Solutions Guide: Please reword the answers to essay type ...
Solutions Guide: Please reword the answers to essay type parts so as to guarantee that your answer is an original. Do not submit as is
Complete Exercise 2-1 on p. 75 and Problem 2-3A on p. 81.
2-1 For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, (2) enter debit (Dr.) or credit (Cr.) to identify the kind of entry that would increase the account balance, and (3) identify the normal balance of the account. a. Unearned Revenue e. Land i. Cash b. Accounts Payable f. Owner Capital j. Equipment c. Postage Expense g. Accounts Receivable k. Fees Earned d. Prepaid Insurance h. Owner Withdrawals l. Wages Expense
| | |Type of |Increase |Normal |
| |Account |Account |(Dr. or Cr.) |Balance |
|a. |Unearned Revenue |liability |credit |credit |
|b. |Accounts Payable |liability |credit |credit |
|c. |Postage Expense |expense |debit |debit |
|d. |Prepaid Insurance |asset |debit |debit |
|e. |Land |asset |debit |debit |
|f. |Owner Capital |equity |credit |credit |
|g. |Accounts Receivable |asset |debit |debit |
|h. |Owner Withdrawals |equity |debit |debit |
|i. |Cash |asset |debit |debit |
|j. |Equipment |asset |debit |debit |
|k. |Fees Earned |revenue |credit |credit |
|l. |Wages Expense |expense |debit |debit |
P2-3A Santo Birch opens a Web consulting business called Show-Me-the-Money Consultants and completes the following transactions in March: March 1 Birch invested $150,000 cash along with $22,000 of office equipment in the business. 2 Prepaid $6,000 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $6,000.) 3 Made credit purchases of office equipment for $3,000 and office supplies for $1,200. Payment is due within 10 days. 6 Completed services for a client and immediately received $4,000 cash. 9 Completed a $7,500 project for a client, who must pay within 30 days. 10 Paid $4,200 cash to settle the account payable created on March 3. 19 Paid $5,000 cash for the premium on a 12-month insurance policy. 22 Received $3,500 cash as partial payment for the work completed on March 9. 25 Completed work for another client for $3,820 on credit. 29 Birch withdrew $5,100 cash for personal use. 30 Purchased $600 of additional office supplies on credit. 31 Paid $200 cash for this month’s utility bill. Required 1. Prepare general journal entries to record these transactions (use the account titles listed in part 2). 2. Open the following accounts—their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); S. Birch, Capital (301); S. Birch, Withdrawals (302); Services Revenue (403); and Utilities Expense (690). Post the journal entries from part 1 to the accounts and enter the balance after each posting. 3. Prepare a trial balance as of the end of this month’s operations.
Part 1)
Mar. 1 Cash 101 150,000
Office Equipment 163 22,000
S. Birch, Capital 301 172,000
Owner invested cash and equipment.
2 Prepaid Rent 131 6,000
Cash 101 6,000
Prepaid six months’ rent.
3 Office Equipment 163 3,000
Office Supplies 124 1,200
Accounts Payable 201 4,200
Purchased equipment and supplies on credit.
6 Cash 101 4,000
Services Revenue 403 4,000
Received cash for services.
9 Accounts Receivable 106 7,500
Services Revenue 403 7,500
Billed client for completed work.
10 Accounts Payable 201 4,200
Cash 101 4,200
Paid balance due on account.
19 Prepaid Insurance 128 5,000
Cash 101 5,000
Paid premium for insurance.
22 Cash 101 3,500
Accounts Receivable 106 3,500
Collected part of amount owed by client.
25 Accounts Receivable 106 3,820
Services Revenue 403 3,820
Billed client for completed work.
29 S. Birch, Withdrawals 302 5,100
Cash 101 5,100
Withdrew cash for personal use.
30 Office Supplies 124 600
Accounts Payable 201 600
Purchased supplies on account.
31 Utilities Expense 690 200
Cash 101 200
Paid monthly utility bill.
Part 2
| Cash |Acct. No. 101 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| |2 | |G1 | |6,000 |144,000 |
| |6 | |G1 |4,000 | |148,000 |
| |10 | |G1 | |4,200 |143,800 |
| |19 | |G1 | |5,000 |138,800 |
| |22 | |G1 |3,500 | |142,300 |
| |29 | |G1 | |5,100 |137,200 |
| |31 | |G1 | |200 |137,000 |
| | | | | | | |
| Accounts Receivable |Acct. No. 106 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| |22 | |G1 | |3,500 |4,000 |
| |25 | |G1 |3,820 | |7,820 |
| | | | | | | |
| Office Supplies |Acct. No. 124 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| |30 | |G1 |600 | |1,800 |
| | | | | | | |
| Prepaid Insurance |Acct. No. 128 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| | | | | | | |
| Prepaid Rent |Acct. No. 131 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| | | | | | | |
| Office Equipment |Acct. No. 163 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| |3 | |G1 |3,000 | |25,000 |
| Accounts Payable |Acct. No. 201 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| |10 | |G1 |4,200 | |0 |
| |30 | |G1 | |600 |600 |
| | | | | | | |
| | | | | | | |
| S. Birch, Capital |Acct. No. 301 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| | | | | | | |
| S. Birch, Withdrawals |Acct. No. 302 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| | | | | | | |
| Services Revenue |Acct. No. 403 |
|Date | |Explanation |PR | Debit | Credit |Balance |
| |9 | |G1 | |7,500 |11,500 |
| |25 | |G1 | |3,820 |15,320 |
| | | | | | | |
| Utilities Expense |Acct. No. 690 |
|Date | |Explanation |PR | Debit | Credit |Balance |
Part 3
SHOW-ME-THE-MONEY CONSULTANTS
Trial Balance
March 31
Debit Credit
Cash $137,000
Accounts receivable 7,820
Office supplies 1,800
Prepaid insurance 5,000
Prepaid rent 6,000
Office equipment 25,000
Accounts payable $ 600
S. Birch, Capital 172,000
S. Birch, Withdrawals 5,100
Services revenue 15,320
Utilities expense 200 _______
Totals $187,920 $187,920
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