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Print Assignment: HW Chpt 2 ::false


E2-2

Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are
as follows.
Jan. 2 Invested $10,000 cash in business in exchange for common stock.

3 Purchased used car for $4,000 cash for use in business.

9 Purchased supplies on account for $500.

11 Billed customers $1,800 for services performed.

16 Paid $200 cash for advertising.

20 Received $700 cash from customers billed on January 11.

23 Paid creditor $300 cash on balance owed.

28 Declared and paid a $1,000 cash dividend.
Instructions
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset, liability, owner's equity).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased or decreased.
(d) The normal balance of the specific account.
Account Debited Account Credited
(a) (b) (c) (d) (a) (b) (c) (d)
Dat
e
Basic
Type
Specific
Account Effect
Norma
l
Balanc
e
Basic
Type
Specific
Accoun
t Effect
Norma
l
Balanc
e
Jan.
2
Asset Cash
Increas
e
Debit
Stockholde
's Equity
Commo
n Stock
Increas
e
Credit
3
Asset Car
Increas
e
Debit Asset Cash
Decrea
se
Debit
9
Asset Supplies
Increas
e
Debit Liability
Account
s
Payable
Increas
e
Credit
11
Asset
Accounts
eceivabl
e
Increas
e
Debit
Stockholde
's Equity
Revenue
Increas
e
Credit
16
Stockholde
's Equity
Advertisi
ng
Expense
Increas
e
Debit Asset Cash
Decrea
se
Debit
20
Asset Cash
Increas
e
Debit Asset
Account
s
eceiva
le
Decrea
se
Debit
23
Liability
Accounts
Payable
Decrea
se
Credit Asset Cash
Decrea
se
Debit
28
Stockholde
's Equity
Dividend
Increas
e
Debit Asset Cash
Decrea
se
Debit




E2-3

Selected transactions for D. Reyes, an interior decorator, in its first month of business, are as follows.
Jan. 2 Invested $10,000 cash in the business in exchange for common stock.

3 Purchased used car for $4,000 cash for use in business.

9 Purchased supplies on account for $500.

11 Billed customers $1,800 for services performed.

16 Paid $200 cash for advertising.

20 Received $700 cash from customers billed on January 11.

23 Paid creditor $300 cash on balance owed.

28 Declared and paid a $1,000 cash dividend.
Instructions
Journalize the transactions:
Date Description/Account
Debit
$
Credit
$
Jan.
2
Cash 10,000
Common Stock 10,000
3 Car 4,000
Cash 4,000
9 Supplies 500
Accounts Payable 500
11 Accounts receivable 1,800
Service revenue 1,800
16 Advertising Expense 200
Cash 200
20 Cash 700
Accounts receivable 700
23 Accounts Payable 300
Cash 300
28 Dividends 1,000
Cash 1,000




E2-7

Rowand Enterprises had the following selected transactions.
1. Aaron Rowand invested $4,000 cash in the business in exchange for common stock.
2. Paid office rent of $1,100.
3. Performed consulting services and billed a client $5,200.
4. Paid $700 cash dividend.
Instructions
(a) Indicate the effect each transaction has on the basic equation (Assets = Liabilities + Owner's
Equity).
Assets = Liabilities +
Stockholder's
Equity
1 4,000 =

+ 4,000
2 -1100 = + -1100
3 5200 =

+ 5200
4 -700 = + -700
(b) Journalize each transaction.
Description/Account Debit Credit
1 Cash 4,000
Common Stock 4,000
2 Rent Expense 1,100
Cash 1,100
3 Accounts receivable 5,200
Service revenue 5,200
4 Dividends 700
Cash 700





E2-10

The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first
month of operations.
Cash No. 101
4/1 15,000 4/15 600
4/12 900 4/25 1,500
4/29 400
4/30 1,000
Accounts Receivable No. 112
4/7 3,200 4/29 400
Supplies No. 126
4/4 1,800
Accounts Payable No. 201
4/25 1,500 4/4 1,800 ...