1,500
Accounts Payable No. 201
Date Explanation Ref. Debit Credit Balance
2017
May 3 J1 1,500
31 J1 600 900

Unearned Service Revenue No. 209

Date Explanation Ref. Debit Credit Balance
2017
May 12 J1 3,500 3,500
 PROBLEM 2-2A (Continued)

Share Capital—Ordinary No. 311

Date Explanation Ref. Debit Credit Balance
2017
May 1 J1 20,000 20,000

Service Revenue No. 400

Date Explanation Ref. Debit Credit Balance
2017
May11 J1 2,800 2,800
17 J1 1,200 4,000

Salaries and Wages Expense No. 726

Date Explanation Ref. Debit Credit Balance
2017
May 31 J1 2,000 2,000

Rent Expense No. 729

Date Explanation Ref. Debit Credit Balance
2017
May 7 J1 900 900

(c) LENA FOHN AG

Trial Balance
May 31, 2017

Debit Credit
Cash.................................................................... €21,200
Accounts Receivable......................................... 2,800
Supplies.............................................................. 1,500
Accounts Payable.............................................. € 900
Unearned Service Revenue............................... 3,500
Share Capital—Ordinary .................................... 20,000
Service Revenue ................................................ 4,000
Salaries and Wages Expense............................ 2,000
Rent Expense ..................................................... 900
€28,400 €28,400
 PROBLEM 2-3A

(a) & (c)

Cash Balance 24,000
Balance 8,000 24,000
(1) 1,000
(3) 1,100
(4) 13,000 Accounts Payable
(5) 15,000 Balance 19,000
(6) (2) 4,000
5,000 (5) 15,000
(7) 3,000 8,000
(8) 2,000
3,900
Share Capital—Ordinary
Balance 33,000
33,000

Accounts Receivable
Balance 16,000
(4) 13,000
(6)
9,000
12,000

Supplies
Balance 13,000
(2) 4,000

17,000

Prepaid Rent
Balance 3,000
3,000

Equipment
 Retained Earnings
Balance 12,000
12,000

Dividends
(8)
2,000
2,000

Service Revenue
(6) 14,000
14,000

Advertising Expense
(1) 1,000
1,000
 (7) 3,000
3,000
Miscellaneous Expense
(3) 1,100
1,100

Salaries and Wages Expense

PROBLEM 2-3A (Continued) (b)

Trans. Account Titles Debit Credit

1. Advertising Expense.............................. 1,000
Cash ............................................... 1,000

2. Supplies .................................................. 4,000

Accounts Payable ......................... 4,000

3. Miscellaneous Expense ......................... 1,100

Cash ............................................... 1,100

4. Cash ........................................................ 13,000

Accounts Receivable .................... 13,000

5. Accounts Payable .................................. 15,000

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

6. Cash ........................................................ 5,000

Accounts Receivable ............................. 9,000
Service Revenue............................ 14,000

7. Salaries and Wages Expense ................ 3,000

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

8. Dividends ................................................ 2,000

Cash ............................................... 2,000
 PROBLEM 2-3A (Continued)

(d) BYTE REPAIR SERVICE, LTD.

Trial Balance
January 31, 2017

Debit Credit
Cash .................................................................... £ 3,900
Accounts Receivable ......................................... 12,000
Supplies .............................................................. 17,000
Prepaid Rent....................................................... 3,000
Equipment .......................................................... 24,000
Accounts Payable .............................................. £ 8,000
Share Capital—Ordinary .................................... 33,000
Retained Earnings.............................................. 12,000
Dividends............................................................ 2,000
Service Revenue ................................................ 14,000
Advertising Expense.......................................... 1,000
Miscellaneous Expense ..................................... 1,100
Salaries and Wages Expense ............................ 3,000
£67,000 £67,000
 SOLUTIONS TO PROBLEMS

PROBLEM 3-2A

(a)
J1

Date Account Titles Ref. Debit Credit

May 31 Insurance Expense .............................. 722 1,200
Prepaid Insurance
($400 X 3) ......................... 130 1,200

31 Supplies Expense ................................ 631 2,700

Supplies ($3,300 – $600)............. 126 2,700

31 Depreciation Expense
($3,000 X 1/12) + ($1,500 X 1/12)...... 619 375
Accumulated Depreciation—
Buildings.................................. 142 250
Accumulated Depreciation—
Equipment................................ 150 125

31 Interest Expense .................................. 718 400

Interest Payable
[($40,000 X 12%) X 1/12] ........... 230 400

31 Unearned Rent Revenue...................... 208 2,200

Rent Revenue
(2/3 X $3,300) .......................... 429 2,200

31 Salaries and Wages Expense.............. 726 750

 Salaries and Wages Payable...... 212 750

(b)

Cash No. 101

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 3,500

Supplies No. 126

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 2,080
31 Adjusting J1 1,330 750

Prepaid Insurance No. 130

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 2,400
31 Adjusting J1 200 2,200

Land No. 140

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 12,000
 Buildings No. 141
Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 60,000

Accumulated Depreciation—Buildings No. 142

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 250 250

Equipment No. 149

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 15,000

Accumulated Depreciation—Equipment No. 150

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 125 125

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 4,800

Unearned Rent Revenue No. 208

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 3,300
31 Adjusting J1 2,200 1,100

Salaries and Wages Payable No. 212

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 750 750

Interest Payable No. 230

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 400 400

Mortgage Payable No. 275

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 40,000

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 41,380

Rent Revenue No. 429

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 10,300
31 Adjusting J1 2,200 12,500

Advertising Expense No.610

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 600

Depreciation Expense No. 619

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 375 375

Supplies Expense No. 631

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 1,330 1,330

Interest Expense No. 718

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 400 400

Insurance Expense No. 722

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 200 200

Salaries and Wages Expense No. 726

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 3,300
31 Adjusting J1 750 4,050

Utilities Expense No. 732

Date Explanation Ref. Debit Credit Balance
May 31 Balance 🗸 900
 SKYLINE MOTEL
Adjusted Trial Balance
May 31, 2014
 Debit Credit
Cash.................................................................. $ 3,500
Supplies ........................................................... 750
Prepaid Insurance ........................................... 2,200
Land .................................................................. 12,000
Buildings .......................................................... 60,000
Accumulated Depreciation—Buildings ......... $ 250
Equipment ........................................................ 15,000
Accumulated Depreciation—Equipment ....... 125
Accounts Payable ........................................... 4,800
Unearned Rent Revenue ................................. 1,100
Salaries and Wages Payable .......................... 750
Interest Payable ............................................... 400
Mortgage Payable............................................ 40,000
Owner’s Capital ............................................... 41,380
Rent Revenue .................................................. 12,500
Advertising Expense ....................................... 600
Depreciation Expense ..................................... 375
Supplies Expense............................................ 1,330
Interest Expense.............................................. 400
Insurance Expense.......................................... 200
Salaries and Wages Expense ......................... 4,050
Utilities Expense.............................................. 900
$101,305 $101,305
(C)

(D)

SKYLINE MOTEL
Income Statement
For the Month Ended May 31, 2014
Revenues
Rent revenue.................................................... $12,500
Expenses
Salaries and wages expense .......................... $4,050
Supplies expense ............................................ 1,330
 Utilities expense .............................................. 900
Advertising expense ....................................... 600
Interest expense .............................................. 400
Depreciation expense ..................................... 375
Insurance expense .......................................... 200
Total expenses ......................................... 7,855
Net income ............................................................... $ 4,645

SKYLINE MOTEL
Owner’s Equity Statement
For the Month Ended May 31, 2014

Owner’s capital, May 1.............................................................. $ 0

Investment by owner ................................................................ 41,380
41,380
Add: Net income...................................................................... 4,645
Owner’s capital, May 31............................................................ $46,025

SKYLINE MOTEL
Balance Sheet
May 31, 2014
Assets
Cash ..................................................................... $ 3,500
Supplies ............................................................... 750
Prepaid insurance............................................... 2,200
 Land ..................................................................... 12,000
Buildings ............................................................. $60,000
Less: Accumulated depreciation—
buildings .................................................. 250 59,750
Equipment ........................................................... 15,000
Less: Accumulated depreciation—
equipment................................................. 125 14,875
Total assets.......................................... $93,075

Liabilities and Owner’s Equity

Liabilities
Accounts payable ....................................... $ 4,800
Unearned rent revenue ............................... 1,100
Salaries and wages payable....................... 750
Interest payable........................................... 400
Mortgage payable........................................ 40,000
Total liabilities ..................................... 47,050
Owner’s equity
Owner’s capital............................................ 46,025
Total liabilities and owner’s equity....... $93,075
 CHONG’S CLEANING SERVICES INC.
FOR THE MONTH ENDED JULY 31, 2011
(b) & (c)

Account Titles Trial Balance Adjustments Adjusted Trial

Balance Income Statement
Statement of
financial position

Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 10,750 10,750 10,750
Accounts Receivable 10,100 (a) 2,700 6,400 6,400
Cleaning Supplies 2,100 (d) 1,400 250 250
Prepaid Insurance 1,800 (c) 150 1,100 1,100
Equipment 9,000 6,000 6,000
Accounts Payable 4,200 2,200 2,200
Share Capital Ordinary 20,000 10,000 10,000
Dividends 1,600 700 700
Service Revenue 13,500 (a) 2,700 7,800 7,800
Gas and oli Expense 350 200 200
Salaries Expense 2,000 (e) 1,000 2,350 2,350
Totals 37,700 37,700
Depreciation Expense (b) 500 300 300
Accum. Depr.—Equipment (b) 500 300 300
Insurance Expense (c) 150 100 100
Cleaning Supplies Expense (d) 1,400 950 950
Salaries Payable (e) 1,000 550 550
Totals 5,750 5,750 20,850 20,850 3,900 7,800 16,950 13,050
Net Income 3,900 3,900
Totals 7,800 7,800 16,950 16,950